611.2231/435: Telegram

The Acting Secretary of State to the Minister in Ecuador ( Long )

27. Your despatch 968, April 2643 and telegram 38, May 4. From the trade statistics included in your despatch 968, confirmed by information here on developments in our trade with Ecuador in recent months, it is realized that the Ecuadorans probably face a difficult situation. The Department will, accordingly, give sympathetic consideration to suggestions for remedial action which you report the Foreign Minister will offer this week.

If your opinion is requested as to the type of action to restrict imports which would be the least objectionable, you may inform the authorities that permitting the sucre to depreciate would seem to offer a natural corrective. In this connection, the Department is unable to estimate the extent of depreciation necessary to restrict imports substantially. This would depend in the last analysis upon the willingness or ability of Ecuadoran consumers to pay the higher costs of imported merchandise resulting from the lower value of the sucre in terms of foreign currencies.

If currency depreciation were not sufficient, increasing import duties on non-schedule articles might be an additional step, followed if necessary by quotas on non-schedule articles on a non-discriminatory basis. If any or all of these steps do not serve the purpose, we would be glad to consider such other measures as the Ecuadoran Government may wish to propose.

With reference to the concern expressed by Dr. Tobar about Ecuador’s commercial credit reputation, you might suggest that the doubling of all import duties might have serious repercussions in that direction, since it might lead to cancellation of orders and delays in payment to an even greater extent than might be the case if one or more of the above-suggested measures were to be adopted.

Welles
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