Memorandum Handed to the Chilean Ambassador (Michels) by the Chief of the Division of Commercial Treaties and Agreements (Hawkins), August 28, 1941

In the discussions with Chilean officials following the announcement on October 2, 1939, of intention to negotiate a trade agreement, it developed that the Government of Chile desired to except from the operation of the unconditional most-favored-nation clause tariff preferences to contiguous countries. Representatives of the United States Government pointed out that no such exception was contained in the existing modus vivendi with Chile, and explained how extremely difficult it would be for the United States, in view of its long-established commercial policy, to agree to such an exception.

Subsequently this same question arose in connection with the exploratory discussions with officials of the Argentine Government. The attention of the Government of the United States was drawn to Resolution LXXX of the Seventh International Conference of American States at Montevideo, approved December 24, 1933. After careful study, in the light of that resolution, the Government of the United States agreed, as part of the basis for the public notice of May 13, 1941 of intention to negotiate a trade agreement with Argentina,3 to an exchange of notes providing that if, pursuant to the resolution, the Inter-American Financial and Economic Advisory Committee should recommend a contractual formula for preferences to contiguous countries identical with the one submitted to that Committee on July 31, 1941 jointly by the representatives of the Governments of Argentina and Brazil, the Government of the United States [Page 604] would not invoke the provisions of Article I (most-favored-nation treatment) of the proposed trade agreement between the United States and Argentina for the purpose of obtaining the benefit of tariff preferences conforming to the contractual formula which Argentina might accord to a contiguous country, it being understood, of course, that if any such preference should be extended by Argentina to any noncontiguous country it would be extended immediately and unconditionally to the United States. However, this agreement on the part of the United States was conditioned upon the inclusion in a Final Minute of the negotiations assurances by the Argentine Government that, prior to according any such preference, with respect to any product of interest to the United States, it would in practice afford the Government of the United States adequate opportunity for consultation through the medium of a mixed commission to be established under the provisions of the proposed trade agreement.

Similar provisions are included in the new proposals relative to a trade agreement which are now submitted by the Government of the United States to the Government of Chile.

The contractual formula now under consideration by the Inter-American Committee, and the collateral understandings in regard thereto mentioned above and described fully in the aide-mémoire containing the new trade-agreement proposals to the Government of Chile,4 represent the full extent to which the Government of the United States feels that it can go, in view of its established commercial policy, toward meeting the request of the Government of Chile for an exception in favor of tariff preferences to contiguous countries.

  1. For correspondence concerning a reciprocal trade agreement with Argentina, see pp. 387 ff.
  2. Not printed; the aide-mémoire gave in detail the proposals of the Department for the renewal of trade agreement negotiations with Chile (611.2531/687b).