611.5331/142
The Minister in Portugal (Caldwell) to the Secretary of State
[Received May 6.]
Sir: Referring to the Department’s confidential instruction No. 95 of March 25, 1935,10 as to the possible denunciation of the commercial arrangement of June 28, 1910, between Portugal and the United States and to later correspondence on the same subject, I have the honor to report that on various occasions importers of American automobiles have expressed to me anxiety with regard to the possible denunciation by Portugal of the existing modus vivendi, fearing that such action might be taken at any time without previous warning.
[Page 665]Such action on the part of Portugal would obviously be highly injurious to importers of American products here because the denunciation of the present commercial modus vivendi would probably be followed by a large increase in customs duties which, according to precedents, would apply to goods in transit or even already landed and in the customhouse. Since the Spring orders for American automobiles are said to be unusually large, and since it is the local custom to keep automobiles in the customhouse without paying duties until they have actually been sold, a sudden increase in duties would unquestionably impose a very serious burden.
The rumors to which I refer of such possible denunciation on the part of Portugal are by no means new, having arisen at various times in the past year but, so far as I know, without any reliable official basis. They are evidently due, (1) to the weakness of our present commercial position on account of the fact that the commercial modus vivendi of 1910 contains no specific clause providing for a period of warning before effective denunciation; and (2) because the arrangement with the United States could conceivably be made a pawn in commercial negotiations with other countries as, for example, at the present time, in connection with the commercial dispute with France (see my despatches No. 492 of January 2, 1935, No. 572 of March 22, 1935, and No. 590 of April 16, 1935, “Commercial Relations between France and Portugal”11), by making possible special favors to French automobiles in return for the greatly desired concessions on Portuguese sardines.
Especially in view of the importance of good relations with the United States with regard to such problems as the proposed trans-Atlantic air route12 and the proposed bridge over the Tagus, I do not have any reason to believe that the action feared by the automobile dealers is at all likely to be taken in the immediate future.
Respectfully yours,
- Not printed; but see telegram No. 1, March 22, 5 p.m., to the Minister in Portugal, p. 662.↩
- None printed.↩
- See vol. i, pp. 510 ff.↩