611.2231/242

The Consul General at Guayaquil ( McDonough ) to the Secretary of State

[Extracts]
No. 708

Sir: In continuation of Minister Long’s despatch no. 29 of May 21, and of my despatch no. 704 of May 23,13 I have the honor to report that I have had a very satisfactory interview with Señor Luis Alberto Carbo, a member of the National Economic Council, on the subject of the trade agreement negotiations with Ecuador.

I explained the status of the negotiations to him and exhibited the tentative proposed Schedules I and II, emphasizing that Schedule I has not been approved by the Department and that neither is in final form. I explained to him reasons why the proposed trade agreement seems to be desirable from an Ecuadoran point of view.

Sr. Carbo agreed heartily with the idea of the proposed trade agreement and expressed surprise that so much progress had been made. [Page 519] He had believed that there were unsurmountable difficulties in the way of the agreement in view of the fact that negotiations were carried on for so long a time without final success.

His opinion is that Schedules I and II should be put into final form as approved by the Department and that they, together with the general provisions of the trade agreement, should be submitted to the National Economic Council. He suggested how final points in the negotiations might be settled.

The text of the proposed general provisions for inclusion in the trade agreement was exhibited to him and Dr. Banda’s objections to some of them were mentioned. The opinion of Sr. Carbo is that formulas can probably be found for reconciling seemingly conflicting points of view on some or all of the articles. He pointed out that the proposed text of Article 8 says that no prohibitions, import or customs quotas, import licenses, etc., shall be imposed by Ecuador, and that, as this country already has such a control system, an agreement might be signed if the United States is willing tacitly to accept its existence, and that the same is true of Article 8. Further, he stated that the questions or objections raised by Dr. Banda must have been raised in successful negotiations by the United States with other countries which have import or exchange controls and other similar conditions or problems. The text of the trade agreement with a Central American country was exhibited to him during our interview to show that the proposed text of the agreement with Ecuador is that which has been adopted with other countries.

Some of Dr. Banda’s objections are regarded by Sr. Carbo as not of great importance as the proposed Schedule I covers only a small number of articles and most of them are typical American products in which foreign countries are not much interested and upon which they would not gain much benefit. The fear expressed by Dr. Banda was that the extension to other foreign countries of the benefits of the proposed agreement with the United States would affect a very large portion of the total import trade of Ecuador.

. . . . . . . . . . . . . .

When the proposed text of the agreement and the two schedules are ready to be submitted to the National Ecomonic Council, it is believed that the opinion of Sr. Carbo will undoubtedly be favorable. He is the economic expert of the Central Bank of Ecuador and is recognized as one of the outstanding authorities upon economic and financial subjects in Ecuador. His opinion should carry great weight with other members of the Council.

As Dr. Banda decided not to submit the proposed schedules to the National Economic Council until a draft of the general provisions could be attached, nothing is now pending before that body upon which Sr. Carbo could express a formal opinion.

[Page 520]

This despatch is being written without any new instructions from the Legation. It is not known if any important developments have occurred in the negotiations at Quito since my departure from that city on May 22.

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Respectfully yours,

Dayle C. McDonough
  1. Latter not printed.