Minister Sorsby to the Secretary of State.
La Paz, September 14, 1905.
Sir: Referring to previous dispatches relative to the treaty of peace and friendship celebrated between Chile and Bolivia on October 20, 1904,a I have the honor to report that on the 10th instant an agreement was signed by the Chilean minister here and the Bolivian minister for foreign affairs with respect to the free or reciprocal introduction of the manufactures and products of each country, respectively, the basis of which is as follows:
In conformity with the treaty of October 20, 1904, and until the Government of Bolivia realizes its purpose to cancel the privilege of the freedom from custom dues which the manufactures and products of Peru now enjoy, the manufactures and products of Chile exported to Bolivia and the manufactures and products of Bolivia exported to Chile reciprocally shall enjoy exemption from the customs duties of each country, respectively.
In this connection I have to say that under the terms of the Peru-Bolivia treaty of October 26, 1878, the manufactures and products of each country, respectively, were exempted from custom duties. On December 15, 1903, a modification of this treaty provided that for a term of two years therefrom cotton domestics or cloths manufactured in Peru should pay a Bolivian import duty of 10 per cent. The treaty of October 26, 1878, was terminable at the option of either party.
The Chilean-Bolivian treaty of peace and friendship of October 20, 1904, displaced the Chile-Bolivia treaty of truce of April 4, 1884, which contained the same conditions with respect to reciprocal customs duties exemptions as that of the Peru-Bolivia treaty of October 26, 1878; the Chile-Bolivia treaty of October 20, 1904, provided that Bolivia should be free to regulate her customs tariffs, and that Chile should enjoy (only) the same customs privileges as might be granted any other nation; and it was in view of this abrogation of the special customs privileges embodied in the treaty of truce that Bolivia sought in June last to clear the way for the rearrangement of her customs tariff system by declaring to Peru, through the Bolivian minister at Lima, that it was her purpose to abrogate the treaty of October 26, 1878; and the agreement of the 10th instant between Chile and Bolivia was in view of the protest by Peru against the purpose of Bolivia to abrogate the treaty of October 26, 1878, without having given a reasonable time in which she might be able to adjust her commercial affairs with Bolivia so as to meet the new conditions. It is understood that Peru is endeavoring to agree with Bolivia upon another commercial treaty to be substituted for that of October 26, 1878.
I have, etc.,