611.3931/71

The Chargé in the Dominican Republic ( Atwood ) to the Secretary of State

No. 3681

Sir: Referring to the Legation’s despatch No. 3671 of December 11, 1936, transmitting a copy of a communication received from the General Receiver of Dominican Customs setting forth the Receivership’s interpretation of instruction No. 14212 [14213] of December 8, 1936, which it had received from the Dominican Treasury Department concerning the application of most-favored-nation treatment to certain American products similar to those identified by brands or trade names in the Franco-Dominican Trade Agreement, I have the honor to report that in conversation yesterday with the Secretary for Foreign Affairs I said to him that the Legation had been advised by the Receivership [Page 431] that the instruction received from the Dominican Treasury Department in nowise changed the situation existing as regards the withholding of most-favored-nation treatment to the American products mentioned above.

The Secretary for Foreign Affairs expressed surprise that the Treasury Department’s instruction should have been thus interpreted by the Receivership. He assured me that it was the firm intention of the Dominican Goverment to grant American commerce exactly the same benefits as those accorded France under the Franco-Dominican Trade Agreement and that he had requested the Treasury Department so to instruct the Receivership. I then asked him what American products he had intended to cover in his instructions to the Treasury Department. Señor Bonetti Burgos replied very vaguely to this question and said that this was a matter for the Receivership and the Treasury Department to work out between themselves. I gathered from Señor Bonetti Burgos’ remarks that, despite his assurances to the effect that the Dominican Government is desirous of extending most-favored-nation treatment to American products similar in character to those identified by brands or trade names in the Franco-Dominican Trade Agreement, the Dominican Government is, at the same time, overly anxious to avoid any dispute with France concerning the operation of the Franco-Dominican Trade Agreement.

Because of Señor Bonetti Burgos’ repeated references to the mutual advantages to be derived from an American-Dominican Trade Agreement, the conviction is steadily growing in my mind that the Dominican Government is deliberately withholding unconditional most-favored-nation treatment to American goods with the express purpose of attempting to oblige the United States Government to conclude a trade agreement with it.

Since it now appears evident that the Dominican Government has no early intention of respecting its obligations under the American-Dominican Modus Vivendi of 1924, and in view of the fact that American goods will no longer receive preferential treatment under the Spanish-Dominican Trade Agreement, which was suspended on December 15, 1936 (see my despatch No. 3680 of today’s date23), the Department may desire to consider the advisability of denouncing the American-Dominican Modus Vivendi. In so doing, the Dominican Government would stand to lose far more than the United States, inasmuch as the only Dominican trade agreement now in force is the one with France, under which the United States receives very few advantages, whereas the United States has fifteen trade agreements in force with foreign nations the benefits of which are extended to Dominican products by virtue of the American-Dominican Modus [Page 432] Vivendi. At present, because of the state of equilibrium in American-Dominican trade and the nature of Dominican exports to the United States, the United States Government has no sound bargaining position in any future negotiations for a trade agreement with the Dominican Republic. But by taking the initiative and denouncing the American-Dominican Modus Vivendi, the United States Government would create bargaining power in its negotiations for a future trade agreement with the Dominican Republic. This action would also remove any opportunity for the Dominican Government to claim that it had scored a diplomatic triumph against the United States by reason of its successful denial of unconditional most-favored-nation treatment to American products similar to those covered by the Franco-Dominican Trade Agreement.

Respectfully yours,

Franklin B. Atwood
  1. Not printed.