The Chilean Ambassador ( Cabero ) to the Secretary of State

No. 2798/107—
—I have read with greatest interest Your Excellency’s confidential note of December 9, 1939, as well as the Memorandum attached, thereto, relative to the concessions which Your Excellency’s Government is willing to grant in the present tariff treatment accorded to certain Chilean products upon their importation into the United States, and to the concessions in tariff treatment, which Your Excellency would like to have accorded to certain United States products upon their importation into Chile, in the reciprocal Trade Agreement which is the subject of negotiation between representatives of our governments.—
—In the note under acknowledgment, Your Excellency stated that the concessions offered on some products of my country represent the maximum which Your Excellency’s Government finds itself in a position to grant, and that the tariff concessions requested on certain products of the United States have been restricted to a minimum, which could be accepted by my Government without difficulty or delay. You also state that such concessions on products of the United States represent a fair equivalent for the benefits offered to certain Chilean products.—
—Commercial relations between Chile and the United States, although very cordial, have been suffering from various obstacles in the last few years, due to the scarcity of foreign exchange37 available in Chile to cover the cost of the articles which exporters of the United States have desired to send into Chile.—
This lack of exchange has its origin in the balance of payments between the two nations, which is decisively favorable to the United States.—
—One of the most effective means for solving the problem of the scarcity of exchange in Chile, is the increase of Chilean exports to the United States. Approximately 90% of Chilean imports come in here free of duty, and consist of fertilizers, iodine, iron ores, sulphur and other products in minor quantities. The balance of 10% represents agriculture products, which are harvested in Chile at seasons opposite to those in the United States. As is natural, in negotiating a Trade Agreement with the United States, my Government must of necessity request tariff concessions on these latter products subject to duties. From this derives the interest with which I awaited the decision on the tariff concessions asked by this Embassy, and which were transmitted to me in Your Excellency’s note of the 9th, instant.—
—Having thoroughly studied these concessions, as well as the concessions which Your Excellency’s Government has requested on some products of the United States, it would seem that the Trade Agreement under discussion does not have as its main purpose the improvement of the balance of payments between the two nations. In this connection I should like to call attention to some data which it is felt should be taken into consideration in the current negotiations:
  • First. Due to the nature of the products and to reasons of competition with similar domestic articles, exports from the United States to Chile have increased steadily during the last few years notwithstanding the lack of exchange available in Chile, while Chilean exports to the United States diminished in almost 40% during 1938 as compared with the preceding year.—
  • Second.—If we analyze imports of Chilean articles in the United States for which tariff concessions are offered and compare them with exports of United States goods to Chile for which tariff concessions are asked, it may be well noted that while the former amounted to $239,000 in 1928 [1938?] the latter amounted to $1,794,000, not in 1938, but in 1937, when exports of United States articles to Chile had less value than in 1938.—
  • Third.—That in the event such exports from Chile for which tariff concessions are offered are doubled, which does not seem probable, the value of such doubled exports would amount to only 27% of the normal annual exportation to Chile of articles from the United States for which tariff concessions are requested.—
—For the reasons pointed out, and taking into account the difficulty of obtaining any improvement in the balance of payments between the two countries unless substantial tariff concessions are considered for those products which Chile exports to the United States subject to duties, I beg leave to request that Your Excellency be good enough to use your good offices to obtain a reconsideration on the part of the proper authorities of their decisions regarding the following products and their consent to the solicitations indicated:
Spermaceti, reduction in duties to the limit provided for in the law of June 12, 1934;38
Beans, the fixing of an annual quota equal to 3% of the normal domestic production, on the quota of which there will be charged duties reduced by 50%. The present duty corresponds to 100% of the value of the beans and the reduction, in the opinion of this Embassy, will in no way affect domestic production;
Onions, a reduction of 50% in the duty in effect during the months of March and April in which there is no national production.—
Grapes, reduction in the duties in effect to $0.20 per cubic foot during the months of February to June, inclusive, if the agreement with Chile is signed before that which is being negotiated with Argentina.—
Lentils, reduction by 50% in the duty in effect due to the fact that the prices of the Chilean product must depreciate in view of the large surplus now in Chile as a result of the outbreak of hostilities in Europe;
Chick peas, reduction in duties to the limit provided for in the Law of June 12, 1934, for those smaller than 50 grains per ounce of 30 grams;
Garlic, reduction in duties up to the limit of 50%, during the months of February to May, inclusive.—
Binding on the free list of furs, sheepskins, lambskins, tartar, and calcium tartrate.—

Knowing that Your Excellency will give your best attention to these observations, I avail myself [etc.]

A. Cabero
  1. See Foreign Relations, 1937, vol. v. pp. 430 ff.
  2. Trade Agreements Act, approved June 12, 1934; 48 Stat. 943.