Foreign Relations of the United States Diplomatic Papers, 1936, The American Republics, Volume V

611.1731/160: Telegram

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

Washington, February 25, 1936—7 p.m.

17. Your 35, 37³² and 38 February 24, 2, 3[4], and 6 p.m.

11. (b) Nicaraguan proposal to keep certain concessions in force for 6 years regardless of termination provisions in the proposed agreement cannot be accepted. Trade Agreements Act prohibits commitments under trade agreements for an initial period longer than 3 years. Even if proposal was for 3 instead of 6 years it would still be unacceptable since it would weaken the safeguards provided for in articles 6, 9 and 12 against contingencies which might render it desirable for either country to have the right to terminate the entire agreement on relatively short notice. Department hopes of course that these contingencies will not arise.

9. If you perceive no objection, Department suggests as substitute for wording transmitted in your 6, January 25, proposed to be added at end of second sentence first paragraph article 11 “and except as otherwise specifically provided in statutes of the Republic of Nicaragua relating to articles imported into Nicaragua through ports on the Atlantic Coast of Nicaragua.” Suggested wording fits in better with the wording of the article as drafted and accomplishes same purpose as that of wording proposed by Nicaragua. Inform Department concerning existing statutes in regard to this matter.

8. You are authorized to add to the memorandum transmitted in Department’s 16, February 24, or to submit as a separate memorandum, the following “The provisions of the proposed trade agreement in regard to foreign exchange are designed to assure non-discriminatory treatment in the administration and operation of any control of foreign exchange which either country may establish or maintain.” It is so obvious that the trade agreement does not require the abolition nor even the liberalization of exchange control that it seems unnecessary to include a statement to that effect in the proposed memorandum.

It is equally obvious that there is nothing in the agreement which would preclude protests by us that the exchange control, even though non-discriminatory, is harmful to our trade, if it should restrict trade so as to impair seriously or nullify the benefits expected from the agreement.

Hull

32. Telegram No. 37, 4 p.m., not printed.