611.2331/49

The Secretary of State to the Ambassador in Peru (Dearing)

No. 838

Sir: Reference is made to the Embassy’s despatches Nos. 4176 of September 29 and 4183 and 4184 of October 2, 1935, concerning the attitude of the Government of Peru toward the possibility of trade agreement negotiations with the United States. The Department notes with satisfaction the manner in which its instruction No. 800 of August 9, 1935, has been carried out.

Apparently no further progress can be made with the exploratory discussions concerning the possibility of a trade agreement with Peru unless the Government of Peru understands fully the nature of the situation in regard to imported sugar. There is little the Department can add to your explanation of the sugar situation in this country in relation to the request of the Government of Peru that assurances be given in advance of trade agreement negotiations that as much as 300,000 tons of Peruvian sugar will be permitted to enter the United States annually in the event a trade agreement is concluded. However, in line with your remarks to Dr. Concha, the Department must recognize that no matter how much it would welcome the opportunity in connection with a trade agreement providing for reciprocal reductions of existing trade barriers to facilitate a substantial increase in imports of sugar from Peru, it must confine any action in this direction within the limits prescribed by the Jones-Costigan legislation under which quantitative restrictions have been placed on cane and beet sugar produced in continental United States, on sugar from Hawaii, Puerto Rico, the Virgin Islands, the Philippine Islands, American Samoa, the island of Guam, the Panama Canal Zone, and on sugar from foreign countries, including Cuba. As long as such restrictions are imposed under the law, this Department perforce must take cognizance of them in connection with trade agreement negotiations with any foreign sugar-producing country. In this connection [Page 943]it may be pointed out that under the trade agreement of August 24, 1934, with Cuba,11 no more sugar from Cuba was permitted to be imported from that country than the amount which the Secretary of Agriculture had already allotted to Cuba in accordance with the provisions of the Jones-Costigan Act.

Peru, it should be noted, has been given as large a quota as possible under the sugar control legislation. The Act specifies that the quotas allotted to foreign countries shall be based upon the average quantities brought into or imported into continental United States for consumption, or actually consumed therein, during such three years, respectively, in the years 1925 to 1933, inclusive, as the Secretary of Agriculture may determine to be the three most representative years. The quota allotted to Peru for the calendar year 1935, amounting to 11,114,100 pounds, or 5,557 short tons, was the largest quota allotted to any foreign country except Cuba, which country is the leading source of sugar imported into continental United States. As of possible interest in this connection two copies each of the Jones-Costigan legislation as amended and of the General Sugar Quota Regulations, Series 2, Revision 1, are being sent to you by pouch.

You are instructed to convey the substance of the foregoing to the appropriate officials of the Government of Peru, and to say that this Government greatly appreciates the interest shown by the Government of Peru in the possibility of trade agreement negotiations looking toward the reciprocal reduction of existing barriers to trade between the two countries, but that this Government, because of existing legislation governing the importation of sugar, cannot give any assurance either in advance of trade agreement negotiations or in connection with any such negotiations, provided the sugar legislation is in force at that time, that any quantity of sugar above the quota allotted in accordance with that legislation will be permitted to enter the United States from Peru; and that should restriction on importation of sugar be terminated, and there be a return to a free market, Peru would have unrestricted quantitative entry for her sugar in the American market. You may say further, however, that this Government is hopeful that its inability to give such assurance in regard to Peruvian sugar will not stand in the way of the continuance of the exploratory conversations for the purpose of determining whether, within the scope of the authority of the two governments, there exists a basis for entering into trade agreement negotiations.

Very truly yours,

For the Secretary of State:
Francis B. Sayre