The Department of State to the Peruvian Embassy
Careful consideration has been given by the Government of the United States to the memorandum dated September 7, 1936, transmitted by His Excellency the Peruvian Ambassador.
With respect to the request of the Peruvian Government for a quota of 200,000 tons for the importation into the United States of sugar for consumption, the Government of the United States cannot but be wholly sympathetic with those sugar-producing countries which are today suffering the effects of the unfortunate conditions of the world market for this important commodity. As the Peruvian Government [Page 899] is undoubtedly aware, the Government of the United States has announced its readiness to be represented at an international conference for the purpose of improving the conditions of the world sugar market.11 The Government of the United States is obliged at the same time to reiterate what has been previously communicated to the Peruvian Government, viz., that the existing sugar quotas of the United States are provided for by legislation which is declared to be in force until the end of 1937. The Peruvian Government will recall that the quotas established by this legislation have been based upon the average importation of sugar for the various foreign countries concerned in three representative years in a nine-year period beginning in 1925. There are given below the figures according to statistics compiled by the United States Department of Commerce for general imports of dutiable cane sugar into the United States from Peru, and for comparative purposes from Cuba and from all foreign countries excepting Peru and Cuba for the years 1912 to 1933, inclusive. It will be noted that the general imports of Peruvian sugar in most of this period have been very small, while those of sugar from Cuba have been substantial.
ending June 30
From all foreign
Peru and Cuba
Calendar years ending
The Government of the United States could not, either in equity or in accordance with most-favored-nation stipulations embodied in the general provisions of treaties and agreements made with other countries, grant a materially increased sugar quota to Peru, even if such action were possible under existing legislation, without granting proportionately increased quotas to other sugar-producing countries, and to do this would obviously be to multiply many times such an increase in the quota given Peru. The result would be to increase very greatly the imports of foreign sugar into the United States and to decrease by a corresponding amount sugar production in the country.
Concerning the sugar quota allotted to Cuba on the basis of representative years, it is relevant also to advert to the special commercial relations which, as the Peruvian Government knows, have existed between the United States and that country for more than thirty years. This exceptional relationship has been consistently recognized for many years in the commercial treaties and trade agreements into which the United States has entered with other countries, and for the United States to adopt any inconsistent course at this time would be manifestly a departure from a long-established policy which was initiated not for narrow or selfish considerations of commercial interests, but as a basis for the economic development of a country whose political independence the United States was instrumental in establishing.
As to the restrictions which are placed upon the imports of sugar into the United States from Peru and other countries, it may be observed that a much higher import duty on sugar has been established by the Peruvian Government than has been fixed by the Government of the United States. So prohibitive has this restriction proved that it is understood that almost no sugar is being imported into Peru from other countries.
The memorandum of the Peruvian Government states that the Cuban Government is selling in the world market such sugar as it is unable to dispose of within the country or in the United States at prices which serve to depress world market prices, and suggests that the Government of the United States counsel the Government of Cuba in an effort to produce the discontinuance of this alleged practice. Without commenting upon the merits of this contention, the Government of the United States is of the opinion that the subject could more properly be made one for discussion directly between the Peruvian and the Cuban Governments, or for consideration at an international sugar conference. It may be mentioned in this connection that, according to reports received, representatives of Cuban sugar producers have indicated a disposition to discuss mutual sugar questions with representatives of sugar interests of Peru and other countries.[Page 901]
The Government of the United States greatly regrets the statement in the memorandum under reference to the effect that the Peruvian Government deplores to observe that it has a passive balance of trade with the United States and that it is considering measures calculated to balance the imports and exports in the Peruvian commerce with the United States. It is noted that the memorandum claims that in 1934 the imports into Peru from the United States amounted to more than 46,000,000 soles, while the exports to the United States after deducting reexports, which it states cannot be considered, aggregated only slightly over 4,000,000 soles, and that in 1935 the figures were about 59,000,000 soles and 6,000,000 soles, respectively. It is apparent that in calculating these figures, the Peruvian Government has assumed that all of its exports of mineral products to the United States are to be reexported and the Peruvian Government is evidently of the opinion that for this reason exports of minerals to the United States are not to be considered a true part of the Peruvian-United States trade.
