Memorandum of Conversation, by Mr. H. Gerald Smith of the Division of Trade Agreements

Señor Gazitúa called at the Department at my request in order to conclude discussion of a few points outstanding from the series of conversations held on February 20, 21 and 23, 1940 regarding the general provisions of the proposed trade agreement.

Señor Gazitúa stated that he had delayed both in submitting a report to his Government on those conversations and in coming in to discuss the few points which had not been covered, as he desired to await the decision in Congress regarding the renewal of the Trade Agreements Act. I told Señor Gazitúa that a report had been prepared for the Trade Agreements Committee based upon the conversations in Santiago in January and in the Department in February, but the committee had not yet considered it.

In accordance with a previous promise, I supplied Señor Gazitúa with a brief memorandum explanatory in so far as the United States was concerned, of the phrase appearing in Article XVII of the draft general provisions regarding the “constitutional limitations on the authority of the Federal Government”.

With regard to Article X on compensating taxes, I reviewed again with Señor Gazitúa the Spanish translation which he had prepared together with a revision which had been made by the authorities in Santiago. It was pointed out to Señor Gazitúa that although the authorities in Santiago had evidently understood the meaning of the final phrase, it was believed that his translation was more clear than that supplied by his Government, and it was, therefore, suggested that his phrasing be utilized.

I discussed the provisions of Article II on internal taxes at some length with Señor Gazitúa, and said that although, as briefly mentioned to him, the possibility would be submitted to the Trade Agreements Committee of excepting from national treatment in Chile for American products the tax imposed by Law 5786 as amended by Law 5991, we were concerned by the presence in the Cuban-Chilean Treaty18 of a clause which guaranteed all Cuban products national [Page 681] treatment on internal taxes without any exceptions. I mentioned to Señor Gazitúa that inquiry had been made of our Embassy at Santiago whether in practice products imported from Cuba which were subject to that tax received substantially the same treatment as similar domestic articles. It was mentioned that a reply had not yet been received from the Embassy and Señor Gazitúa said that he did not know whether Cuban products in practice received such treatment. I informed Señor Gazitúa that if the information we were awaiting from Santiago showed that Cuban products were in practice receiving the equivalent of national treatment under Laws 5786 and 5991, there would probably be considerable resistance to our agreeing to an exception from national treatment in the case of that particular tax. I told Señor Gazitúa that a further inquiry would be made of the Embassy today in order to expedite a reply, following which an effort would be made to have the Trade Agreements Committee consider the Chilean general provisions at an early date. Señor Gazitúa was informed that the decision of the Trade Agreements Committee on the various points outstanding would be communicated to him as soon as possible and he stated that he would delay submitting any report until he had learned and could communicate to his Government the decision of the Trade Agreements Committee.

[The Department’s files reveal no further negotiations for a trade agreement with Chile during the remainder of the year.]

  1. Treaty of Commerce and Navigation, signed at Habana, March 13, 1937, League of Nations Treaty Series, vol. cxcv, p. 389.