811.20 Defense (M) Chile/596: Telegram
The Ambassador in Chile (Bowers) to the Secretary of State
[Received November 25—1:35 a.m.]
1986. For FEA,34 Food Purchase Program. The Minister of Economy and Commerce today informally approved the following overall agreement. Please note that the principal changes in the draft desired by Washington are the following: That the Chilean Government is permitted to supply all other American countries without limitation of price, and that the American Government agrees to try to get additional agricultural machinery and repairs for Chile. It is suggested that this overall agreement receive early consideration and that Santiago be notified promptly whether it is acceptable and what changes if any are desired. As has been indicated from the outset, prices to be paid constitute the primary factor and they should be resolved promptly. The approved draft agreement is as follows:
“I have the honor to set forth below the understanding of my Government as to the principles and procedures which constitute the program heretofore under discussion between our Governments for the acquisition by an agency of the United States of certain agricultural commodities in Chile.
- [“]1. The Government of the United States of America and the Government of the Republic of Chile recognize the importance to the prosecution of the war, the defense of the Western Hemisphere and the early achievement of stable conditions throughout the world, of increasing to the largest extent compatible with Chilean economy, the production in Chile of those essential agricultural commodities covered by this agreement and which are to be used for the furtherance of the war effort. It is recognized that the attainment of the desired objective implies a broad program of coordinated effort by our respective Governments in the manner hereinafter stated and as may otherwise be later agreed upon.
- “2. The Government of the United States agrees to buy through the medium of a designated agency the exportable surpluses of certain agricultural commodities produced in Chile up to September 1, 1945, resulting from the crops of 1943–1944 and 1944–1945 as stipulated in Schedule A (attached)35 of products, specifications, prices and conditions. Schedule A shall accompany and form a part of this agreement as soon as it is approved by our respective Governments. Exportable surplus is understood to mean the complete productions [Page 858] of the products enumerated in Schedule A, less the amounts thereof necessary for Chilean consumption, the quantities retained for germination seed and those exports necessary for the internal consumption of those countries of America which normally import from Chile. The Government of Chile will take every precaution to see that such exports are not used for stockpiling or reexportation. In the event that actual requirements for Chilean consumption or for germination seed or to meet the internal needs of other American Republics are less than the amounts estimated therefor the differences shall be a part of the exportable surplus. The United States Agency shall be free without prior consultation with the Chilean Government to sign contracts for future deliveries and make spot purchases of the products mentioned in Schedule A within the limitations of the exportable surplus as defined herein. Full performance to the United States Agency may be made of all contracts entered into within the foregoing procedure.
- “3. The Government of the Republic of Chile will do everything possible to augment the production of the articles covered by this agreement including publicizing and supporting the program throughout the country. Further the Government of Chile for the same purpose will adopt a special program contemplating financial aid to farmers for providing seeds, fertilizer, machinery and also technical advice and supervision. The Government of the United States on its part will assist in obtaining the necessary licenses for the exportation to Chile of the agricultural machinery and repair parts necessary to obtain the augmentation of the crops of the articles covered by this agreement.
- [“]4. The Government of the Republic of Chile will try to avoid the levying of new imposts, contributions, taxes and charges of any nature which could affect directly or indirectly the prices of the ‘exportable surplus’. Nevertheless prices shall be subject to mutual revision on August 1, 1944 for the purpose of bringing them in line with the cost of production or other factors which have altered and justify a change in prices.
- “5. Export licenses will be promptly granted for the movement of all Schedule A commodities acquired by the United States agency under this agreement and the Government of the Republic of Chile agrees that each year, prior to the beginning of the harvesting of the scheduled crops in producing regions, it will establish and announce the amount of each of these commodities needed from these crops to meet the requirements of Chile for germination seed and for internal consumption, making due allowance for the carryover from the previous seasons. It will likewise establish and opportunely announce to the Embassy of the United States the amount of each of the commodities for which export licenses will be issued to cover shipments to other American countries for their internal consumption, and will inform the Government of the United States, through its Embassy at Santiago, of all proposed shipments to other American countries.
- “6. The designated agency of the United States will be considered as a governmental agency free from taxes, contributions and other obligations which are ordinarily applied to private [interests?] doing business in Chile and it will be permitted to hold real and personal property.
- “7. It is understood that this note and Your Excellency’s reply36 thereto shall constitute an agreement effective this date between our two Governments, that the notes in English and Spanish are identical, mutatis mutandis, and of equal force, and that the agreement shall continue until September 1, 1945, unless ended sooner or extended by mutual agreement. It is mutually understood that contracts made within the terms of this agreement shall be effective until December 31, 1945.
“Accept, Excellency, the renewed assurances of my highest and most distinguished consideration.”