The Ambassador in Spain (Moore) to the Secretary of State
[Received July 7—2:54 a.m.]
66. 1. Had three hours’ conference with treaty commission yesterday. Atmosphere generally friendly. Commission stated they were not prepared to talk about other than commercial features but indicated as to other articles that they might be able to accept such provisions as are not in opposition to Spanish law. They indicated preference, however, for separation commercial from general relations stating that nine months would be required for conclusion of treaty along lines present draft.
2. Concerning commercial features commission stated law would not permit acceptance of most-favored-nation clause as proposed but they would give us most-favored-nation treatment through a schedule of arguments [articles] provided we give similar schedule and treatment to Spain.
3. They stated the only possible bases of negotiation were: (1) admission of Spanish wine; (2) reduction of tariff on some Spanish products, mentioning especially manufactured cork, licorice, olives, olive oil, and essential oils. This it is stated is necessary under Spanish law (see Hackworth’s memorandum of June 13, 192314).
4. Hackworth explained that under the law and constitution amendment liquors cannot be imported for beverage purposes; that [Page 857]while the Government controls the importation under the law, to the extent of determining whether liquor is for lawful purpose and may be permitted to enter, it is not an importer or dealer in liquors and consequently cannot agree to take any quantity of wine. They said would be sufficient merely to say that the importation of a certain quantity for lawful purposes would be permitted without in any way committing the Government to the taking of that or any specified amount. Hackworth stated that since all importations would be by non-government agencies the Government could not offer any assurance that the importer would buy Spanish wines nor that any particular kind of wines would be imported since these depend on the one hand upon the choice of the importer and on the other hand upon the question whether the purpose is lawful and the goods needed. These conditions seemed unobjectionable so long as something even of an innocuous nature is provided in the treaty.
5. As to lowering of tariff on certain articles it was explained that this could not be done, that the President is authorized to raise the tariff if other governments discriminate American products but not to reduce it and that he would not by treaty run counter to tariff legislation. They insist that these were the only conditions on which they could negotiate since they are bound by their law as well as we by ours. We stated that while we could not hold out any hopes for the acceptance of their conditions which would mean the breaking down of our tariff and treaty policy the matter would be submitted to the Department for decision of the two points and we would inform them at next meeting.
6. Hackworth fully explained provision 317 of the tariff act and observed that if they persisted in their attitude and placed our trade at a disadvantage under their tariff as they said it would be necessary to do, we in turn would probably be under the necessity of raising our tariff on Spanish products; that our purpose is to prevent such a calamity to the commerce between the two countries, but that we would have to insist on fair treatment. They regard our most-favored-nation treatment proposed as no concession whatever and refuse to concede that their first column15 is abnormal or punitive in character.
7. After the session Lago stated privately he hoped we could agree and that if we could give reductions on only a few articles it would enable them to negotiate with us. They apparently desire to negotiate but are either maneuvering for advantage or seeking a way to comply with their law.[Page 858]
8. [Paraphrase.] Can the treaty be changed, since I have included list of articles for which we desire most-favored-nation treatment as well as list for Spain based on our present tariff schedule, in order to conform to the Spanish law and so expedite treaty, or does the Department still hold to the position set forth in its no. 31, June 18, 5 p.m.?
9. While it is possible that a failure to make any concession may result in our being placed for the time being upon an unfavorable tariff basis, it is my belief that resort to article 317 of the tariff act will lead to a readjustment as soon as Spanish exporters feel the effect.
10. The Embassy would greatly appreciate an immediate reply, for if the Department adheres to its former position a prompt request for a modus vivendi should be made if feasible. Important Spanish officials will be leaving soon and it is not likely that any action will be taken on the application for six or eight weeks. [End paraphrase.]