611.2531/227
The Secretary of State to the Chargé in Chile (Frost)
Sir: Reference is made to the Embassy’s despatch No. 768 of November 22, 1937,17 with respect to subjects to be included in a [Page 432] trade agreement and in a general Treaty of Friendship, Commerce and Navigation with Chile.
The Embassy’s thought that the Chilean Foreign Office will probably be desirous of proceeding at once to explore the possibilities of entering into negotiations for a reciprocal trade agreement after the conclusion of the modus vivendi18 has been noted as has the Embassy’s belief that the Chilean Government possesses a genuine and earnest desire to conclude such an agreement at an early date.
For tactical reasons, the Department considers it preferable that you not take the initiative at this time in proposing to the Chilean Government the immediate undertaking of exploratory conversations with respect to a trade agreement. However, if subsequent to the conclusion of the modus vivendi, you are approached by the Chilean Government in regard to the subject, you may state that this Government would be glad to explore the possibility of a trade agreement with Chile. You may reiterate to the Chilean Government the position consistently taken by this Government with respect to the basis for negotiations, and in this connection you may wish to refer specifically to the last sentence of the Department’s memorandum of July 16, 1937,19 which was handed to the Chilean Under Secretary of Commerce on the occasion of his visit to Washington at that time. A copy of this memorandum was forwarded to the Embassy as an enclosure to the Department’s instruction No. 248 of July 19, 1937.20 You should explain to the Chilean Government, however, that before this Government would be prepared to make any public announcement (such as is made in accordance with procedure here) regarding the initiation of trade-agreement negotiations, it would have to be definitely assured that the Chilean Government would negotiate upon the basis of the unconditional most-favored-nation principle as applied to all forms of trade and payments control, as set forth in the memorandum under reference. In this connection, you may also wish to refer to the last paragraph of the Department’s telegram No. 55 of December 2, 1937,20a regarding the question of exchange control.
You may in your discretion recall to the Chilean Government that the acceptance of the foregoing basis for negotiation would involve the removal of any discrimination against American trade that might exist. In this connection, if you deem it advisable, you may state that the prompt removal by Chile of any discrimination that may exist would greatly facilitate any trade-agreement conversations or negotiations that might be undertaken.
[Page 433]With respect to the question of contiguous countries, you may state that this Government would wish to be assured also, prior to any public announcement, that the Chilean Government would not insist upon trade arrangements with such countries constituting an exception to the unconditional most-favored-nation principle as contained in a trade agreement with the United States, that is, that in such an agreement, there would be no more exceptions to that principle than those provided for in the modus vivendi.
You may, if you deem it useful, outline the customary procedure followed by this Government in the negotiation of trade agreements. As soon as possible after agreement has been reached upon the basis for the negotiations, a preliminary public announcement is made by this Government that negotiations are contemplated. The purpose of this announcement is to afford American interests an opportunity to present suggestions as to the products to be covered by the agreement. After an interval of not less than five weeks formal public notice of intention to negotiate is given. Accompanying the formal notice there is published a list of products on which the United States will consider granting concessions. This list, however, does not constitute a commitment by this Government to grant a concession on any of the products listed. In order to be in a position to publish such a list, it would be necessary for this Government to have a list of products on which the Chilean Government contemplates requesting concessions from the United States. This list could usefully be furnished by the Chilean Government as soon as convenient after accord has been reached on the basis for negotiations.
For the confidential information of the Embassy there is enclosed a copy of the “standard” general provisions21 which have been developed [Page 434] for use in reciprocal trade agreements. In the case of Chile, it may be considered desirable to make certain changes in these general provisions. With this in mind, it would be helpful if the Embassy were to supply the Department with its comments as to the applicability and adequacy of these provisions. There is also enclosed for the information of the Embassy a list of the subjects22 usually included in a general treaty of friendship, commerce and navigation, together with a copy of the most recent instrument of this character negotiated by the United States, the Treaty of Friendship, Commerce and Consular Rights with Finland.23
Should any conversation with respect to a possible trade agreement be initiated by the Chilean Government with the Embassy, you are requested to report fully thereon to the Department.
Subject to further developments which might change its views, the Department agrees in general with the thoughts, expressed in your despatch under reference, in regard to the method of dealing with a possible treaty of friendship, commerce and navigation, as compared with a trade agreement.
Very truly yours,
- Foreign Relations, 1937, vol. v, p. 419.↩
- Signed January 6 and February 1, 1938; for text, see Executive Agreement Series No. 119, or 52 Stat. 1479; see also pp. 421 ff.↩
- Foreign Relations, 1937, vol. v, p. 392.↩
- Not printed.↩
- Foreign Relations, 1937, vol. v, p. 422.↩
-
These standard general provisions are the same as those contained in the reciprocal trade agreement between the United States and Ecuador, signed at Quito on August 6, 1938, and printed in Executive Agreement Series No. 133, and 53 Stat. 1951, except for the following article which does not appear in the Ecuador agreement:
“Article . . . . . The Government of the United States of America and . . . . . . . reserve the right to withdraw or to modify the concession granted on any article under this Agreement, or to impose quantitative restrictions on any such article if, as a result of the extension of such concession to third countries, such countries obtain the major benefit of such concession and in consequence thereof an unduly large increase in importations of such article takes place: Provided, That before the Government of either country shall avail itself of the foregoing reservation, it shall give notice in writing to the other Government of its intention to do so, and shall afford such other Government an opportunity within thirty days after receipt of such notice to consult with it in respect of the proposed action; and if an agreement with respect thereto is not reached within thirty days following receipt of the aforesaid notice, the Government which proposed to take such action shall be free to do so at any time thereafter, and the other Government shall be free within fifteen days after such action is taken to terminate this Agreement in its entirety on thirty days’ written notice.”
The Ecuador agreement contains in the second paragraph of article VII a statement permitting the imposition of quantitative restrictions on importations “in order to maintain the exchange value of the currency of the country”, which does not appear in the standard general provisions of December 29, 1937.
↩ - Not printed.↩
- Signed February 13, 1934, Foreign Relations, 1934, vol. ii, p. 134.↩