Foreign Relations of the United States Diplomatic Papers, 1938, The British Commonwealth, Europe, Near East, and Africa, Volume II

611.5331/165

Memorandum of Conversation, by Mr. Laurence J. de Rycke of the Division of Trade Agreements

[Washington,] May 10, 1938.

Participants:	Dr. J. A. de Bianchi, Portuguese Minister.
	Mr. Deimel.
	Mr. T. C. Achilles of Eu.
	Mr. de Rycke.

Dr. de Bianchi called by appointment to explore further quite informally the possibilities of trade-agreement negotiations between the United States and Portugal. Restating what he had told Mr. Sayre at an interview last February, the Minister said that he had discussed the subject with his Government last summer and had been requested to explore informally with us the prospects of negotiating a trade agreement. He stated that he thought no serious problems would arise with respect to the general provisions since his Government was familiar with the general provisions included in the various trade agreements negotiated by this Government and since there were no exchange or quota restrictions imposed on imports into Portugal.

Mr. Deimel explained to the Minister in some detail our general procedure with respect to the negotiation of trade agreements. He emphasized that anything that might be said at this time was entirely informal and tentative. He likewise stated that there were two fundamental questions involved in informal discussions of this type, namely (a) whether a basis for a trade agreement existed and (b) when it would be desirable to make preliminary announcement if a basis for a trade agreement were found. Mr. Deimel pointed out that we could consider at this time only the first of these questions. Mr. Deimel likewise emphasized the importance to this Government of the general provisions and pointed out that even though Portugal did not now impose exchange or quota restrictions, it would be necessary to include general provisions to cover those subjects to provide for possible future eventualities.

The Minister said that he fully understood that the present conversations were entirely informal but that he hoped they might result in some informal indication of what might be done which he could communicate to his Government for study. The Minister likewise emphasized that his Government was devoted to a liberal commercial policy and that he did not believe that any disagreement would arise with respect to the general provisions.

The Minister then stated that there were three points which he wished to raise with respect to the general aspects of the problem: (1) Would a trade agreement replace the present executive agreement concluded in 1910⁹ or, in the event that that was not deemed appropriate or desirable, might not some indication be made in the trade agreement that the existing agreement would be replaced?; (2) would the abolition of flag discrimination, which the Minister surmised was the most important concession which this Government might wish to obtain in a trade agreement, be obtained through an article in the general provisions or by a separate exchange of notes at the time the trade agreement was signed?; and (3) could some clause be inserted in the proposed trade agreement protecting the geographical designation of Portuguese wines, especially Port and Madeira?

The Minister stated that the Portuguese Government had consummated a number of agreements with foreign countries in which the word “Port” was restricted to Port wine originating in Portugal and that it would be difficult to negotiate with the United States on any other basis. He observed, however, that American law would not permit this Government to enter into such an agreement but he thought it highly desirable that we supply him with an informal statement which he might communicate to his Government indicating that in the proposed trade agreement “Port” would not be construed as a generic term but would be held as a geographical designation.

It was pointed out to the Minister that Port, Sherry, and Madeira wine now enter the United States under the same tariff paragraph and that Portugal is not the principal supplier of the wine entering under this paragraph. It was observed that if a concession on Port wine were granted to Portugal it would be necessary to generalize the concession to all countries who might wish to export that product to the United States. The Minister stated that he was not particularly concerned with that aspect of the problem because agreements between Portugal and important wine-producing countries prohibited those countries from exporting wine labeled “Port”. He felt therefore that if a concession on Port wine were made in the trade agreement the major benefits would accrue to Portugal.

The possible interest of Portugal in a concession on Madeira wine was then discussed, and the question whether a possible concession on Portuguese wines should refer to them by the terms, “Port” and “Madeira”, or should cover the entire tariff classification as now worded, was referred to. The Minister stated that he realized that a concession in the latter form would include Sherry wine imported from Spain but stated that he was not concerned at that possibility because Port and Sherry were two distinctly different products.

The Minister then mentioned the following commodities on which he said he thought his government would be especially interested in obtaining concessions in a trade agreement:

1. Cork and cork wood.

2. Manufactured cork.

3. Sardines.

4. Port and Madeira wine.

5. Madeira embroideries.

6. Beeswax.

7. Chestnuts.

8. Wine lees and argols.

With respect to sardines the Minister stated that he believed Portugal was the principal supplier of the higher priced product, and that his Government was actively interested in maintaining and improving the quality. With respect to Madeira embroideries the Minister stated that the industry was now producing a lower class product than his Government wished because of the necessity of competing with Chinese and Puerto Rican embroideries under the existing ad valorem tariff; but that it was eminently fitted to produce a higher quality product. He indicated that his government would be primarily interested in some concession worked out to be of primary benefit to high quality Madeira embroideries, as for instance by making the duty part ad valorem and part specific.

The Minister then observed that since the agreement with Brazil¹⁰ was already translated into Portuguese, the general provisions of that agreement might be taken as a working model for the proposed agreement with Portugal. It was pointed out to the Minister that the trade agreement with Brazil was one of the first negotiated by this Government and that a number of changes in the general provisions had been made since that time. It was agreed that the Brazilian general provisions should be studied in conjunction with the standard general provisions and in the light of Portuguese commercial policy to see what changes might be thought desirable.

It was agreed that the various points outlined above would be further considered, with a view of possibly enabling Dr. de Bianchi to submit some sort of report to his Government early in the summer, in the expectation that it might prove possible to advance to public announcements and definitive negotiations in the fall.

9. Commercial Arrangement Between the United States and Portugal, effected by exchange of notes signed at Washington June 28, 1910, Foreign Relations, 1910, p. 828.
10. For correspondence concerning the Reciprocal Trade Agreement between the United States and Brazil, signed February 2, 1935, see Foreign Relations, 1935, vol. iv, pp. 300 ff. For text of agreement, see Department of State Executive Agreement Series No. 82, or 49 Stat. 3808.