(c) Imports from countries having clearing agreements giving Turkey a margin of less than 20 percent of free foreign exchange were regulated by the terms of the clearing-usually based on the principle of imports compensating exports.

(d) Imports from other countries, not having clearing agreements with Turkey, were placed on a compensation basis, that is, imports might be made only against compensating exports.

At the same time a number of Turkish tariff rates were increased, to protect home industries, but a greater number of rates were reduced for the reason that Turkey needed the additional imports which could be paid for largely by exports under the clearing. Some of the tariff increases and many of the tariff decreases applied to products imported into Turkey from the United States.

Increased emphasis on direct compensation.—In practice, Turkey's imports from clearing countries, except Germany, have tended to exceed exports to those countries contrary to Turkey's intent. This has led to an increasing emphasis by Turkey, since 1937, on compensation arrangements usually within the framework of the existing clearing agreements whereby specified imports might be compensated for directly by specified exports-a policy designed to increase Turkish export. Clearing agreements of this type permit imports into Turkey to be paid for either (a) by compensating exports to the same country or (b) by normal ways of clearing. Where Turkey has no clearing agreement, the usual procedure now is compensation trade. The lists of import and export products which may be used for compensation are announced from time to time by a recently established compensation commission.

United States-Turkey trade agreement. In the United States-Turkey trade agreement, Turkey granted the United States tariff reductions on products which account for approximately one-half of the value of Turkey's total imports from the United States. The most important tariff concessions obtained were a 60 percent reduction in the duty on automobiles (the principal Turkish import from the United States), a 75 percent reduction in duty on radios, a 12 percent reduction in duty on refrigerators, typewriters, and calculating machines, a 40 percent reduction on goat and kid upper leather and a 5 percent reduction on cattle hides, steel sheets, sewing machines, lubricating oil, and other products.

The agreement provides also for reciprocal unconditional most-favored-nation treatment in the matter of quotas, customs duties, and other charges imposed on imports and exports. With respect to payments, it provides in general that Turkey will make available free foreign exchange in payment on imports from the United States for each year of the agreement up to an amount corresponding to the proportion of Turkey's total commercial imports which the United States supplied in a previous favorable period (1935-37). In the awarding of contracts for public works and in purchasing nonmilitary supplies, each government undertakes not to discriminate against the other country in favor of a third country.

BRAZIL

Brazilian Tariff Act of 1934.-In 1931 Brazil invited foreign countries to negotiate reciprocal unconditional most-favored-nation agreements. As a result, most of the important commercial nations, including the United States, were accorded the minimum Brazilian tariff rates, a few by virtue of agreements already in existence, and the others by new agreements. The present Brazilian tariff act, dated September 1, 1934, provides for minimum rates to products of countries which guarantee similar treatment to Brazilian products. Under its tariff act, Brazil may, by decree, increase its tariff duties by as much as 100 percent on articles from those foreign countries which attempt to restrict the importation of Brazilian products by means of discriminatory duties or other devices. It also may increase duties on specified products which are "dumped" to the prejudice of Brazil's economy. The minimum rates of the tariff act were extended to practically all commercially important nations except the Soviet Union. The general rates in the tariff of September 1, 1934, exceed the minimum rates by a little more than one-fifth. Penalty duties amounting to 100 percent were applied to French products for about 6 months of 1933-34.

By decree of December 30, 1935 (immediately before the Brazil-United States trade agreement came into force), the Brazilian Executive gave instructions to revise all commercial agreements concluded before January 1, 1934, and to terminate them not later than July 30, 1936. Consequently, all of the commercial agreements of Brazil except those with the United States, Argentina, Uruguay, and Portugal were denounced. Provisional agreements, renewing or continuing the previously accorded unconditional most-favored-nation treatment were subsequently negotiated with practically all the countries whose agreements were denounced.

Exchange control and quotas.-Exchange control was introduced in Brazil on May 18, 1931, and it is still in effect. Brazil has no formal quota system.

United States-Brazil trade agreement.-Under the trade agreement with the United States, effective January 1, 1936, Brazil granted duty reductions on 67 American industrial and agricultural products, and bound 39 additional classifications against the imposition of or increase in import duties. The Brazilian reductions ranged between 20 and 67 percent of the duties in force prior to the agreement. Commodities subject to reduction covered 23.8 percent of the value of United States exports to Brazil in 1933, and reductions and bindings covered 31.3 percent of that value.

In addition to duty concessions, the trade agreement with Brazil provides safeguards against impairment of its trade benefits by import quotas, new internal taxes, or exchange control, and safeguards against discriminatory treatment.

