Memorandum of Conversation, by the Assistant Chief of the Division of Commercial Policy (Smith)

Sr. Illanes84 called at the Department and left with me the attached memorandum.85 I told him that I was greatly surprised that the Department had apparently not received from the Embassy at Santiago the proposals referred to, but that, following his brief telephone message on May 3, a telegram had been sent to Santiago inquiring about the matter and that an answer was momentarily expected. I also mentioned that I had spoken to Fernando Illanes86 at Mexico City during the recent Conference, and he mentioned that proposals had been given to the American Embassy by the Chilean Foreign Office.

The Commercial Counselor expressed the opinion that the recent action which had had the effect of increasing Chilean import duties had been self-defeating, in that the increases had been so large that trade had been stifled and government revenues from tariffs on the affected items had therefore declined.

Sr. Illanes emphasized that the current proposals of the Chilean Government were not in the nature of counter-proposals to those which this Government had presented many months ago for a formal trade agreement; that the current proposals merely suggested a broadening of the existing modus vivendi87 which would provide for a number of tariff reductions by Chile without a specific quid pro quo by the United States. Sr. Illanes inquired whether an agreement of this type could be concluded quickly and without reference to the authority of the Trade Agreements Act.88 I told Sr. Illanes that [Page 829] from the picture as he had given it to me it would seem that such an agreement could be concluded as an executive instrument by this Government without reference to the Trade Agreements Act, as no changes in the United States tariffs were involved.

I told Sr. Manes that I would get in touch with him as soon as we had heard from the Embassy at Santiago and that we would, of course, give the Chilean proposals our active and sympathetic attention as soon as they had been received from Santiago.

  1. Chilean Commercial Counselor.
  2. Not printed.
  3. Secretary, Chilean Economic Controls Commission, and a delegate to the Inter-American Conference on Problems of War and Peace held at Mexico City February 21–March 8, 1945.
  4. Provisional commercial agreement between the United States and Chile effected by exchange of notes signed at Santiago on January 6 and February 1, 1938; for text, see Executive Agreement Series No. 119, or 52 Stat. 1479. For documentation regarding this agreement, see Foreign Relations, 1938, vol. v, pp. 421 ff.
  5. Approved June 12, 1934, 48 Stat. 943, and subsequently renewed.