Foreign Relations of the United States Diplomatic Papers, 1938, The American Republics, Volume V

617.003/243: Telegram

The Secretary of State to the Minister in Nicaragua (Long)

Washington, February 1, 1938—5 p.m.

8. Department’s No. 6, January 24. 1. As indicated in telephone conversation Thursday, the Department feels that the most desirable method whereby Nicaragua would be permitted the freedom of action it wishes with regard to the collection of customs duties on Schedule I products would be to terminate the provisions of the Agreement relating to the rates of duty in the two schedules. If this procedure meets the desire of and is acceptable to the Nicaraguan Government, you may submit to the Foreign Office the following text of an exchange of notes effecting the termination of the pertinent provisions of the agreement:

Note to be addressed by the Nicaraguan Government to you:

“Reference is made to recent conversations which have taken place with regard to the desire of the Government of Nicaragua, in view of the emergency financial conditions with which it finds itself confronted, that the trade agreement between the Republic of Nicaragua and the United States of America, signed at Managua on March 11, 1936, be modified in certain respects.

I now have the honor to confirm and make of record by this note the agreement which, as a result of the conversations referred to, has been reached between the Government of Nicaragua and the Government of the United States that the provisions of Article I, the first paragraph of Article II, Article III (except insofar as it relates to Note I to Schedule I appended to the Agreement), and Article V of the Agreement of March 11, 1936, shall cease to have force and effect on and after (blank date).

The Government of Nicaragua will be pleased to enter into negotiations with the Government of the United States, at the earliest practicable date, for the renewal or⁷ replacement of the provisions of the above-mentioned Articles of the Agreement of March 11, 1936.”

The note to be addressed by you to the Nicaraguan Government would be identical with the foregoing mutatis mutandis, except for the last paragraph which would read as follows:

“The Government of the United States has noted with pleasure the willingness of the Government of Nicaragua to enter into negotiations, at the earliest practicable date, for the replacement of the provisions of the above-mentioned Articles of the Agreement of March 11, 1936.”

2. The date on which the exchange of notes would take effect would be 30 days after their exchange.

3. It will be necessary for the Department to make public the notes terminating the tariff concessions in the Agreement. Mention has been made in the notes of the circumstances giving rise to the termination in order to avoid the necessity for detailed explanation in the press release which will accompany the publication of the notes. The Department believes that the Nicaraguan Government will agree that it will be desirable to avoid giving undue emphasis to these circumstances.

4. With reference to the last paragraph in the draft notes, you should say to the Nicaraguan authorities that the Department regrets that termination of the tariff concessions in the trade agreement appears to offer the only practicable solution of the present problem. It is accordingly felt that it would be most desirable if the notes were to give some indication that the action taken is not necessarily of a permanent nature. You should further state that this Government would not regard the last paragraph of the Nicaraguan note as constituting a commitment on the part of the Nicaraguan Government, but rather as a welcome indication by that Government of its willingness to enter into new negotiations whenever it feels that it is in a position to do so.

5. Please inform the Department whether the foregoing procedure and the notes are acceptable to the Nicaraguan Government. If acceptable, the Department will advise you as to the day on which you are authorized to proceed with the exchange.

6. There will be no increase in United States duties applicable to Nicaraguan products as a result of the termination of the tariff concessions in the Agreement. The Department assumes from your reports that the Nicaraguan Government does not contemplate an increase in the basic rates of duty specified in Schedule I of the trade agreement, but rather an increase in the rate of conversion between the paper cordoba and the gold cordoba. Please obtain confirmation of the Department’s understanding, if correct, and ascertain whether the Nicaraguan Government would have any objection to a statement to this effect in our press release.

7. With reference to your telephone conversation Thursday, the Department considers that the provisions of Article XI of the trade agreement requiring 30 days’ advance notice of administrative rulings effecting advances in rates of duty or in charges applicable to imports apply to the contemplated increase in the amount of paper cordobas to be collected per gold cordoba, as regards both schedule and non-schedule products.

Hull

7. The words “renewal or” were inserted in accordance with Department’s telegraphic instruction No. 9 of February 3, 5 p.m., to the Minister in Nicaragua (617.003/249).