5

CUBA

The special trade agreements between the United States and Cuba accord exclusive and preferential customs treatment to a large list of products of each country imported into the other. Each country agrees to accord to the other national and most-favored-nation treatment with respect to Federal internal taxes, and agrees also not to increase these taxes or impose new taxes during the life of the agreement on those items on which the customs duty was bound against increase. Both countries agree not to impose quantitative restrictions on any article enumerated in the schedules of the agreement. This is without prejudice, however, to such special arrangements as those regarding sugar and tobacco in connection with the United States domestic programs for these products.

In the first trade agreement, Cuban concessions to the United States provided for preferential treatment on more than 400 tariff items, the margin of preference ranging from 20 to 60 percent.

A supplementary trade agreement between the United States and Cuba, effective December 23, 1939, supplemented the trade agreement of 1934. The new agreement provided for the restoration of concessions on Cuban cigars and cigar tobacco imported into the United States to replace those concession on tobacco which terminated March 1936. Provision also was made for the restoration of the trade agreement rate on Cuban sugar (90 cents per 100 pounds on 96° sugar), should public notice be given of the suspension of the quota provisions of the Sugar Act as proclaimed by the President on September 11, 1939. Such notice was published on December 27, 1939, and the quotas were reestablished January 1, 1940. The supplementary agreement also provided for a number of modifications in the provisions relating to customs treatment of specified United States products imported into Cuba.

changes.

between the United States and Cuba

became effective January 5, 1942. The new agreement took into account developments signing of the original and first supplementary agreements, and provided for additional reductions by each country in the tariff rates on specified imports from the other, as well as other mutually advantageous Nearly all dutiable products entering into the trade between the two countries had already been included in the original and first supplementary agreements. Therefore, the new agreement included comparatively few new products and its provisions related chiefly to further reductions in duties which had already been modified in the earlier agreements, as well as to matters other than tariff concessions. Cuba granted concessions, in the new agreement, on products imported from the United States involving 38 tariff items. Thirty-three of these items cover

for improved customs treatment. improved in the 1942 agreement. Thirty of the thirty-eight items represented reductions in the previous rates of the Cuban tariff. Bindings of existing favorable tariff rates were accorded to specified products covered by the remaining

The treatment of these products was further

eight items.

COLOMBIA

The Colombian tariff.-The law of December 9, 1931, created a maximum (penalty) tariff, under which goods from countries not extending most-favored

23, 1939. They continue the preferential relationship established by the Commercial Convention of 1902. The first agreement bedame effective September 3, 1934, and the supplementary agreement on December

than the basic rates. Maximum or penalty duties were also provided for, but they were not used until July 1936. The maximum rates were intended to apply to imports from countries which buy little or nothing from Colombia, or which restrict imports of Colombian products by high customs duties or other devices. The intermediate column applies to the products of countries which purchase appreciable quantities of Colombian goods, and which place no severe restrictions on such imports or on the payments for them. The minimum column is extended only to countries with which unconditional most-favored-nation agreements exist. Exchange control inaugurated.-Exchange control was inaugurated in Colombia on September 25, 1931. Since August 1, 1936, import licenses have been required for all imports.

Quotas. On June 3, 1936, the Colombian Exchange Control Board placed commerce with Denmark on a compensation basis, on the ground that establishment by Denmark of a quota for Colombian coffee was in contravention of the treaty between the two countries. Similar action respecting trade with Austria, Czechoslovakia. and Siam was taken by the Exchange Control Board on September 27, 1936.

United States-Colombia trade agreement.-The trade agreement between the United States and Colombia, effective May 20, 1936, provides for reciprocal unconditional most-favored-nation treatment, with respect not only to all import and export charges and internal taxes but also to such import prohibitions and restrictions as are authorized under the terms of the agreement. Both countries agree, subject to certain specified reservations, not to impose any import prohibitions or restrictions on the products covered specifically by the agreement. Colombia tariff concessions on imports of American goods consist of duty reductions or bindings on over 150 tariff classifications, covering an even greater number of individual commodities. The reductions in duty, which ranged from 16 to 90 percent of those which were in effect prior to the agreement, covered 58 percent of the value of United States total exports to Colombia in 1933.

COSTA RICA

The Costa Rican tariff.-The Costa Rican tariff is single-column, and prior to the conclusion of the trade agreement with the United States, no conventional reductions had been made. On February 16, 1933, the President of Costa Rica was authorized to impose a 30 percent penalty surtax on the duties assessed on the products of countries which do not accord most-favored-nation treatment to Costa Rican products.

