825.6352/6–2449

Memorandum of Conversation, by Mr. Bainbridge C. Davis of the Division of North and West Coast Affairs1

restricted

Subject: Farewell Call by Chilean Minister of Economy and Commerce2

Participants: Assistant Secretary Thorp.
Alberto Baltra, Chilean Minister of Economy and Commerce.
Felix Nieto del Rio, Chilean Ambassador.
Roberto Vergara, Chilean Fomento Corporation.
Mario Illanes, Commercial Counselor of Chilean Embassy.
Winthrop Brown, Director of ITP.
Harold R. Spiegel, OFD.
Karl Anderson, IR.
Leonard Weiss, CP.
John Cady, ED.
Bainbridge C. Davis, NWC.

As Mr. Thorp was delayed at the White House, Mr. Brown opened the meeting. He referred to the reports he had received of the various talks Sr. Baltra had had with officials of other Government agencies and stated that we wished to review with Sr. Baltra each of the points which he had raised so that we might be certain of the status of each. The points were then discussed as follows:

1.
Copper Tax—Mr. Brown stated that if there should appear to be danger that one of the bills now before Congress which would reimpose the 2 cents per pound excise tax on imported copper might pass,3 the Department would make sure that Congress is thoroughly familiar with the Chilean situation and point of view on this matter. It was also pointed out that if the 2-cent tax were to be reimposed this would not be a violation of the General Agreement on Tariffs and Trade (contrary to the apparent belief of some Chilean senators) inasmuch as our obligation under GATT is limited to the maintenance of an excise tax not in excess of 2 cents per pound. Sr. Baltra stated he realized that the 2-cent tax would not be a violation of GATT.
2.
Stockpiling of Copper—Mr. Brown stated that the principal aim of stockpiling was to promote US security and to purchase as economically as possible and that the law required preferred treatment for domestic suppliers. He pointed out that regardless of where the copper is purchased it takes that much copper off the market and affects the price. It is therefore of assistance to all suppliers. Sr. Baltra and Sr. Illanes asked about the contract which the Munitions Board had with Canada for purchasing copper and indicated that Canada seemed to be supplying an unfair proportion of our purchases. None of the Department officers was aware of this contract and Mr. Anderson was asked to check with the Munitions Board. He reported that there was such a contract which had been made in 1947 (valid for 5 years) after all other suppliers including Anaconda and Kennecott had been canvassed and none of them were able to meet the needs of the US Government. The contract with Canada was, therefore, considered of an emergency nature and no other contracts of this type are being made. It was explained that the amount involved was very small in relation to total purchases by the Munitions Board and less than purchases of domestic and Chilean copper presently being made from either Anaconda or Kennecott.
3.
Dispute Regarding Certain Provisions of GATT—Mr. Brown referred to conversations which had taken place between Sr. Baltra and officers of the Department of State during the Minister’s visit at which time Sr. Baltra had urged the transfer to Santiago of negotiations now going on at Annecy regarding the dispute between the two countries over the application of certain taxes and exchange surcharges on goods imported into Chile. Mr. Brown said that in view of the importance Chile attached to this request, we would agree. However, he went on to state the importance which we attached to an early resolution of this problem and to say that if it were not resolved bilaterally we would expect that Chile would join with us in presenting it to the Contracting Parties. Mr. Brown then handed to Amb. Nieto a note from the Department4 which he stated was our formal agreement to the foregoing request and he explained that we would send a qualified person to Santiago to discuss the problem with the Chilean Government just as soon as possible, although there would probably be some delay as a number of our qualified officers were now at Annecy.5
4.
Loan—Mr. Thorp remarked that Sr. Baltra had done a splendid job of “selling” the idea of a loan to Chile as it seemed very doubtful when he arrived that the Chilean Government could get the type of loan needed at this time. Mr. Thorp now understood that the Export Import Bank (while unable to commit itself until an application is received and approved by the Bank and other Government agencies) had expressed its willingness to give both prompt and very sympathetic consideration to a Chilean application for a balance-of-payments loan. Sr. Vergara then reported that he and Sr. Baltra had held a meeting with International Monetary Fund officials, particularly Mr. Southard (US Executive Director), but that they had not been encouraged to propose a further drawing from the fund at this time. It was suggested that such action be deferred at least pending the outcome of the Eximbank negotiations. (The second 25 per cent of Chile’s quota would be $12.5 million.) It was stated that Vergara and Amb. Nieto Would carry on detailed negotiations with the Eximbank.

Mr. Thorp then expressed great pleasure at Sr. Baltra’s visit to Washington and the hope that he would make another visit before long.

Sr. Baltra wanted to make a public statement upon his return to Santiago that he had worked out with us a solution to the problem confronting Chile. Mr. Thorp suggested that it would be most unfortunate if he should make a statement of this sort and it should then turn out that the problem had not been solved. Sr. Baltra thereupon suggested that he state that we had reached agreement on steps which might contribute to a solution of the problem, and Mr. Thorp agreed that this would be quite satisfactory.

  1. A copy of this memorandum of conversation was transmitted to the Embassy in Chile.
  2. On June 20, Mr. Baltra and Ambassador Nieto had met with President Truman and left with him an aide-mémoire (not printed) outlining Chilean concern over the economic problems confronted by Chile particularly with regard to the declining price of copper (825.50/6–2049).
  3. No such legislation was enacted during 1949; see footnote 2 to telegram 315, June 15, p. 595.
  4. Not printed.
  5. Despatch 628, September 9, from Santiago (not printed), summarizing U.S. Chilean economic relations, indicated that the proposed bilateral talks in Santiago on this issue were still pending, and went on to say that it was extremely doubtful that the U.S. position would be accepted (711.25/9–949). No subsequent documentation has been found to indicate that the proposed bilateral talks were pursued by the United States.