611.1731/147: Telegram

The Minister in Nicaragua (Lane) to the Secretary of State

7. My 6, Jan. 25, noon. Our comments follow:

We have protested orally against proposed changes on the ground that it would give Nicaragua an unfair advantage in that the laws of Nicaragua could be changed between the date of signature of treaty and date of treaty’s becoming effective. As I am told that Nicaragua proposes to pass new tariff Trill (see paragraph 5 of letter of Collector General of Customs dated September 12, 1935 addressed to the Minister of Hacienda, a copy of which was transmitted with my despatch No. 1055, Sept. 19, 193511) to be used as basis of bargaining with other nations, Nicaragua considers that its position would be enhanced by this change. I recommended against proposed change unless understanding can be confirmed through exchange of notes that no increase in tariffs will be effected while negotiations are pending and until treaty goes into effect.
In view of paragraph number 3 of Department’s telegram No. 2, 1 assume that omission may be made.
Castro says that proposed change is for purpose of simplifying computation of duties in event of change in official rate of exchange. We do not regard this as important.
We recommend that insertion be agreed to. Apparently it is for purpose of maintaining political tranquility.
Nicaraguan Exchange Control Commission in order to make its decisions effective must issue permits to allow importation of merchandise with respect to which foreign exchange is to be allotted. Vita12 states that he does not regard proposed change as fundamental (see paragraph 8).
No comment necessary.
Nicaraguan Government says its statistics will not enable it to fulfill such an obligation (see comments Nos. 5 and 8).
We objected strongly to this on the ground that it is impossible to find a truly representative period subsequent to the establishment of Exchange Control Commission in view of the Commission having exerted arbitrary control over importations. (Vita says our point of view is reasonable and just.) As I regard this point as fundamental, I recommend that the Department insist on acceptance of our draft of this article.
Because of lack of transportation facilities with central and western portions of Nicaragua, Atlantic coast ports enjoy more favorable customs treatment than is case on Pacific coast, so as to encourage importations from Costa Rica and elsewhere. American citizens in Bluefields and Puerto Cabezas would probably be largely benefited by proposed insertion. Recommend acceptance.
Nicaraguan contention is that “nominal” has not same meaning in Spanish as in English, hence, it is necessary to be more specific. This point seems unimportant.
(a) Question of policy—hence, no comment.
(b) It is apparent that Nicaragua will request reduction in duty on sugar and that she wishes to be assured that possible sugar market in the United States would not be suddenly closed to her.

As Congress reconvenes January 28, 1 should appreciate it if the Department would telegraph me its views and instructions on foregoing. Revised Spanish text as submitted by Nicaragua being sent by air mail Monday.

  1. Not printed.
  2. Presumably Vicente Vita, manager of the National Bank of Nicaragua.