Memorandum of Conversation, by Mr. H. Gerald Smith of the Division of Commercial Treaties and Agreements

Participants: Señor Rodolfo Michels, Chilean Ambassador
Mr. Hawkins
Mr. Fowler1
Mr. Smith

The Ambassador called by request and was handed a memorandum2 embodying proposals by this Government looking toward the renewal of trade-agreement negotiations with Chile.

Mr. Hawkins outlined the principal points included in the new proposals and reviewed the situation preceding the time in 1940 when the negotiations became inactive. It was pointed out to the Ambassador that changed conditions now made it possible for this Government to indicate to the Chilean Government the possibility of improving the offers which had previously been made on Chilean products imported into the United States. These included the possibility of a concession on copper, which had been withdrawn from the earlier negotiations, and on certain other commodities on which it had not previously been found possible to offer any concessions. Mr. Hawkins also commented on two of the principal points in the general provisions on which no agreement had been reached in the earlier negotiations: the article on exchange control and the question of customs preferences by Chile to contiguous countries. With respect to the exchange control article, Mr. Hawkins pointed out that we were withdrawing our previous proposal which called for making exchange available without delay for all permitted imports into Chile from the United States and were proposing in its place an article which would provide merely for most-favored-nation treatment. With respect to the question of preferences by Chile to contiguous countries, particular emphasis was placed by Mr. Hawkins on the fact that, as the Ambassador was probably aware, the Secretary of State had always vigorously supported the principle of unconditional most-favored-nation treatment. As a result, however, of our recognition of the fact that we had supported Resolution LXXX at the Montevideo conference in 1933 on Commercial Advantages between Neighboring States, we had in connection with our trade-agreement discussions with Argentina somewhat receded from our original position to the extent of agreeing to a contractual formula under which we would not claim most-favored-nation treatment in the [Page 603] case of preferences granted under certain conditions in trade between contiguous countries. It was recalled to the Ambassador that this was the formula which had been presented by Argentina and Brazil to the Inter-American Economic and Financial Advisory Committee and which was now under consideration by that group.

The Ambassador was requested to treat the new proposals as strictly confidential in advance of any public announcement by this Government of trade-agreement negotiations which might result from reopening discussions with Chile. The Ambassador stated that he would study the proposals and call Mr. Hawkins in a few days with a view to bringing in the Commercial Counselor of the Embassy for a more detailed discussion of the matter.

  1. William A. Fowler, Assistant Chief of the Division of Commercial Treaties and Agreements.
  2. Not printed.