United States-Costa Rica trade agreement.-Under the trade agreement between the United States and Costa Rica, effective August 2, 1937, Costa Rica granted on imports from the United States reductions in duty on 30 tariff classifications and bindings against increase in duty on 11 others. Over 200 individual commodities were affected. Prior to being reduced, some of the rates had materially restricted imports. Reductions in duty ranged from 8% to 65 percent. The concessions applied to about one-third of the value of Costa Rican imports from the United States. The general provisions afford the usual safeguards.

ECUADOR

Tariff Act of 1935.-In January 1935 Ecuador replaced its single-column tariff with one of three columns. A limited maximum-minimum system was established by fixing higher rates on about 300 tariff items, and authorizing bargaining reductions therefrom by 30 percent. Conventional reductions outside of the maximum-minimum system were than employed. Finally, a new general maximum was established, to be imposed on imports from any country if their value exceeded by more than 30 percent the value of Ecuadoran exports to that country. Initially, a surcharge up to 50 percent of the customs duties was imposed on imports from such countries. Authorization to increase this surcharge up to 75 percent was granted the Ministry of Finance by a decree of March 17, 1939.

Exchange control and quotas.-Exchange control was established May 1, 1932, modified at the end of 1933, and abolished in October 1935. An import permit system was inaugurated in May 1934 and abolished in December of that year. A decree of June 30, 1936, provided for the control of imports, exports, and foreign exchange. Prior permits were required for all imports shipped after July 30, 1936. Preference was to be given to indispensable imports and imports from countries which take Ecuadoran products to a value in excess of the value of their exports to Ecuador. For imports from countries which impose discriminatory restrictions, or from countries with which Ecuador has an excess of imports, permits were to be issued only to the extent of balancing the trade.

United States-Ecuador trade agreement. In the trade agreement between the United States and Ecuador, effective October 23, 1938, Ecuador granted tariff concessions on 33 tariff classifications. Reductions in duty were provided on 15 items, and bindings against increase in duty on 18 others. Since several of the items provided for groups of articles, over 200 individual commodities were beneficiaries of concessions. The reductions in duty ranged from 25 to 50 percent. The concessions applied to nearly one-half of the value of Ecuadoran imports from the United States. The general provisions of the trade agreement were designed to insure nondiscriminatory treatment in respect of all forms of import and exchange control.

HAITI

The Haitian tariff.-The Haitian tariff has 3 columns-maximum, minimum, and conventional. The schedules placed in effect April 16, 1935, doubled the minimum rates to form the maximum. Minimum rates are extended to countres with which most-favored-nation agreements exist. They were also extended to more than 20 other nations which accord such treatment to Haitian products, provided that during the final year 1932-33 they took at least 1 percent of Haiti's total exports, or supplied less than one-half of 1 percent of its imports.

United States-Haiti trade agreement. In the trade agreement between the United States and Haiti, effective June 3, 1935, Haiti granted reductions in duty on 13 tariff classifications, conditional duty reductions on 3, and bindings against increase of duty on 19 more. The reductions in the Haitian duties ranged from one-fourth to two-thirds of the duties in effect prior to the conclusion of the agreement. Reductions in duties or assurances against increase applied to more than 17 percent of the value of Haitian imports from the United States. The general provisions assure United States trade of most-favored-nation treatment.

HONDURAS

The Honduran tariff.-Honduras has a single-column tariff, from which conventional reductions were made in the trade agreement with the United States. A foreign exchange control system has been in effect since March 27, 1934. Honduras has no formal import quota system.

United States-Honduras trade agreement. In the trade agreement between the United States and Honduras, effective March 2, 1936, tariff concessions granted by Honduras applied to 37 commodities. Duties were reduced on 17, and assurances against increase were given on 20 others. About 120 commodity subdivisions were covered. The concessions applied to about one-quarter of the value of Honduran imports from the United States. The general provisions afford the usual safeguards.

GUATEMALA

Trade balance surtax.-Because restrictions were imposed by some countries on the importation of Guatemalan coffee, Guatemala inaugurated a system of trade-balance surtaxes in January 1935. Provision was made that duties, rates, and taxes should be doubled on products coming from countries which increased their shipments to Guatemala by 100 percent between 1933 and 1934.

