The Ambassador in Chile ( Bowers ) to the Secretary of State

No. 97

Sir: I have the honor to refer to the Department’s instruction No. 22 of October 11, 1939, with reference to the consideration by the Chilean Government of the general provisions of the projected Chilean-American trade agreement, on which it is understood that the Counselor of the Chilean Embassy at Washington submitted a report to his Government in August.

On consultation with Señor Cayetano Vigar, Chilean Under Secretary of Commerce, it is learned that the latter has now received a copy of the current text of the “standard” general provisions. He has undertaken to study these at once, omitting the provisions respecting exchange and quotas, and he hopes to transmit his comments to the Chilean Embassy at Washington within the next week or so if possible. It is assumed that the general provisions as reported by Señor Gazitúa in August have now been superseded, so that comments on the revised provisions will be more suitable. In connection with approving the announcement of intention to negotiate the agreement the Chilean Minister for Foreign Affairs indicated to Mr. Frost on September 30th a general acceptance of the provisions proposed [Page 424] by Señor Gazitúa; but this attitude was not based upon any detailed study here, and the latter is now being made by Under Secretary Vigar.

Señor Vigar raised no objections in respect to the Department’s intention of negotiating the agreement at Washington, and appeared to understand the difficulties which the Department would encounter in detailing officers to Santiago in order to pursue the negotiations here. It is believed, however, that he plans to follow the course of the discussions rather closely; and if this Embassy can be of service at any time I should of course be glad to receive instructions. A copy of the current text of the standard general provisions might perhaps be helpful to the Embassy, and is presumably being forwarded by the Department.

It may be of interest to report that Señor Vigar, while appreciating the value of the trade agreement, does not anticipate that a sufficient volume of Chilean agricultural exports to the United States can be built up to correct radically the Chilean shortage of international exchange. He referred to the relative smallness of the fruit trade, and to the fact that dried vegetables have not been needed in large quantities by the United States; and he also volunteered the statement that it can hardly be expected that the United States will take Chilean copper in quantities sufficient to affect adversely the American copper industry. His mind is still running on the necessity of promoting industries within Chile which will obviate certain of her imports of manufactured goods; and he spoke particularly of ship-building in this connection. He feels that it will be difficult for Chile to purchase new vessel tonnage abroad at prices which she can afford; while she already possesses a rudimentary ship-building industry, with many of the elements which could justify its expansion. It appeared that he has not yet held extensive conversations with Señores García and Pedregal of the Fomento Corporation, since his return; but he apparently plans to advocate industrial developments, as indicated, in early discussions with them.

I shall endeavor to keep in contact with Señor Vigar to ensure his prompt submission to the Chilean Embassy at Washington of the comments desired by the Department, and will report from time to time as the situation develops.

Respectfully yours,

Claude G. Bowers