611.5231/971a: Telegram
The Secretary of State to the Ambassador in Spain (Bowers)
28. Department’s 14, February 19, 7 p.m., and 24, May 6, 7 p.m. At our first meeting on May 3 the insistence of the Spanish negotiators on concessions on items of which Spain is only an insignificant source of supply, together with their extreme reluctance to make even nominal concessions on American products; did not encourage the belief that it would be possible to arrive at as comprehensive an agreement as we should like. However, in order to arrive as quickly as possible at a point where a fair estimate of the Spanish position could be made it was decided to hold daily meetings at which the two lists of desiderata would be considered item by item in their turn. At these meetings it became daily more clear that the Spanish negotiators were not willing to understand that because of our policy of extending concessions granted in trade agreements to all countries which do not discriminate against, us we were compelled to restrict our concessions to items of which Spain was the principal supplier and that they were likewise unwilling to regard as of any present value reductions which they would eventually receive through the operation of the most-favored-nation clause.
In order to avoid a premature breakdown of the negotiations we finally took the extreme step of making an exception from our basic principle by offering reductions of 10 percent in the duties on table wines and sardines, which Spain considers of prime importance although in both cases it exports to the United States much smaller quantities than several other countries. The Spanish negotiators, however, affected to regard this exception as a concession of minor consequence and pressed for larger reductions on these items. Moreover, when consideration of the American list of desiderata was resumed the Spanish negotiators again appeared entirely unwilling to grant reductions on items of the greatest importance to the United States.
With regard to quotas the attitude of the Spanish negotiators is equally uncompromising. We have asked for their minimum tariff rate and abolition of the quota on automobiles or a global quota not less than 1934 imports either unallocated or with an allotment of 55 percent to the United States, preferably the former. The figure 55 percent represents our share of the trade during 1927–29, the last 3 years in which there was no duty discrimination against American automobiles. The Spanish negotiators flatly reject the principle that the allotment to the United States should be based on our average share of the total trade during a period in which imports from all [Page 706] countries were subject to the same rates of duty and state that they are able to consider acceptable only an arbitrary figure which may be slightly more than our imports in 1934 but must be very much less than our 1927–29 average.
It seems evident that the Spanish negotiators aim to obtain for Spain a very considerable number of concessions, including not only all items of real importance in their trade with the United States, but also many items of which other countries are by far the most important suppliers, and that they intend to offer to the United States with regard to customs duties only most-favored-nation treatment plus slight reductions on minor items and with regard to quotas only arbitrary allotments having no relation to our fair share of the market. Unyielding maintenance of such an attitude would make necessary a sharp revision of our intended concessions to Spain and render impossible the conclusion of more than a very limited agreement which will not serve to open up trade on either side on a scale of any consequence. It is suggested, therefore, that you bring informally to the attention of the appropriate authorities the situation which has arisen here, pointing out that we are prepared to make real concessions on Spanish products of considerable economic and political importance but that unless Spain is prepared to adopt a more generous attitude toward our trade the opportunity to obtain these concessions may be lost.