611.3931/107
The Department of State to the Dominican Legation24
Memorandum
The Department of State, deeply gratified to learn that the Government of the Dominican Republic desires to enter into a trade agreement with the Government of the United States, has given the most careful and sympathetic study to the proposals made in the memorandum which the Minister of the Dominican Republic was good enough to leave at the Department on August 24, 1938.
The Department shares the desire of the Dominican Government for a mutually advantageous expansion of the trade between the two countries and welcomes the opportunity to comment upon the Dominican Government’s proposals. If, after further conversations, the two Governments find it possible to agree upon a basis for definitive negotiations and subsequently to conclude a trade agreement, it is felt that the friendly relations between the two countries, to which the Minister has contributed so much, will be further strengthened.
As the commercial policy of the United States is based upon the principle of equality of treatment, the Department notes with pleasure the statement made in the memorandum of August 24 that the Dominican Republic is disposed to maintain for the United States the mostfavored-nation benefits derived from the modus vivendi of 1924. In view of that statement, the Department assumes that the Government of the Republic would be prepared to exchange, in a trade agreement, reciprocal guarantees of unconditional most-favored-nation treatment in respect of all forms of trade and payments control.
In accordance with the policy of extending to all countries which do not discriminate against American commerce the benefits of duty reductions and bindings which have been granted by the United States in its trade agreements, and pursuant to the terms of the modus vivendi of 1924, the benefits of duty reductions on the following products, among those mentioned in the memorandum of August 24, have been extended to the Dominican Republic:
[Here follows table of duty reductions on nine items and list of eight items bound on the free list.]
With reference to the request made in the memorandum of August 24 for parity of tariff treatment with Cuba, it may be pointed out that, in view of the terms of the trade agreement between the United States and Cuba,25 under which the advantages provided for in the agreement are made exclusive, it would not be possible for the United States to [Page 506] grant parity of treatment for Dominican products. On the other hand, the Department desires to point out that, in all but a very few cases, the percentage of preference which has been guaranteed to Cuba in the present trade agreement with that country, in respect of products in which the Dominican Republic has expressed an interest, is the same as that provided for in the treaty of commercial reciprocity of December 11, 1902 between the United States and Cuba.26 In this connection, it may be noted that the public notice of intention to negotiate a supplementary trade agreement with Cuba, issued by the Department of State on November 30, 1938,27 contained the statement that “no increases in the guaranteed percentages of preference in tariff rates will be made.”
The Government of the United States would, however, be prepared to consider granting to the Dominican Republic, in connection with trade-agreement negotiations, duty reductions or the binding of the existing customs treatment in respect of any of the products mentioned in the memorandum of August 24, or of any other products, of which the Dominican Republic is the principal or an important source of United States imports. The Government of the United States would, of course, expect the Government of the Dominican Republic to give similar consideration in such negotiations to United States products imported into the Republic. With reference to the extent of concessions which might be granted by the United States, it should be noted that, under the authority of the Trade Agreements Act of June 12, 1934,28 the President of the United States may not modify any existing rate of duty by more than 50 percent and may not transfer any article between the dutiable and the free lists.
With particular reference to the request that a quota of not less than 150,000 tons per year be granted for the importation of Dominican sugar into the United States, it may be pointed out that it would not be possible to modify, in connection with a trade agreement, the quota treatment now accorded to sugar originating in the Dominican Republic. The basis and method by which import quotas for sugar are determined have been established by the Congress of the United States, and the President has no authority, under the Trade Agreements Act, to modify those quotas.
As the Government of the Dominican Republic is aware, not only imported sugar but sugar produced in the United States is subject to quota limitations as a part of a program designed to restrict the total quantity of sugar marketed in the United States to an amount necessary to meet domestic consumption requirements. The quotas which have been fixed for the various areas, both domestic and foreign, [Page 507] supplying sugar to the United States market are based upon the extent to which these areas have participated in the trade in past years. Any alteration in these shares in order to enlarge the quota of one area would require corresponding reductions in the shares of other areas.
However, it may be observed that the United States has taken steps, within the framework of this system, to increase substantially the sugar quota allotted to the Dominican Republic.
It will be recalled that during the past several years the Philippine Islands have been unable to fill their quota, and under the Jones-Costigan Act of 193429 the unused portion of this quota was reallocated among all other producing areas. Under the Sugar Act of 1937,30 any unused portion of the Philippine quota was reserved exclusively for foreign countries other than Cuba. That this change is of real benefit to the Dominican Republic is evidenced by the fact that, in 1937, the Dominican quota was increased from 3,334 tons to 32,143 tons as a result of the reallocation of the unused portion of the Philippine quota as well as of the unused portions of the quotas allotted to other foreign countries to which the general rates of United States duties apply. The reallocation to the Dominican Republic of the unused portion of the Philippine quota in 1938 amounted to 7,265 tons. However, 4,677 tons of this amount was forfeited because of the failure to fill the quota by September 1.
Although it would not be possible to modify, in connection with trade-agreement negotiations, the quota treatment now accorded to Dominican sugar, the Government of the United States would be prepared to consider granting to the Dominican Republic in a trade agreement a reduction in the duty on sugar.
With reference to the request made in the memorandum of August 24 for concessions on the importation of certain Dominican products into Puerto Rico alone, it may be pointed out that Puerto Rico is an integral part of the customs territory of the United States and, for this reason, that it would not be possible to consider specific concessions of this nature in connection with trade-agreement negotiations. However, any concessions which might be granted to the Dominican Republic in a trade agreement would be applicable to imports of Dominican products into Puerto Rico as well as into the rest of the customs territory of the United States. Moreover, trade-agreement concessions granted to other countries and extended to the Dominican Republic are also, of course, applicable to Puerto Rican imports of the Dominican products concerned. In this connection, mention may be made of the duty reductions on cattle (paragraph 701 of the Tariff [Page 508] Act of 193031) which were granted to Canada in the present trade agreement with that country and in the new trade agreement signed on November 17, 193832 and provisionally effective on January 1, 1939.
With particular reference to sanitary regulations affecting the importation of livestock into the United States (including Puerto Rico), it is believed that the Government of the Dominican Republic is aware that such regulations are established by the competent technical administrations of the United States Government pursuant to specific provisions of law. Although the Department of State is prepared, of course, to receive such representations or requests for information as the Government of the Republic may wish to make at any time in regard to such matters, it may be pointed out that there is no authority of law by which such regulations might be modified in connection with trade-agreement negotiations.
In commenting upon the proposals which have been made by the Dominican Government, the Department of State has endeavored to clarify the questions raised by those proposals. Motivated by the hope that it may be possible to find a basis for entering into trade agreement negotiations at a reasonably early date, the Department will be very glad to receive the further views of the Dominican Government on the subject.
- Handed to the Dominican Minister by Mr. Harry C. Hawkins, Chief of the Division of Trade Agreements, on December 13.↩
- Signed August 24, 1934, Foreign Relations, 1934, vol. v, p. 169.↩
- Foreign Relations, 1903, p. 375.↩
- Department of State, Press Releases, December 3, 1938, p. 398.↩
- 48 Stat. 943.↩
- Approved May 9, 1934; 48 Stat. 670.↩
- Approved September 1, 1937; 50 Stat. 903.↩
- Approved June 17, 1930; 46 Stat. 590, 631.↩
- Executive Agreement Series No. 149, or 53 Stat. 2348; see also vol. ii, pp. 164 ff.↩