811.20 Defense (M) Chile/78: Telegram
The Ambassador in Chile ( Bowers ) to the Secretary of State
[Received 10:48 p.m.]
59. My No. 851, 5 p.m.65 Senate has approved copper tax law in form satisfactory to copper companies except that in the debate Minister of Finance66 made an erroneous statement which has to be cleared up in the official record. Bill was returned to Chamber of Deputies and expected to pass without alteration. Copper companies now object to provision in the law which stated that the President of Chile by decree can insist that 20% of the exports of raw materials be returned to Chile in the form of finished products. Copper companies say impossible to comply with such a [provision?]. Minister of Finance stated frankly to a company representative that he considered this provision a club to insure that the United States furnish Chile with sufficient essential materials. Graham,67 negotiating Metals Reserve contract, of the opinion that clause is political and not much actual danger of its ever being applied is an unfortunate precedent but too late to correct the law itself. The matter might be corrected by an informal exchange of notes reiterating to Chile our intention of supplying needed material to the limit of our ability but stating that if Chile insisted on enforcing a return of finished goods in some fixed proportion of our purchases of Chilean raw materials beyond our possibility to supply, Metals Reserve agreement would have to be abrogated and renegotiated. Please instruct.