611.2231/115

The Chargé in Ecuador ( Sparks ) to the Secretary of State

No. 681

Sir: With reference to my despatch No. 680 of January 30, 1937, and in confirmation of my telegram No. 6 of February 1, 6 p.m., 1937,30 relative to the concessions sought by Ecuador in the contemplated trade agreement, I have the honor to enclose herewith a copy with English translation of note No. 9, dated January 29, 1937, from the Minister for Foreign Affairs,30a in reply to my note No. 7 of January 26, 193730a (enclosure No. 1 to my despatch No. 680 of January 30, 1937).

It will be observed that the formal request for concessions now made is substantially the same as that contained in the Foreign Office note of December 15, 1936, (please see enclosures 1 and 2 of my despatch No. 633 of December 15, 193631). In effect, Ecuador desires that its [Page 488] products now on the free list be bound thereon, and to that end the following itemization is made of the products now on the free list:

  • Annatto and its extracts;
  • Cacao;
  • Coffee;
  • Cascarilla;
  • Rubber and its refuse; Hides and skins; Kapok;
  • Bananas in general;
  • Medicinal plants and herbs;
  • Mangrove bark (cáscara de mangle); and
  • Balsa wood logs.

A request is also made for the other items appearing in the Free List of the Tariff Law of 193032 as amended, but it is thought that this additional petition may be disregarded inasmuch as the itemized list appears to be comprehensive.

As concerns the articles on which a 50% reduction in the existing customs is sought, the following items are listed:

  • Palm leaf hats;
  • Sawed balsa lumber;
  • Lentils;
  • Naranjilla and its juice;
  • Carbonic gas;
  • Mineral waters; and
  • Manufactured and unmanufactured tobacco.

In view of the statement relative to handwoven palm leaf hats made in the second paragraph of page two of the Department’s instruction No. 186 of November 11, 1936,33 no further comment on this item would appear to be necessary.

With regard to the request for a reduction on sawed balsa lumber, I would refer to the second paragraph on page three of my despatch No. 633 of December 15, 1936. It would seem that the internal revenue tax on this product has already been reduced by 50%, from US$3.00 to US$1.50 per M feet, under the Trade Agreement with Canada, in view of which no further concession can be made except to bind the US$1.50 rate.

With respect to the concession desired on lentils, reference is made to the first paragraph on page four of my despatch No. 632 of December 14, 1936,34 in which I reported my observation made to the Director of the Commercial Section of the Foreign Office that the export of [Page 489] Ecuadorean lentils to the United States is practically in the same class as is naranjilla juice, and that Dr. Banda recognized at that time that a concession on this product would accrue principally to Chilean lentils.

With regard to naranjilla and its juice, I venture to invite the Department’s attention to my comments made in my despatch No. 680 of January 30, 1937, and previous despatches, concerning the seeming desirability, if not necessity, of making a concession to Ecuador on this product. It occurs to me that if any concession made on naranjilla juice must be extended to all fruit juices, the Department might desire to give consideration to a contingent concession which would become effective within a specified period after the conclusion of the agreement, or when the exports of this product have reached a certain quantity. I would reiterate my opinion that a concession on naranjilla juice should facilitate appreciably the obtaining of concessions from Ecuador in which we may be interested.

As concerns natural carbonic gas, I have the honor to refer to the second paragraph of page four of my despatch No. 632 of December 14, 1936, in which I reported my conversation with Dr. Banda on this subject. In this connection Ecuador apparently seeks the abrogation of the prohibition of the purchase of foreign products by American Government agencies.

The matter of a concession on Ecuadorean mineral waters is analogous to that desired on naranjilla juice. These waters are undoubtedly of high quality and, with a proper introduction into the American market, might attain a large distribution in the United States. For the moment, however, they are definitely only a potential export. Moreover, since the containers must be imported inasmuch as there is no bottle factory in Ecuador, it is not thought that these mineral waters could compete with those supplied by other countries to the United States.

The inclusion of a request for a reduction of 50% in the existing duties on manufactured and unmanufactured tobacco is the only addition to the list previously prepared by the Ecuadorean Foreign Office (see enclosures Nos. 1 and 2 of my despatch No. 633 of December 15, 1936). This again is only a potential export. It is thought that upon pointing out that the granting of such a concession to Ecuador, since it must necessarily be extended to the principal supplying countries, Greece, Turkey and Italy, would not improve the competitive position of Ecuadorean tobacco in the American market, may be sufficient to convince it that it would gain nothing by insisting on this concession.

Respectfully yours,

Edward J. Sparks