825.24/1017
The Secretary of State to the Ambassador in Chile (Bowers)
The Secretary of State refers to the Embassy’s despatch no. 6338 of April 29, 194398 regarding the Decentralization Plan, and in particular [Page 171] to enclosure no. 1 transmitting a letter dated March 10 to the Embassy from the National Foreign Trade Council1 stating that it had no objections to according special treatment to the Chilean Development Corporation in connection with the importation of machinery and installations for the industrial development of Chile. The Embassy in reply to this letter indicated that the matter had been referred to the Department for consideration.
As the Embassy is aware, the Department has previously indicated that it had no desire to hinder the operations of the Chilean Development Corporation, and it would be glad to consider any practical means within the decentralization procedure which would facilitate the handling of Fomento’s applications for export licenses.
The Department has discussed the matter with Mr. Roberto Vergara of the Chilean Development Corporation and has arrived at the following understanding with him, which understanding, it will be noted, represents a clarification of points 1, 2 and 3 of the letter of March 10, and the deletion of point number 4, Mr. Vergara having voluntarily withdrawn point number 4 from the discussion:
- (1)
- For its ordinary applications, Fomento will submit import recommendations in accordance with the basic principle of the Decentralization Plan.
- (2)
- For projects involving considerable technical study (such as the proposed steel mill, for instance) Fomento will, at the time of presenting its application, furnish a brief preliminary import recommendation describing the project in general terms. This document will serve to indicate to the Department that the Consejo and the Embassy approve of the project in principle, and will at the same time constitute the authorization to use the indicated amount of target tonnage for the purpose, if the material is not to be transported on Fomento’s own vessels. (As the Embassy is aware, Fomento has in the past shipped a considerable volume of cargo on its own ships, such cargo not being deducted from the established target figure.)
The Department and the War Agencies will then study the application in detail, process it with particular reference to its technical aspects, and make any necessary adjustments. In the event it should be found that any materials involved would have to be deducted from the estimates of supply for Chile (raw materials which go into the manufacture of machinery are usually not deducted from the estimates), the amount of such materials will then be ascertained and Fomento so informed. Fomento will then obtain a final import recommendation authorizing these materials to be deducted from the Chilean estimates.
It is believed that this procedure will meet the request of Fomento that the technical matters relating to its applications continue to be [Page 172] handled in Washington, and at the same time the basic principle of decentralization will remain in effect.
For the Embassy’s information it may be added that Mr. Vergara states Fomento, in the future, will seldom engage in such commercial activity as would involve materials properly deductible from the estimates of supply.
The Embassy is requested to inform the Consejo of the understanding at which the Department and Fomento have arrived in this connection. Should the Embassy have any views to express on the matter, the Department would be pleased to receive them.