A year later the provisions were extended to apply to products from countries with which Guatemala had an excess of imports in 1935, provided Guatemalan imports from such countries had increased by 100 percent between 1934 and 1935. The trade-balance surtaxes, however, do not apply to those Central American countries that have established preferential tariffs of Guatemalan products. The Minister of Finance was authorized to suspend the 100-percent increases in duties when the value of imports from a country is at least equaled by its purchases of

Guatemalan coffee.

A decree of January 26, 1936, authorizes exemption of imports whose use or consumption may be necessary for the national economy. United States-Guatemala trade agreement. In the trade agreement between the United States and Guatemala, effective June 15, 1936, Guatemala granted on imports from the United States concessions on 66 tariff classifications, including duty reductions on 14, and assurance against increase in duty on 52 others. Although the rates on some of the articles on which duties were reduced or bound were moderate, the rates on others were so high as materially to restrict imports. Reductions in duty ranged from 25 to 50 percent. Concessions applied to about two-fifths of the value of Guatemalan imports from the United States. The general provisions assure United States trade of nondiscriminatory treatment.

NICARAGUA

The Nicaraguan tariff.-Nicaragua has a general tariff, from which conventional reductions have been accorded to France and the United States. These concessions have been extended to other countries which have most-favored-nation agreements with Nicaragua.

Exchange control.-Exchange control has been in effect in Nicaragua since November 13, 1931.

United States-Nicaragua trade agreement.-In the trade agreement between the United States and Nicaragua, effective October 1, 1936, tariff concessions were granted to the United States on 24 tariff items (duty reductions on 9, and assurances against increase on 15 others), covering over 100 commodity subdivisions. Reductions in duty ranged from 17 to 67 percent. Concessions applied to over one-fourth of the value of Nicaraguan imports from the United States.

The reciprocal duty concessions in this trade agreement and certain provisions of the agreement relating thereto were terminated March 10, 1938; the remainder of the agreement is still in force.

EL SALVADOR

Tariff Act of 1934.--Since September 1, 1934, El Salvador's tariff has had three columns (minimum, intermediate, and maximum), applicable to products of individual countries in accordance with their trade balances with El Salvador. The law provides that, irrespective of trade balances, the minimum column shall apply to products of countries having most-favored-nation agreements with El Salvador, until such agreements expire. Also, the minimum column applies to products of Central American States, whether or not they have most-favorednation agreements with El Salvador; minimum tariff rates may be applied to vitally necessary products irrespective of trade balances.

Quotas. No formal quota system has been established.

United States-El Salvador trade agreement.—In the trade agreement between the United States and El Salvador, effective May 31, 1937, El Salvador granted on imports from the United States concessions on 25 tariff items, including reductions in duty on 19, and assurances against increase in duty on 6 others. Over 60 individual commodities were involved. The reductions in duty ranged from 50 to 83 percent, and applied to rates which had materially restricted some imports from the United States prior to the conclusion of the agreement. The concessions applied to about 9 percent of the value of El Salvador's imports from the United States. The general provisions afford the usual safeguards for United States trade.

VENEZUELA

The Venezuelan tariff.-Venezuela applied a single-column tariff to the products of all countries (with certain minor exceptions) until the Tariff Act of October 23, 1936, came into force. Under that act, the Venezuelan Executive is authorized, inter alia, to double import duties, to apply duties not exceeding 100 percent ad valorem (irrespective of existing tariff rates), to establish import quotas, and an import permit system, to reduce import duties by as much as one-fourth, and to make compensation or similar agreements. In addition, the Executive was given other extensive powers to control imports.

Under the Venezuelan tariff, machinery, equipment, and supplies for petroleum companies, certain mining and public utility enterprises, and the Venezuelan Government are imported free of duty under special provisions. Most consumer goods, however, are dutiable at relatively high rates. In 1937, average Venezuelan duties were the equivalent of about 70 percent ad valorem.

Exchange control and quotas.—Until 1938, Venezuela had not established exchange control or quotas, though, as compensation up to specified amounts, the purchase of governmental supplies in Denmark and France has been pledged in return for quotas on Venezuelan coffee. At present Venezuela has no formal quota system and exercises a purely nominal import permit system with regard to a few products of secondary interest to the United States.

Exchange control was inaugurated in February 1937.

United States-Venezuela trade agreement.-In the trade agreement between the United States and Venezuela, effective December 16, 1939, concessions obtained by the United States covered 96 tariff items. These products represented over one-third of total value of Venezuela imports from the United States. Reductions in duty ranging from 2% to 62%1⁄2 percent were obtained on 35 classifications, and assurances against less favorable customs treatment were obtained on 61 others.