561.35E1/545: Telegram

The Ambassador in Peru (Steinhardt) to the Secretary of State

69. Referring to Department’s instruction No. 38 of December 6, the Peruvian Government does not anticipate or contemplate in the immediate future any increase in acreage devoted to sugar or any increase in production other than such as may be occasioned by natural causes. Due to increased domestic consumption the Peruvian Government would not object to total permissible exports next year of 366,000 metric tons in lieu of 386,000 metric tons provided the quota recently granted by the United States is not thereby diminished. If the quota to be granted by the United States next year is to be not less than 56,000 metric tons, the Peruvian Government advises confidentially that it is prepared to surrender next year 20,000 metric tons of its free market quota of 330,000 metric tons granted pursuant to chapter 4 of the International Agreement.

The Peruvian Government hopes the United States will stand on its interpretation of article 9 (c) and thus continue to reserve complete freedom of action for the future and believes that its assurance of no increase in acreage and a voluntary reduction of 20,000 metric tons next year in its free market export quota should contribute materially to this end.

The Peruvian Government stresses that it was well understood in London that the quota to be granted Peru by the United States was to be in addition to the free market export quota specified in the International Agreement and is extremely anxious that the United States should not permit an alleged misunderstanding under the International Agreement to be used as an instrument for reducing or affecting its quota of exports to the United States.

The Peruvian Government is insistent that any voluntary concessions made by the United States or Peru at the present time to other signatories to the International Agreement should only be for the period of next year.

The Peruvian Government will resist any attempt by other governments to bring about directly or indirectly any reduction in the quota granted by the United States under the pretext of misunderstanding in the course of preliminary negotiations which led up to a written contract and observes that under both British and Dutch law the preliminary negotiations were merged in the final written agreement.