825.6374/7–1246
The Chilean Ambassador (Mora) to the Secretary of State
Memorandum
The Ambassador of Chile has duly informed his Government of the meeting held at the Department of State on July 2nd 1946, for the purpose of discussing compliance with the Agreement set forth in the letter dated March 5th, 1945,57 concerning the sale or lease of the synthetic nitrate plants owned by the United States Government and sent by the then Secretary of State, Mr. Edward Stettinius to the Minister of Foreign Affairs of Chile, señor Joaquin Fernández, during the Chapultepec Conference.
Following the developments at the meeting of July 2nd. 1946, Mr. Mora advised his Government that, on that occasion, Mr. Willard Thorp58 declared himself not to be in accord with the opinion held by the Chilean Government on the matter, recorded by the Chilean Ambassador in verbal notes to the Department of State and viva voce at this meeting.
[Page 636]In this connection, the Government of Chile considers that the letter from Secretary of State Stettinius to Minister Fernández, written at the time of the Chapultepec Conference, clearly establishes that the negotiations for the sale or lease of synthetic nitrate plants owned by the Government of the United States will not be carried out without previously consulting the Government of Chile on the terms of sale or lease, in order to determine whether or not the terms of sale or lease would constitute an aid or subsidy to the purchaser, which would open the way to unfair competition with the Chilean nitrate industry.
The Chilean Government is confident that the opinion advanced by Mr. Thorp contrariwise to that of the Chilean Ambassador, does not reflect the definite feeling of the Government of the United States regarding this delicate problem.
A fundamental basis for believing that ultimately the Government of the United States will come to the same conclusion as that of the Government of Chile regarding the scope of the Letter-Agreement referred to, is precisely the declaration made by the Assistant Secretary of State, Mr. William Clayton, on April 20, 1945, before the Ways and Means Committee of the House of Representatives, in connection with the discussions regarding the extension of the Reciprocal Trade Agreement. At that time, Mr. Clayton, who at Mexico City negotiated directly with Minister Fernández the Agreement set forth in the letter of March 5, 1945, stated to the Ways and Means Committee the following:
“Point No. 2 was that if the Government did not operate the plants but decided to sell them to private interests who would operate them for commercial purposes, and if the terms of such sale or lease should be of a character which would grant to the purchaser or lessee a subsidy in the operation of the plants, that before doing so we would sit down and discuss that matter with the Chilean Government”.
It is evident that the Agreement reached in Mexico City must have been made on the basis that the consultation and studies to be conducted between the Governments of Chile and of the United States, regarding the terms of sale or lease of synthetic nitrate plants, would take place before the Government of the United States would enter into negotiations for these transactions, for, otherwise, the Agreement would be ineffective and consequently purposeless. In fact, were the referred to consultations and studies of the terms of sale or rent of the plants, to be carried out after the corresponding negotiations are closed by the Government of the United States, this Government would then have no means of legally annulling the negotiations and would not be in a position to compensate for the damage caused by [Page 637] these negotiations to Chilean economy, even though the Chilean Government would afterwards advise that its interests had been affected.
The Chilean Ambassador has received precise and definite instructions from his Government to request from the Secretary of State a clear and frank statement on this question, which is considered fundamental before carrying on the discussions with the meeting presided by Mr. Willard Thorp.
The Chilean Government is confident that the Secretary of State will find it proper to take into consideration the points set forth in this memorandum in order to find a solution for the matter in the spirit of equity which has always existed in the relations between Chile and the United States, and with the high concept of loyal fulfillment of previous agreements which has constituted the soundest basis of good friendship and reciprocal trust prevailing in the commercial operations between the United States and Chile.
The Chilean Government, furthermore, has instructed the Chilean Ambassador to bring to the notice of the Secretary of State that, although it has noted the rapidity with which the negotiations concerning the sale or lease of synthetic nitrate plants owned by the United States Government have been conducted, it will refrain from continuing discussions as to the terms of these negotiations, until there is a definite statement by the Secretary of State on the points raised in this memorandum.
- Foreign Relations, 1945, vol. ix, p. 795.↩
- Deputy to the Assistant Secretary of State for Economic Affairs.↩