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

No. 13193

Sir: I have the honor to transmit herewith the Spanish text and an unofficial translation of the Chilean reply10 to the Department’s Memorandum concerning the pending trade agreement between the United States and Chile, which Memorandum was forwarded with [Page 843] the Department’s instruction No. 5160 of September 28, 1945. The chief points covered in the Chilean reply which is dated December 10, 1945, were telegraphed to the Department today as Embassy’s 1544 of December 12.10

Since the Chilean reply memorandum is self-explanatory and the gist thereof has been telegraphed to the Department, no further detailed comment seems necessary from this end until an opportunity is had to discuss some of the more important points again with the Chilean Foreign Office. As mentioned in Embassy’s telegram No. 1544, a possible source of difficulty could arise with respect to the point made by the Chilean Foreign Office to the effect that the list of United States products for which concessions are to be sought should be drawn up with a view to benefiting Chilean economy and without causing any considerable decrease in Chilean customs revenues. However, the insertion of the words, “en lo posible” (as far as possible) may be considered as rendering this proposed condition fairly innocuous. Otherwise it might be necessary for the United States to select its own list of products from the standpoint of conformity to the Chilean exchange control system rather than from that of principal products in United States trade with Chile. The Embassy will endeavor to discuss this and other pertinent points with the Foreign Office at the earliest opportunity, and will inform the Department of any further developments in this connection. Obviously the past record of Chile with respect to the manipulation of its exchange control system to protect domestic industries does not inspire confidence, but it is hoped a satisfactory understanding can be reached even on this phase of our commercial relations with Chile.

So far as the Embassy can perceive at this time, the Chilean reply appears to be highly satisfactory. There is undoubtedly a sincere desire on the part of the Chilean authorities to conclude a trade agreement with the United States as soon as possible. The Foreign Office has stated to Embassy representatives that a trade agreement of some kind is regarded as of such great importance here that the United States point of view has been accepted in every case, and that it is hoped that the agreement can be signed within a few weeks at the latest. The Foreign Office has been warned against undue optimism on this point, however, in view of the procedure prescribed in our Trade Agreement Act. In the case of the proposed immediate reduction of customs duties on automotive equipment, the Department will observe that the Foreign Office offers to expedite such reductions if it seems likely that the present negotiations are likely to continue [Page 844] for a period of from two to three months. In such case, however, a formal provisional agreement would be necessary, the Foreign Office points out, in order to permit such reductions to be made under existing Chilean legislation. The Embassy would appreciate receiving urgently the Department’s telegraphic instructions on this particular point, together with any other observations that may be deemed pertinent, in order that actual negotiations on the details of the proposed agreement may be expedited in accordance with the desire of the Chilean Foreign Office.

Respectfully yours,

Claude G. Bowers
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