According to the Peruvian official publication Boletín Mensual del Comereio Especial del Peru for June, 1936, the total exports from Peru to the United States in 1934 and 1935 amounted to approximately 43,399,000 soles and 64,476,000 soles, respectively. The Government of the United States believes that to deduct from these figures the exports of all mineral products from Peru to the United States on the assumption that they are to be subsequently reexported gives a picture of the trade between the two countries that is clearly erroneous. An analysis of the exports of the minerals to the United States in these two years reveals that a large amount of such exports was metals other than copper on which there have been no customs duties in the United States and which, for the most part, were not destined for reexport. The copper imported into the United States from Peru for reexport in 1934 and 1935, according to figures compiled by the United States Department of Commerce, amounted not nearly to the total amounts of Peruvian exports of all mineral products to the United States, but to 60,082,976 pounds, valued at $4,278,437 (or about 18,600,000 soles), and 68,563,798 pounds, valued at $4,856,478 (or approximately 20,350,000 soles), respectively. While it is true that annual figures of imports into the United States do not coincide exactly with those for exports of foreign countries to the United States, there is normally over a period of time little difference between the two sets of figures. By subtracting from the total of the exports from Peru to the United States the above amounts for imports of Peruvian copper for reexport, there will result remainders of approximately 25,000,000 soles for 1934 and approximately [Page 902] 44,000,000 for 1935, which are very much greater than the figures of 4,000,000 and 6,000,000 soles for 1934 and 1935, respectively, mentioned in the Peruvian Government’s memorandum.
It may be observed also that according to the publication Boletín Mensual del Comercio Especial del Peru of the Peruvian Government for June last, the exports of Peruvian merchandise to the United States have in recent months been increasing more rapidly than the imports into Peru of goods originating in the United States. In this connection it is noted in the publication mentioned that the exports in the Peruvian-United States trade increased from approximately 43,399,000 soles, or 14.2 percent of the total exports, in 1934 to approximately 64,476,000 soles, or 21.5 percent, in 1935, while the imports rose from approximately 46,061,000 soles, or 26.9 percent of the aggregate imports in 1934, to about 59,582,000 soles, or 33.8 percent in 1935. Thus, the Peruvian exports to the United States increased by approximately 21,077,000 soles, and the imports from the United States increased by only about 13,521,000 soles.
The same trend has been noted in comparing the years ending June 1935 and June 1936. According to figures published by the Bureau of Foreign and Domestic Commerce, United States Department of Commerce, the imports from Peru increased from approximately $6,160,000 in the first of these periods to $8,923,000, or by about $2,763,000, while the exports to Peru increased from about $11,247,000 to $13,550,000, or by approximately $2,303,000.
Apart, however, from the matter of the actual figures in the commercial relations between the United States and Peru, the Government of the United States believes that any measures that might be deemed expedient to establish a strictly bilateral balance and operation of commerce, would, particularly in view of the close trade relations that have long subsisted between the two countries, be most unfortunate. It seems apparent that if the various countries which have an excess of imports over exports in their trade with Peru should see fit to adopt such a policy, and if similarly the United States should call upon those countries with which it has a passive trade balance to level imports to the export figures, international commerce would suffer a still further shock, which would be severely felt by all countries of the world. Countries would be thereby prevented from purchasing and selling in markets where they can now most profitably do so, and trade would be still further diverted from natural channels of commerce.
The fact that an important trading nation like Peru has been so successful in recovering from the world depression owing largely to wise avoidance of policies of bilateral balancing and restriction of trade and payments has given great encouragement to other governments [Page 903] which are working for the general adoption of liberal trade policy, based on equality of treatment as an indispensable means of lessening economic and political tension. The Government of the United States has appraised very highly the effective cooperation which the Peruvian Government has in the past offered in the way of attempting by collective efforts to break down the various kinds of trade restrictions which are now so lamentably reducing international commerce with corresponding detrimental effects upon standards of living and upon world peace. It is therefore most earnestly hoped that the Government of Peru will defer any action of the character indicated in its memorandum of September 7, 1936, until at least after the forthcoming Inter-American Conference at Buenos Aires,12 when the countries of this hemisphere will have the opportunity of consulting jointly with one another with respect to problems of mutual interest.