611.5231/1083: Telegram

The Ambassador in Spain ( Bowers ) to the Secretary of State

4. Chief of Trade Agreement Section Ministry of Commerce in personal conversation with Commercial Attaché made following statements: Canadian Trade Commissioner now here pressing for commercial agreement with Spain on basis of substantial concessions by Canada in return for more favorable treatment Canadian automobiles. In current negotiations Germany is also pressing for increased quota allotment automobiles. In coming Spanish-British negotiations Spain would be in less unfavorable position if it could offer increased English automobile quota.

Indecision as to American treaty thus places Spanish Government in awkward position and inter-ministerial committee on foreign trade will shortly have to request Foreign Office to wire Embassy Washington to ask immediate action.

Despatch No. 1016, January 15.15 My considered opinion continues to be that it would be to our advantage to sign commercial agreement. Increasing gravity of exchange problem may oblige Spain to adopt measures to relieve situation. Certain financial journals are advocating displacement of gold. In case such action is taken we would be in far better commercial position if we preserve our market here by signing agreement thus gaining favored nation treatment with regard to leading American products.

Failure to sign agreement will doubtless entail loss of major part of Spanish market and make its recovery difficult.

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