611.2231/192a: Telegram
The Acting Secretary of State to the Minister in Ecuador (Gonzalez)
40. In several of your recent despatches reporting conversations on the trade agreement you have indicated that Ecuador will not consent to bind any tariff rates unless they are specified in dollars. Presumably this would also apply to items on which reductions are requested. The trade agreements program envisages the reduction of tariff and other barriers to international trade and the stabilization of the conditions under which such trade is carried on. Since to specify bound or reduced rates in dollars would be to permit them to fluctuate in sucres, which would not appear to furnish the stability sought, the Department is reluctant to accede to the proposal. If this proposal is made by the Minister of Finance because of revenue considerations, it may be pointed out that barring a substantial devaluation of the sucre, the expenditures of the Government of Ecuador (which are principally in local currency) will not increase or decrease with each change in the exchange value of the sucre. In this connection it would be helpful to have your opinion as to the probability of a further decline in the exchange value of the sucre.
You are requested to discuss this matter again with the appropriate Ecuadoran officials along the lines indicated above with a view to ascertaining how insistent they are on the collection of duties on [Page 507] schedule articles in terms of the dollar and the reasons therefor. You should find out their position in this regard with respect to reductions and bindings of both specific and ad valorem rates in the schedule.
Report fully by telegraph the outcome of your conversations together with your comments thereon. In this connection indicate also what prospect you believe there is for a fairly speedy and successful termination of the negotiations. With a heavy program scheduled for the coming months the Department is anxious to have this agreement out of the way as soon as possible.