611.1231/470
Memorandum of Conversation, by Mr. H. Gerald Smith of the Division of Commercial Policy and Agreements
| Participants: | Señor José Saenz, Chief, Statistical Office |
| Señor Aurelio Bueno, Treasury Department | |
| Ing. Ricardo Villareal, Department of Agriculture | |
| Mr. Fowler, TA | |
| Mr. Smith, TA |
Following the formal opening session of the negotiations for the trade agreement with Mexico on July 17, the above-named members of the Mexican Delegation called to begin discussions of the general provisions. The Mexican Embassy, under date of July 6, had transmitted its first counterproposals on the general provisions and these served as the basis for the discussions.
As pointed out in the Mexican note, the Mexican Government accepted without change the preamble and Articles I and II of the draft general provisions submitted by the United States Government.
On Article III, on quotas in general, the Mexican Government had submitted a redraft of that part of the Article referring to the period which should be selected as that upon which quotas should be based. The Mexican draft made the specific points that the period should not be one year; it should be a previous representative five-year period or some other previous representative period on which the two countries might agree; and that quotas in effect on the day of signature of the agreement should be modified to conform with the principle advanced by the Mexican Government regarding a representative period. It was pointed out by the Mexican negotiators that Mexico had come late into the trade-agreements picture and for that reason Mexico should not be adversely affected by the share of quotas allotted to that country which resulted from negotiations with third countries. It was agreed that any final decision which might be reached on the matter of quotas would be affected to a considerable extent by the concessions which the United States Government would offer on such products as petroleum and cattle and therefore it would be better to leave this Article open for further discussion after the Mexican negotiators had seen our definitive Schedule II offers. It could then be determined whether or not the Mexican Government wished to continue to seek the adoption of the proposals set forth in the note of July 6. With regard to the final phrase of the third paragraph of Article III, the Mexican negotiators inquired whether it would not be possible to find somewhat more precise language to cover customs quotas. They were informed that we would look into the possibility of drafting new and more specific language.
[Page 506]Article IV of the draft general provisions as presented by the United States on exchange control was acceptable to the Mexican Government without change.
With regard to Article V on monopolies and government purchases, the Mexican Government wished to have the word “transportation” included among the considerations such as price, quality, marketability and terms of sale which would be taken into account by government purchasing agencies. The Mexican negotiators were assured that this proposal would receive our sympathetic consideration.
In regard to Article VI on customs administrative matters, advances in duties, customs penalties, consultation on technical matters and Committee of Sanitary Experts, the Mexican Government was in accord with the first four points, but on the fifth desired a change which would result in the sanitary experts (an equal number representing each government) reaching a decision and not merely a recommendation, as set forth in the United States draft. Further, the Mexican negotiators desired that an arbitrator be appointed in case of disagreement by the technical experts representing each government in order that a final decision might be reached, binding on both governments. The Mexican negotiators were given an explanation of the restrictions encountered by the laws and regulations of the United States Government affecting sanitary matters. Reference was made to the case which arose several years ago in connection with the operation of the trade agreement with the Netherlands, under which progress was made in working out a solution of a difficult sanitary question concerning the importation of tulip bulbs from the Netherlands. The Mexican negotiators agreed that there was some value in the procedure provided for by our proposal but they desired to strengthen it so that a mere recommendation by representatives of the two governments on sanitary matters would not merely be pigeonholed and no action result. The Mexican negotiators were informed that we probably could not agree to their request due to the legal restrictions in this country, but we would of course submit their proposal for further consideration.
Articles VII and VIII, on duty concessions by the two countries, and Article IX, on compensating taxes, were accepted by the Mexican Government.
The Mexican negotiators raised no question concerning the provisions of Article X, quotas on scheduled products, except that at the end of the third paragraph they requested that some such phrase as “to which both countries are signatory” should be added.
Article XI, covering withdrawal or modification of concessions, was also acceptable to the Mexican Government without change, and they promised in the near future to submit a draft of those provisions, [Page 507] omitted from the text as submitted by the United States, which would provide for the application of the Article to imports into Mexico.
The Mexican negotiators expressed the desire to eliminate Article XII, the general provision to safeguard concessions. The second sentence of the Article, providing for termination of the agreement, was particularly difficult for the Mexicans to accept. They pointed out that the inclusion of the Article as drafted would be interpreted in Mexico as a swinging of the big stick by the United States and an ability to interfere in Mexican affairs not related to the trade agreement. The negotiators agreed to consult with their Government as to the possibility of leaving in the first sentence of the Article but eliminating the second providing for termination.
On Article XIII, the matter of territorial application of the provisions of the agreement, the Mexican negotiators expressed the desire that this be discussed directly with Lie. Beteta. They did not know the reason why the Mexican Government was opposed to the inclusion in this Article of any reference to the Panama Canal Zone and stated that it was their confidential understanding that the Mexican Government, while it did not agree to inclusion of reference to the Panama Canal Zone in the agreement proper, would consent to such a reference in a separate (and presumably unpublished) exchange of notes. The negotiators said that there were matters of high policy involved here which they as technical experts were not qualified to discuss.
Article XIV, on exceptions to most-favored-nation treatment, was acceptable to the Mexican Government without change.
On Article XV on general reservations, the Mexican Government desired that the provisions of the final paragraph relating to Constitutional limitations on the authority of the Federal Government be made reciprocal.
The final Article, XVI, providing for proclamation, ratification, definitive entry into force, duration and termination of the agreement, was satisfactory to the Mexican Government as proposed by the United States.
The question then arose of two articles which the Mexican Government desired to add to those proposed by the United States: (1) on sanitary requirements, providing that each government would do everything in its power to facilitate shipments in transit in either country destined for third countries; and (2) relating to the application of ad valorem rates of duty and methods of converting currencies.
On the first point the Mexican negotiators referred to cases, involving oranges particularly, where on shipments from Mexico to Canada, after fumigation at the United States–Mexican border and sealing of the freight car under customs supervision, transit through certain individual states in this country was refused. The Mexican negotiators were informed that this was the first time that any such [Page 508] case had been brought to our attention and that we would look into the matter. In the meantime the Mexican negotiators were requested to supply a memorandum providing details on the specific cases to which reference had been made.
On the second point the Mexican negotiators were given a brief outline of the difficulties in this country growing out of the application of laws which did not take into account such factors as multiple rates of exchange in foreign currencies. The Mexican negotiators were told that while we probably could not agree to the proposal which they had made, which was to use the language of the trade agreement with Costa Rica27 on this subject, possibly we would be in a position to submit to them language in more general terms.
It was agreed that the next meeting would be held as soon as the negotiators on either side had prepared further material for consideration of the representatives of the other government.
[Meetings of the American and Mexican technical negotiators were begun on July 20, 1942. Records of these discussions are not printed.]
- For text of agreement signed November 28, 1936, see Department of State Executive Agreement Series No. 102, or 50 Stat. (pt. 2) 1582.↩