611.2531/274: Telegram
The Chargé in Chile (Frost) to the Secretary of State
[Received 7:45 p.m.]
34. Garcia today offered after prolonged discussions and modifications the following exchange clause for the proposed trade agreement. It is very similar to the clause worked out by the Foreign Office with the British Embassy and now submitted telegraphically by the latter [Page 441] to London stating that “The Government of Chile and the Government of the United States of North America agree that in case there be established or maintained, directly or indirectly, any form of control of international exchange the measures which govern the subject shall apply in a manner not to make discriminations which would prejudice payments for importation or other authorized operations. Especially as relates to the acquisition of exchange needed by one of the two countries to effect payments in the other the said measures shall apply in such a manner as not to impose charges, surcharges or differential rates which are not equally applied upon exchange destined to effect similar payments to the foreign nation most favored in this respect. There are excepted from this undertaking the cases of depreciation of exchange instruments which may result from demand and supply within the compensation regimes which prevail between Chile and other countries.
Nevertheless, in no circumstances shall there be imposed measures of control which involve the use of exchange for importations or other authorized operations at rates higher than those which would be fixed by the free play of demand and supply in the market.”
Essentially it is believed that this is as far as Chile will go, or can from a practical standpoint be asked to go under present circumstances. The Commercial Attaché has assisted continuously and communicates the above views.