611.2231/449
The Minister in Ecuador ( Long ) to the Secretary of State
[Received June 12.]
Sir: In reference to the Department’s telegram No. 60 of June 5, 5 p.m., I have the honor to report that when the message was decoded last evening, it was not possible to reach the Minister for Foreign Affairs, but Mr. Ricardo Ortiz, Director General of Commerce and Consular Affairs called at the Legation to discuss the points mentioned in the Department’s telegram. Mr. Tewksbury50 also attended this discussion and the conference this morning at the Foreign Office.
During the exchange of views last evening Mr. Ortiz appeared to be in entire conformity with the substance of the Department’s telegram, but pointed out that the proposed changes in customs duties on non-schedule items were very extensive and would be far too long to cable. He was of the opinion that the effective date of both the decree covering quotas and that covering duty increases, could be delayed a few days to permit the material to be forwarded by airmail.
This morning in our conference with the Minister for Foreign Affairs and the Minister of Finance,51 the substance of the Department’s telegram was discussed in detail.
Quota Restrictions
It was definitely agreed that the quotas should be established on the basis of the volume of imports, either weight or units. A strenuous effort was made to have the Ecuadorean Government establish global quotas for each of the nine items, without allocating quotas for individual supplying countries. Both Ministers felt that this might give rise to complaints from other countries if, for instance, all of a given quota were filled by one country. After a complete discussion of the matter, it was agreed that the individual commodity quotas would be [Page 867] divided in three units, each applicable for a two-month period. In case one unit could not be supplied by a given country in the specified two-month period, this would be divided among the other supplying countries in the succeeding period or periods.
Although this is not strictly as requested by the Department, it is believed that the provision for transferring unused quotas to actual supplying countries in subsequent periods will, to a large degree, protect the interests of American exporters. Both Dr. Tobar and Mr. Freile52 felt that it would be advantageous to have imports low in July and August and let them increase in succeeding months if a given quota could not be filled. This was another argument on their part for assigning quotas to individual supplying countries.
In view of the additional work involved in arriving at quotas for individual countries, Dr. Tobar felt that the effective date should be advanced somewhat. He therefore suggested that this be fixed for June 15, and said that his Government would withhold announcement until that time and that it would be agreeable for the Department to make the announcement in the United States as of the same date.
Dr. Tobar has furnished us with a copy of the proposed decree establishing import quotas, a copy of which, with translation, is attached.53 Both Ministers indicated that additional products, not appearing on Schedule I, of our Trade Agreement, might also be made subject to quota regulation, but that in that case the products would be covered in a separate decree.
Both Ministers stated that, with the advance in the effective date, it would probably be possible to complete the “regulations” for the administration of the decree in time to include the entire announcement at one time. Dr. Tobar offered to consult with us regarding the provisions of the regulations, which will include specific data regarding the exact quotas for the various products.
Tariff Changes
With respect to the Department’s request that details of the proposed tariff changes on non-schedule items be supplied by telegraph, it is found that these changes are so extensive that this is impractical. It was suggested this morning that if possible, the effective date of this decree be made to conform with the date of the decree covering quota restrictions. The Minister of Finance indicated that the President was very insistent that the duty changes be made effective immediately and that the plan had been to make this effective on June 10. He, however, agreed to discuss this matter with the President at noon to see if it could be made effective on June 15.
[Page 868]Both Ministers were agreeable to the Department’s suggestion that the duty changes should not apply to products on which the Consular documentation was made prior to, or on the effective date of, the decree.
The Minister of Finance furnished us late this afternoon a copy of the proposed decree modifying duty rates. This was received too late to make a translation or additional copies, and we are, therefore forwarding the only copy received. The decree provides both for increases and decreases in the rates of duty applicable to a large number of items in the tariff schedule. It will be noted that among the items included are several which appear in Schedule I of the Trade Agreement. Since there was no indication in the draft of the decree that exemption would be made in the case of increases to products imported from the United States, an attempt was made to see the Minister of Finance this afternoon.
As he was not in his office, we called on the Minister for Foreign Affairs, who informed us that the draft as supplied by the Minister of Finance did not include the general provisions of the decree, but that he had definitely seen the provision which safeguarded items appearing in Schedule I from any of the specified duty increases.
Dr. Tobar indicated late this afternoon that the decree changing the duty rates would probably also be made effective June 15. Therefore, no announcement should be made of these changes until we are able to notify the Department by telegraph definitely as to the effective date.
Respectfully yours,