The Peruvian Ambassador (Freyre) to the Secretary of State

Your Excellency: With reference to the Memorandum of the Department of State, dated 14th [12th] August, 1936, expressing the earnest hope that my Government would take no action nor make any commitments which could be counter to the policy of equality of treatment unanimously subscribed to by the American Republics in the Economic Resolution adopted at the Seventh International Conference of American States at Montevideo, my Government have directed me to expose as follows their views on the subject.

The principal object of the Resolution above mentioned was to free international trade from such restrictions as high tariffs, quotas, etc., whereby various countries were endeavoring to protect their national economic structure.

According to Mr. Braden, one of the American Delegates to the Conference, the essence of the Resolution was that it favored the reduction of tariffs, as the main barrier to international trade, and the removal of quotas, as contrary to the equality of treatment; but that it did not prevent any country from establishing quotas, should they be considered necessary.

Doctor Saavedra Lamas, Chairman of the IX Committee where the Resolution was discussed and adopted, declared, on 13th December, 1933, without having been contradicted, that “Mr. Hull’s proposal amounted to a wish or a declaration, without implying any commitment whatsoever”.

The Peruvian Delegate, Doctor Barreda y Laos, stated that the Delegation of Peru accepted the Resolution with the following reservation: “The Delegation of Peru declares that the principle of equality of treatment is and should be the commendable basis on which to build international trade. But that Peru, with regard to the clause of the most favored nation, does not undertake any commitment which might be contrary to her interests in the treaties of commerce she may or will adjust in the future.”

The Resolution apparently has two separate aspects:

A doctrinarian bearing, that is in reality a declaration of principle;
A practical bearing, as to the form American countries should adopt for their treaties of commerce.

It does not seem to my Government that in either case have American countries, or other countries invited to accept these principles, complied with them.

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No independent, simultaneous or concerted action has been taken to reduce tariffs, or remove other barriers that restrict the flow of international trade, except on the basis of mutual and specified concessions. No multilateral agreements have been stipulated, eliminating prohibitive measures or lowering tariffs in a general way and to the benefit of all countries. Import duties continue to be as high as ever. A great majority of countries have failed to apply the principle of equality of treatment or the clause of the unconditional most favored nation, except with restrictions often seriously detrimental to the main products of Peru and to her economic structure.

The reservations made by the Delegation of Peru at the Montevideo Conference define the line of conduct methodically followed by the Peruvian Government in adjusting commercial treaties. This line of conduct is traced in general terms according to a commercial policy that excludes from such trade agreements as the Peruvian Government may negotiate the clause of the most favored nation, providing instead bilateral agreements with adequate and reciprocal concessions destined to facilitate trade exchange. For this reason my Government, without opposing subtopics a) and c), topic 9, of the Program for the forthcoming Inter-American Conference, formulated thereto a reservation.

Consequently, the trade agreement between Peru and Great Britain, to which the Memorandum of the Department of State refers, cannot be said to infringe any commitment made by Peru in subscribing to the Economic Resolution of the Montevideo Conference, since on that occasion Peru through her Delegation expressly stated, with regard to the clause of the most favored nation, that she did not undertake any obligation which might run counter to her interests, etc.

Finally, my Government wishes to recall that, before initiating negotiations for a trade agreement with Great Britain, Doctor Carlos Concha, then Minister of Foreign Affairs of Peru, stated to the American Ambassador at Lima that Peru must needs place her sugar on the American or British markets in order to save the Peruvian sugar industry from impending ruin; and Doctor Concha added that he wished in the first instance to approach the United States Government on the subject. The American Ambassador replied in due time that the United States Government could not grant any special facilities to the Peruvian sugar industry; that the United States Government had in view the possibility of negotiating a treaty of commerce with Peru; that however the United States Government was then unable to open the corresponding negotiations; and that, fully aware of the difficulties confronting the Peruvian Government, the United States Government would not deem prejudicial such concessions as might eventually [Page 924] be made by Peru to Great Britain in the trade agreement to be negotiated.

I avail myself [etc.]

M. de Freyre y S.