The Ambassador in Chile ( Bowers ) to the Secretary of State

No. 12,078

The Ambassador has the honor to transmit herewith89 copy of a proposal by the Chilean Government to grant the United States, for a period of one year or until a new trade agreement between the two countries may be consummated, a number of tariff concessions formerly granted by Chile to France. The proposal was received by the Embassy on April 21 but its transmission to the Department has been unavoidably delayed by the difficulties in obtaining data on Chile’s imports for periods subsequent to 1942 showing the extent to which exports from the United States and other countries would benefit from the proposed concessions.

It will be observed that the Chilean Government declares that it desires to adopt measures designed to expand trade with the United States and other Allied nations in accordance with a policy of mutual concessions and close cooperation and thereby effectively implement the principles sponsored by the United Nations and the economic objectives of both the Atlantic Charter90 and the recent Mexico City Conference.

It will be further observed that Chile, ostensibly as a gesture of appreciation of the frank and loyal cooperation manifested by the American delegation in connection with the agreements concluded at Mexico City, states that it is disposed at this time to grant import duty reductions without seeking any concessions in return.

Without any thought of questioning the reasons advanced by Chile for proposing duty reductions at this juncture, the Embassy feels that it should point out that the abrogation of the Franco-Chilean Commercial [Page 830] Convention92 in February of this year combined with the increased gold customs surcharge on imports, which became effective at the beginning of 1945, have resulted in the Government being roundly criticized by the press and various influential organizations for raising the cost of merchandise on one hand while on the other it is allegedly making every effort to control and reduce prices within the country. In addition, the Government has been subject to strong pressures by persons in private and commercial life to adopt measures of relief. Importers of the products formerly favored by the preferential duties of the Franco-Chilean Commercial Convention, have threatened not to clear their shipments from the customs claiming they would rather abandon the merchandise or return it to the country of origin than pay the higher imposts.* The Government, consequently, is faced with a loss of customs revenues. These considerations, the Embassy is convinced, have strongly influenced the decision to propose reductions in certain import duties.

For the information and guidance of the Department, there is enclosed such statistical material as the Embassy has been able to compile from official sources on the products imported into Chile in 1943 under 76 of the 82 tariff items which would be subject to lower rates. No figures have been obtainable on six items, namely, numerals 371, 378, 379, 380, 381 and 383, all covering cotton textiles. There is no detailed statistical information on the 82 tariff items for 1944.

The total value in gold pesos of the imports corresponding to the 76 tariff items is 34,603,286 gold pesos. The leading supplier was Great Britain with 15,351,285 gold pesos followed respectively by the United States with 7,525,419 gold pesos, Brazil with 6,022,767 gold pesos, and Argentina with 4,349,515 gold pesos. All other countries account for only 1,355,300 gold pesos. Brazil followed by Great Britain were the principal suppliers of the cotton textile items on which no figures have been obtainable. If statistical information for 1943 were available for all 82 tariff items it would no doubt show the position of the suppliers to be Great Britain first with Brazil a close second, followed by the United States in third place and Argentina holding fourth place.

An agreement in force between Chile and Great Britain, and treaties between Chile and Brazil and Argentina give these countries most [Page 831] favored nation treatment. Assuming that during the next 12 months they retain the positions held in 1943 as Chile’s suppliers of the tariff items subject to concessions then the proposed Chilean duty reductions would prove to be more important to British and Brazilian trade than to the commerce of the United States.

It will be observed that the Chilean Government states that a note in acknowledgment of the note containing its proposal would constitute an agreement in the matter, and that the agreement would be construed as broadening the existing modus vivendi.

After the Department has had the opportunity to consider the Chilean proposition, the Embassy would appreciate receiving its views and a draft text of a note of acceptance of the Chilean proposal in the event it is believed that an agreement can be consummated in the manner that has been suggested.

  1. Enclosures not printed.
  2. For text, see Foreign Relations, 1941, vol. i, p. 367.
  3. British and Foreign State Papers, vol. cxxxv, p. 1.
  4. See Embassy’s Despatch No. 11,976 of March 15, 1945, entitled “Additional data on effects of cancellation of French-Chilean Commercial Convention and increase in customs surcharge”, file No. 631/630. [Footnote in the original. Despatch 11,976 not printed.]