611.3931/62

The Consul at Ciudad Trujillo ( Reineck ) to the Secretary of State

No. 684

Sir: I have the honor to refer to the Legation’s despatch No. 3597 of November 2, 1936, relative to the “Threatened Denial of Most-Favored-Nation Treatment to Certain American Products Imported into the Dominican Republic in Apparent Violation of American-Dominican Modus Vivendi of 1924. Conversation with Dominican Minister for Foreign Affairs” and to report that the delay in obtaining the most favored nation treatment in connection with the French Dominican trade agreement is resulting in serious loss to American trade in this country.

While no comprehensive and detailed study of the effect of this treaty on American trade has been made, largely because it was naturally assumed that similar treatment would be immediately granted to American commodities of the same categories, the following instances in which importers of American goods have consulted the Consulate may be taken as typical of the losses that are resulting from the vacillation of the Dominican authorities in extending the benefits granted to French products to similar commodities of American growth or manufacture.

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One small importer of American cosmetics received a shipment of American beauty cream on the SS. Borinquen arriving in Ciudad Trujillo on October 21st. The shipment comprised only 87 kilograms and the duty under the rates of Ley 854 (internal revenue) amounted to $261.52, Under the rates which would obtain if they were adjusted to the terms of the French agreement, the internal revenue tax paid on this shipment would have been $43.59. The difference and consequently the competitive advantage now enjoyed by French products amount to $2.50 a kilogram.

The local agent of White Rock mineral water reports that in spite of the relatively low consumption of mineral waters in the Dominican Republic, he has heretofore been able to import annually about 700 cases of approximately 25 gallons each. The internal revenue tax under Law 854 on mineral water is 7 cents a liter. Under the French agreement it is free of this internal revenue tax. Unless the more favorable treatment can be obtained importations of White Rock will cease and the agent is not now placing any orders pending the decision.

A third loser is the firm of Grevatt Brothers, an important grocery and confectionery firm, whose importations of American canned fish, confectionery and similar products are especially heavy at this time of the year on account of the holiday trade. The loss of this firm up to October 21st last, by reason of its being unable to secure treatment similar to that accorded to French products of the same kind was $1,100 in round numbers and the firm estimates that this amount will be increased to over $11,000 on importations which it will make for the holiday trade.

Examples of this kind could be multiplied, but it is not deemed necessary to do so. The clause of the French treaty which provides for special treatment for confectionery also provides for the abolition of the internal revenue tax on preserved fish of French origin. The Dominican authorities have extended the benefits of this clause to cod fish of American origin and small quantities have actually been imported, free of the internal revenue taxes. But the taxes have not been waived on American chocolate and confectionery.

It is difficult to see how the extension of the benefits of the French agreement can be denied under the Modus Vivendi with the United States, or how the extension of these benefits could be used with any hope of success as a lever to force a new reciprocal trade agreement with the United States. It would seem that failure to recognize the rights of the United States under the Modus Vivendi might properly be regarded as an ill omen in any attempt to judge the loyalty with which a more formal agreement would be kept.

Respectfully yours,

Walter S. Reineck