812.24/3946
The Secretary of State to the Ambassador in Mexico (Messersmith)
Sir: Reference is made to the Embassy’s despatch no. 15,954 of February 17, 194473 which, in a discussion of the relation of import tariffs to the development of industries in Mexico, refers to remarks made by the Mexican Minister of Finance, Señor Suárez, on the subject of competition of United States products with domestic products in the post-war Mexican market. In substance, Señor Suárez has said that the shipment of large quantities of United States products to Mexico at prices with which Mexican producers cannot compete constitutes “dumping”, a situation with which the Mexican Government is prepared to deal by various means, including action under the trade agreement between the two countries.
It seems apparent that Señor Suárez would regard as dumping any condition under which the United States products undersell similar Mexican products in the markets of Mexico. In the view of this Government, and in its generally accepted meaning, the term “dumping” is used to signify sales for export at lower prices than those charged buyers in the domestic market at the same time and under like circumstances. Thus, the selling price of products in markets of the United States, compared with prices quoted for export of the same products to Mexico, rather than a comparison of prices of United States products and similar Mexican products in the Mexican market, would be a basic consideration for an examination by this Government of a charge by the Mexican Government that products of the United States were being dumped in the markets of Mexico.
[Page 1221]In conversations with officials of the Mexican Government regarding tariffs and related problems, you should lose no opportunity to make known to them the foregoing view of this Government with respect to dumping, pointing out that dumping should not be confused with ordinary competitive conditions. There is enclosed a mimeographed copy of the United States Antidumping Act, 192174 which defines dumping and provides legislative means for determining and combatting the condition. This may be useful in your discussions of the subject with Mexican officials.
You may, in your discretion, refer to the marketing problems related to the products mentioned in the despatch under reference and point out that if United States steel manufacturers, for example, should find it possible in the post-war period to ship steel products to Mexico in response to demand, and sell them at prices lower than those at which similar Mexican products can be sold, this Government would not, per se, consider that such products had been dumped in the Mexican market.
It will be noted that this instruction deals with only one aspect of the problem which is developing in the relationship between the establishment of industries in Mexico and pressure for further tariff protection, that is, with the apparent lack of understanding of the term “dumping”. The broader aspects of the problem will be made the subject of a separate instruction.
Very truly yours,