611.1731/154: Telegram

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

29. Department’s telegram No. 6, and my No. 28. Here follow comments on points 1, 3, 7, 10 and 11.

Paragraph 1. Nicaragua is prepared to exchange notes in sense proposed in paragraph 1 of my telegraph No. 7. Expressed reason for qualified acceptance of our draft of articles 1 and 2 is that Nicaragua must give 30 or 90 days notice of denunciation of modus vivendi and that proposed new tariff which would not affect products listed in Schedule 1 would be protested by other powers. As the Department has not definitely rejected proposal regarding exchange of notes I should appreciate instructions on this point.

Paragraph 3. Nicaragua agrees to withdraw proposed omission of clause “and of converting currencies” in article 5 provided following sentence is inserted at the end of article: “These bases and methods shall not refer to changeable provisions which relate to the official establishment of the rate of exchange for the conversion of currencies”. Nicaraguan negotiators claim that without this insertion Nicaraguan Government would be imperilled by possible and probable devaluation of cordoba.

Paragraph 7. Nicaragua accepts article 7 provided we answer affirmatively note which Minister for Foreign Affairs would address to me in translation as follows:

“In accordance with our conversation regarding article 7 of the Trade Agreement, I should be grateful if Your Excellency would be kind enough to address me a communication explaining that the determination of the total quantity of the article the sale or importation of which may be permitted during a period of not less than 3 months shall not be interpreted in a rigorously exact manner but within the possibilities and the disposal of our commission for the control of exchange operations.[”]

Paragraph 10. Nicaraguan negotiators state that if our draft of article 13 is accepted law will have to be passed fixing fines. As Nicaraguan redraft takes into consideration the value of the shipment (see article No. 10 of Department’s telegram 6) we request further instructions.

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Paragraph 11. (a) Nicaragua withdrew its proposal, (b) Nicaraguan point of view was given us substantially as follows: The production of sugar is one of the most important industries in Nicaragua, from standpoint of both capital and labor. A concession in reduction of duty would be of no account unless benefit were continued for a fixed period, as it would be impracticable to invest extensively here in the planting and cultivation of sugar cane unless a market in the United States can be assured for a sufficient period of years. Sugar production has suffered in Nicaragua because of impossibility of competing in the United States under Nicaragua’s duties with other sugars. Nicaragua consequently attaches the greatest importance in, (1), assuring quota (see my 28); (2), obtaining reduction in duty (see 28), and (3), assuring market in the United States over fixed period of years.

Lane