The Secretary of State to the Peruvian Ambassador ( Freyre )

Excellency: I have the honor to acknowledge the receipt of Your Excellency’s courteous note of November 6 last, which was in reply to the memorandum of the Department of State dated August 12, 1936, on the subject of discriminatory effects of the trade agreement then being negotiated between Peru and Great Britain.

This Government has noted that in referring to the principle 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 in 1933, Your Excellency’s note states that “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”. The note adds that “Import duties continue to be as high as ever”.

With respect to these statements, I am sure that Your Excellency has overlooked the application of the liberal trade policy which has formed one of the major policies of this Government during the past four years. The United States has concluded in this period fifteen reciprocal trade agreements with other countries. Each of these agreements has provided for tariff reductions, as well as the binding of a number of already existing rates, and the United States extends these reductions and bindings to the trade of all countries which are not discriminating against American commerce. This has meant in effect a considerable reduction in the tariff rates of this country, and Peru without making any concessions to the United States specifically in exchange, has, together with most of the other countries of the world, shared both directly and indirectly in the benefits of these agreements. The extent of these benefits may be judged from the publication of the United States Tariff Commission, entitled Changes in [Page 927] Import Duties Since the Passage of the Tariff Act of 1930, dated January 21, 1937, which I have the honor to enclose for Your Excellency’s information. It should also be observed that the American trade agreements program has further contributed to the reduction of trade barriers throughout the world by the action of a number of other countries in generalizing the concessions which they have granted to the United States.

I may add that this Government is now negotiating additional trade agreements, and studying the possibilities of still other agreements, all of which will serve to liberalize further the customs treatment accorded by this and other countries to the importation of foreign products.

It has been noted in the concluding paragraph of Your Excellency’s note under acknowledgment that the American Ambassador is reported to have informed the Peruvian Government that the United States would not deem prejudicial such concessions as might eventually be made by Peru to Great Britain in the trade agreement then being considered between the two countries. In this regard, I must say emphatically that any statements made by a representative of this Government in the sense mentioned must have been predicated upon the definite assumption that such concessions would not be of an exclusive nature; any other interpretation would be obviously inconsistent with the cardinal principle of the commercial policy which this Government is pursuing and which it has earnestly urged other countries to adopt, namely, the unconditional most-favored-nation principle.

On November 18 last, the American Ambassador, upon instruction, presented a note to Your Excellency’s Government referring to the coming into effect of Articles IV and V of the Commercial Agreement of October 6, 1936, between Peru and Great Britain, and stating that this Government assumed that imports into Peru of goods from the United States would be granted the benefits accorded like goods from Great Britain, as otherwise it would have no course other than to regard the operation of the Agreement as discriminatory. At the same time, the Ambassador again invited the attention of Your Excellency’s Government to the practice, established by law, of this Government in generalizing for the benefit of other countries concessions granted in trade agreements, with the single exception of Cuba, provided that discrimination was not made against the commerce of the United States. This Government has regretfully learned, however, that the concessions recently granted to Great Britain have not been applied by the Peruvian customs authorities to goods from the United States.

[Page 928]

In consideration of the policy of this Government to generalize for the benefit of other countries customs concessions granted in trade agreements, I feel confident that Your Excellency’s Government will agree that it is only fair for this Government to expect from Peru the same treatment that it accords to Peru. I trust, for this reason, and in view of the reaffirmation of the principle of equality of trade contained in the Final Act of the recent Inter-American Conference for the Maintenance of Peace, that Your Excellency’s Government will cause appropriate instructions to be issued to its customs authorities in order that American goods will not be further subjected to discriminatory treatment.

Accept [etc.]

For the Secretary of State:
Francis B. Sayre