611.5231/972: Telegram
The Ambassador in Spain (Bowers) to the Secretary of State
[Received May 21—9:15 a.m.]
33. Your telegram No. 28, May 17, noon. Have seen Minister for Foreign Affairs and Sub-Secretary and made representations directed.
I dwelt especially on the automobile feature insisting that our trade here must be greatly improved by arrangements agreed upon. They replied that the withdrawal of the refund of 35% given French and consequently English cars had been decided on solely with the view of helping us; that their embarrassment regarding automobiles is in the fact that the principal item sold here from France is the automobiles; and that both England and France, while Spain’s best customers, have a decided adverse trade balance with Spain which has to be taken into consideration by the Spanish. The outcome was the promise to go over the matter here again and see what can be done.
Following are general considerations: should negotiations break down our export trade with Spain would be seriously endangered as, in addition to unfavorable duty rates now in effect, American goods would be denied advantage of rates established in trade balancing agreements which Spain is now negotiating with other countries. It may furthermore be expected that quota allocations provided for in such agreements would in many instances eliminate allotments available to the United States.
I believe the agreement would be highly beneficial to our trade even if in return for substantial concessions to Spain we can only secure the assurance that American goods will receive most-favored-nation treatment with regard to customs duties and that quotas will be allocated on the basis of our exports to Spain during a representative period. With regard to sardines and table wine suggest that concessions [Page 709] be increased and that a smaller percentage be retained for bargaining with major supplying countries, also that maximum reduction be granted sherry wines of which Spain major supplier.
It must be borne in mind as I have consistently advised that because of the heavy adverse balance against Spain the Government here has always insisted that the agreement must increase exports to a greater extent than imports.
Hope there will be no premature break down of negotiations before my arrival.