611.236 Sugar/16
The Peruvian Ambassador (Freyre) to
the Secretary of State
[Translation]
Washington, October 6, 1936.
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.
[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.
