611.1731/154: Telegram

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

13. Your 28 and 29 February 19.

Point 1. Do Nicaraguan negotiators understand that the duties or charges to which the second sentence of articles 1 and 2 relate are not ordinary customs duties. They relate only to duties and charges other than ordinary customs duties. Hence Department unable to understand how proposed change would affect Nicaragua’s [Page 792] bargaining position vis-à-vis other countries. In this connection Department hopes that Nicaragua will not make signing of agreement with us the occasion for denouncing agreements with other countries. Instruction on this point will follow by air.

Point 3. Article 5 as drafted would not embarrass Nicaraguan Government in event of devaluation. Devaluation of the dollar did not affect the bases and methods of converting foreign currencies. Treasury Department continued as before to follow provisions of section 522 Tariff Act of 1930.

Point 7. Article 7 as drafted does not provide for any specified quantity of importations as the Nicaraguan negotiators appear to believe. The total quantity permitted to be imported could be fixed at any figure. Possibly Nicaraguan negotiators are confusing exchange permits with the import permits envisaged in this article. If imports are controlled by means of permits, we want to know definitely the total quantity permitted to be imported during a period of at least 3 months. Proposed change unacceptable.

Point 8. “Fair and equitable share” does not refer to an absolute amount of exchange as Nicaraguan negotiators may have thought. It provides merely that the proportion of whatever total amount of exchange is made available for commercial transactions which is represented by the allotment to the United States shall not be less than the proportion of the total exchange for commercial purposes employed in a previous representative period for the settlement of commercial obligations to the United States. Our purpose is to prevent arbitrary discrimination either as between the United States and other countries in respect of the total allotments to individual countries or as between different commodities. Our definition accomplishes this purpose. Proposed changes would leave the way open for possible discriminations; hence they are not acceptable. Suggest translating “share” as “porción” instead of “cuota”.

Point 9. Instruction in regard to this point will follow by air.

Point 10. Paragraph 10 your number 6 apparently garbled. Fixed percentage of dutiable value or amount of duties or fixed maximum amount in dollars or cordobas would not be in harmony with our law and would not ensure that penalties would be nominal in all cases. Ascertain why acceptance of our draft would make new legislation necessary in Nicaragua.