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

No. 157

Sir: Reference is made to your despatches nos. 588 of July 28 and 614 of August 18, 1939 and to the Department’s telegram no. 39 of August 7, 193952 regarding the results of the trade agreement between the United States and Ecuador, particularly with respect to the effect upon the revenues of the Ecuadoran Government of the concessions granted on various products imported from the United States.

For your own information, the Department considers that the circumstances in Ecuador under which the agreement has operated since its effective date have in large measure served to defeat the purposes for which the agreement was negotiated. The concessions granted by Ecuador were intended to stimulate exports from this country and to protect American trade in the commodities affected against less favorable treatment during the life of the agreement, but since the effective date of the agreement import restrictions have been in effect in Ecuador apparently both arbitrary in their application and in conflict with those terms of the agreement providing for methods of applying such restrictions should they be found necessary for any of the reasons stated therein. Any comparison of imports into Ecuador before and after the effective date of the agreement would not, under such circumstances, appear to be of any particular value. Had there been no form of import control in effect in Ecuador during the period of the agreement, or even had such control been applied in accordance with the terms of the agreement, it would then of course be useful to analyze imports into Ecuador from the United States prior and subsequent to the effective date of the agreement.

With regard to the effects of the trade agreement upon imports into the United States from Ecuador, on which you have requested statistical data, the concessions which this Government was in a position to offer in the trade agreement consisted, as you know, almost entirely of bindings upon the free list, the single exception of importance being the reduction in duty granted on so-called Panama hats. The binding free of duty of important Ecuadoran export products was of course of value to Ecuador in assuring continuance of such favorable customs treatment. Nevertheless, concessions of such a nature could not in themselves have been expected to facilitate larger exports of the commodities affected from Ecuador to the United States. Increases in imports of articles on this country’s free list depend primarily upon improved purchasing power in the United States, which is in turn dependent upon general economic conditions. The comments above are for your confidential information.

[Page 632]

In view of the foregoing, the Department does not desire that the question of the results of the trade agreement be taken up with the Ecuadoran Government at this time. Should officials of that Government raise the question, you should request them to convey their views in the form of a note or memorandum, which should be transmitted for consideration by the Department.

Very truly yours,

For the Secretary of State:
Henry F. Grady
  1. None printed.