611.5231/935
Memorandum by the Assistant Chief of the Division of Western European Affairs (Hickerson)
The Spanish Ambassador came in by appointment at four o’clock yesterday afternoon and talked for an hour and a half with Messrs. Sayre, Grady and Hickerson on the general subject of trade agreement negotiations. The Ambassador said he had received a telegram from Madrid to the effect that giving us most favored nation treatment in Spain would involve a sacrifice of over seven million pesetas on automobiles alone. The Ambassador hinted, without definitely stating, that his instructions said that the Spanish Government could not agree to grant us any concessions other than most favored nation treatment. He went on to say that it would be exceedingly difficult for Spain to sign an agreement with us which contained no concessions for Spanish Sardines and Spanish table wines, pointing out that in all other commercial agreements in recent years which Spain had signed these products had figured in the list of concessions obtained irrespective of whether Spain was the principal source of imports or not. He dwelt at great length on the difficulties which Spain is encountering in finding foreign exchange to pay for foreign imports, particularly those from the United States.
The Ambassador went on to say that we had spoken of general provisions for a trade agreement but that we had not yet sent him copies. It was explained that it has thus far not been possible to send him a copy for the reason that the appropriate committees have not finished their studies in connection with these standard general provisions. (This morning I sent the Ambassador a set of the proposed standard general provisions pointing out that there would probably be a few changes to be made.) The Ambassador further stated that he had not yet received from us a list of products on which we desire most favored nation treatment. It was stated in reply that we had not yet felt that we had reached the point where it would be helpful to give him such a list. The Ambassador said that the French list of most favored nation treatment in Spain contained over a thousand [Page 697] items and that they would not object to a large list; he said he believed our exports to Spain comprised 700 items. Mr. Hickerson stated that in that event when we sent a list of products on which we desired most favored nation treatment it would therefore contain approximately 700 items. It was added that our general provisions provide for complete most favored nation treatment but that if the Spanish Government cannot as the Ambassador has said make such a commitment the American Government will probably be satisfied with an arrangement which gives us most favored nation treatment on all the products in which we are actually interested.
The conversation was long, repetitious and in general indicative of the extreme difficulties which we shall face in reaching a trade agreement with Spain. Over and over again it was explained that the American trade agreement program must be justified in this country and that this can only be done if we obtain advantages for American goods to offset the rather substantial cuts in our import duties which we are prepared to consider for Spanish products. It was stressed that it is our hope and belief that if the Spanish Government will go along with us in such a program and other countries join in, the trade balance situation will take care of itself as it has always done in the past prior to the last year or so. The Ambassador kept stressing the fact that any trade agreement which benefits American exports more than Spanish exports will bring a trade agreement failure.
Finally, it was agreed that the Ambassador would cable Madrid and ask definite authority to discuss with us concessions beyond most favored nation treatment for American products entering Spain. It was intimated to the Ambassador that we will be prepared to give consideration to small reductions on sardines and table wines if Spain is prepared to grant us concessions beyond most favored nation treatment.