611.1731/161b: Telegram

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

16. With reference to the Department’s telegram No. 13, February 21.

Point 1. This Government has no intention of presuming to suggest to Nicaragua what tariff policy it should follow, but I believe that our action might be misinterpreted if we allowed the situation which you mention in your telegram No. 7, January 25, 3 p.m., to pass without comment. Please, therefore, take advantage of a suitable opportunity to point out to the appropriate officials of the Nicaraguan Government our regret that Nicaragua has apparently decided to denounce its most-favored-nation agreements with other countries. [Page 799] This would be regrettable in this Government’s opinion at any time, but it is particularly unfortunate that Nicaragua is apparently planning to use the conclusion of a trade agreement with this Government as the point of departure for carrying out its proposed tariff policy. Therefore, in order that our position may be absolutely clear, this Government cannot urge too strongly that the trade agreement be handled as a separate and unrelated matter and that the signing of the agreement and the denunciation of agreements with other countries be separated as far as possible in point of time. Consult in this connection the first paragraph of the Department’s instruction No. 298, July 25, 1935.30

Point 3. On the understanding that Nicaragua will accept article 5 as drafted, you are authorized to hand an informal memorandum, as follows, to the appropriate Nicaraguan official.

“Article 5 of the proposed trade agreement is designed to safeguard the concessions exchanged by preventing changes in the bases and methods of determining dutiable value or of converting currencies (for customs purposes) which would be less favorable to importers than the bases and methods employed as of the date of signature of the agreement.

In the case of each country, the provisions of this Article mean merely that in respect of the products on which it has granted concessions to the other country, and which are or may be subject to ad valorem rates of duty, the bases and methods of determining dutiable value and of converting (for customs purposes) the currency of the other country into terms of the national currency will not be altered to the disadvantage of importers of those products. The provisions of this Article do not, of course, affect in any way the right of either country to fix official rates at which exchange on the other country may be sold.”

  1. Not printed.