611.236 Sugar/16

The Peruvian Ambassador ( Freyre ) to the Secretary of State

[Translation]

Excellency: I have the honor to transmit to Your Excellency, in compliance with instructions sent by my Government, a Memorandum on the grave crisis through which the Peruvian sugar industry is passing and on the only remedies which, in the judgment of my Government, and that of the public opinion of the nation, could relieve the evil.

As Your Excellency will see, the action of the Government of the United States in the sense suggested by the enclosed Memorandum would succeed not only in relieving a situation which has serious economic, political and social repercussions, but would, at the same time, facilitate the conclusion of a commercial agreement between our two countries, based on terms of real reciprocity.

I therefore highly request, Your Excellency, to give the said memorandum your special attention; and confident that the observations of my Government will merit a favorable reception from the Government of the United States, I improve the opportunity to reiterate etc.

M. de Freyre
[Enclosure—Translation]

The Peruvian Embassy to the Department of State

Memorandum

1.
The Government of Peru considers that the crisis in the national sugar industry has reached an extremely acute period and can no longer suffer further delays. It also considers that no local factor is present in the situation of the Peruvian sugar industry which could be subjected to an independent and decisive action of the Peruvian Government. Consequently, it has to face the problem from the point of view of the international commercial relations of Peru and adopt a policy sufficiently active, on the basis of real compensations, with other countries, to open or broaden markets for Peruvian sugar.
2.
In order to judge of the gravity of the sugar crisis in Peru, we must consider that upon sugar depend 200,000 persons; that it represents huge capitals, represented both by the value of the land given to the cultivation of sugar, and by the investment in its industrial [Page 897] exploitation; that in the great sugar zone there is no possibility of substituting any other crop for the cultivation of sugar cane; that for reasons of a political and social character, the paralyzing of the sugar industry would have the gravest repercussions; and that public opinion, represented by all of the important press organs of Lima, demands energetic and prompt solutions.
3.
The Peruvian Government has repeatedly received memorials and documents from the National Agrarian Society—the representative center of agricultural interests,—and from the industrialists affected, but it has not desired to be guided solely by interested opinions and has subjected the general situation to a profound study by the Commercial Department of the Ministry of Foreign Relations. By that study, it has been established that one of the indispensable measures to overcome the ruinous crisis of the Peruvian sugar industry is that this industry should be able to place 200,000 tons in the United States, from which it is excluded by the established system; and that, furthermore, in the Liverpool market, which is free to our sugar, the excess Cuban production is effecting a dumping which is lowering the price to a point below the cost of production. As is natural, no industry can resist this situation.
4.
Now, both the opening of the market of the United States to Peruvian sugar up to the limit of 200,000 tons, and the suppression of Cuban dumping on the English market, depend on the action of the Government of the United States. The limit which the Jones-Costigan law places on this action is more apparent than real, because the quota fixed for Cuba can be modified in this year and if the Government of the United States desires to aid the Government of Peru it can obtain from the Cuban Government the yielding or transfer of the amount of 200,000 tons to Peruvian sugar which is a small amount of the enormous Cuban quota of 1,700,000 tons.
5.
In concurrence with, or independently of, this measure, the Government of the United States can exert influence on the Cuban Government for the suppression of dumping. The over-production represented by the dumping had its origin in the necessity of caring for the problem of unemployment in Cuba, but this problem has lost seriousness, so that now an artificial situation is being maintained, the termination of which would not injure Cuba and would save the Peruvian sugar industry from ruin. The Peruvian Government is convinced that the United States Government could give counsel in this sense which would be followed by the Cuban Government.
6.
If, as a consequence of the measures which might be adopted by the United States Government, the price of Peruvian sugar should, as is certain, reach seven shillings or more, the Peruvian Government could secure from the sugar producers the payment of an equitable [Page 898] tax which could be assigned to caring for the settling of the external debt.
7.
In the situation which has been created, the Peruvian Government laments to observe that the statistics of its commerce with the United States strongly favor this latter country. Thus, in the year 1934 imports totaled more than S/o. 46,000,000, while exports, after deduction of the re-exports which cannot be considered, only amounted to somewhat more than S/o. 4,000,000. In the year 1935 imports were over S/o. 59,000,000 while exports did not reach S/o. 6,000,000. To this visible commerce there must be added the greater disproportion created by the invisible commerce (freights, passenger fares, maritime insurance, profits of enterprises established in Peru).
8.
Only sugar could relieve the deficit, for Peru, in the balance of payments, and if this should not be possible by means of a rapid action of the United States Government, the Peruvian Government could not consider concluding a Commercial Agreement, in which the United States Government has shown interest. Furthermore, the Peruvian Government would have to consider immediately the adoption of a policy of measures capable of producing rapidly also a leveling up of the balance, by means of a régime different from the present régime towards imports of the United States, because public opinion so requires.
9.
This public opinion of Peru is not unaware, because of the ample expositions which have been made on the problem, of the part of the United States in it, nor is it unaware of the fact that the bonus price granted in that country to Cuban sugar is a direct cause of the dumping effected by Cuba on the English market, and that it would not be possible if that special price did not protect the Cuban industry from the loss which, in principle, the dumping, under the circumstances in which Cuba does it, ought to represent for it.