611.2531/23: Telegram

The Ambassador in Chile ( Culbertson ) to the Acting Secretary of State

97. Referring to Department’s telegram No. 30, July 18, 2 p.m., Chilean Government is willing to give to the commerce of the United States the same treatment as French commerce receives under the modus vivendi of May 22nd, but it wishes in the exchange of notes, or in supplemental notes, to have an assurance that we are willing to discuss immediately with them a general commercial treaty incorporating the unconditional most-favored-nation guarantee together with special lists. The proposed paragraph to be included in the exchange of notes would read as follows:

“I have the honor to confirm to Your Excellency the terms of the provisional commercial agreement which our respective governments have agreed to maintain while they are studying a definite general commercial treaty. It is understood that meanwhile our governments will study the terms of a general commercial treaty which among other things will, both by virtue of specific provisions in the treaty and by virtue of the general unconditional most-favored-nation principle, reciprocally consolidate and improve the situation on the one hand in which Chilean commerce finds itself in the markets of the United States and on the other hand in which American commerce finds itself in the markets of Chile”.

The Foreign Office now declare that in view of the paramount importance of our commercial relations the Chilean Government desires to negotiate its first new commercial treaty with the United States rather than with France and that, abandoning its earlier position and recognizing our settled policy, it is now willing to include in said treaty a general guarantee of the unconditional most-favored-nation principle. In particular it desires to include in such a treaty a provision which will maintain the present situation in the United States with reference to nitrates and in return it is willing to discuss the stabilization of tariff rates on a special list of American products.

The Foreign Office explains that the proposal of the basis for a definite treaty has been joined with the question of the immediate removal of a discrimination against American commerce because they are inextricably connected, in that before Chile can proceed to extend the treatment granted to France to countries with which Chile has no treaty obligations, some advanced commitment of treaty policy must be obtained. Furthermore, as this new treaty will determine Chile’s whole commercial policy it is essential for them to know as soon as possible on what basis we are prepared to negotiate; for if the [Page 922] United States is unable to agree to a treaty on the bases suggested, Chile must then consider seriously the denunciation of the French modus vivendi and the abandonment of its present commercial policy of special lists. This statement is based on realization by Chile of the importance of the American market for its products and of the need for agreement in the commercial policies of the two countries. Failure to reach an agreement would place the blame on us and leave not only a general bad impression but would also injure American interests in the Chilean nitrate industry.

Instruction from the Department is requested as to whether it is willing to exchange notes committing itself to a study of the Chilean proposal. If so we will obtain immediately the rates of duty granted to France and our influence will take first place in the new commercial negotiations which Chile is contemplating with all countries.

Culbertson