611.2331/83
The Secretary of State to the Ambassador in Peru ( Steinhardt )
Sir: Reference is made to your despatch No. 149 of December 3, 1937 regarding the possibility of a reciprocal trade agreement with Peru.
You should inform the Foreign Minister that the Department is gratified to learn of the interest of the Peruvian Government in a trade agreement with the United States and that your Government is glad to join with his Government in exploring the possibilities of [Page 833] such an agreement. You should explain, at the outset of the exploratory conversations, that before this Government would be prepared to make any public announcement (such as is made in accordance with procedure here) regarding the initiation of trade-agreement negotiations, it would have to be definitely assured that the Peruvian Government would negotiate upon the basis of the unconditional most-favored-nation principle as applied to all forms of trade and payments control. It should be made clear that the acceptance of this basis for negotiation would involve the removal of any discrimination against the trade of this country that might exist. In this connection, if you deem it advisable, you may state that the prompt removal by Peru of any discrimination that may exist would greatly facilitate the progress of the exploratory conversations.
In view of the nature of the commercial agreement between Peru and Chile,1 you may state, if you deem it advisable, with respect to the question of contiguous countries, that this Government would wish to be assured also, prior to any public announcement, that the Peruvian Government would not insist upon trade arrangements with such countries constituting an exception to its pledge of unconditional most-favored-nation treatment in a trade agreement with the United States.
You may, if you deem it useful, outline the customary procedure set forth below which has been followed by this Government in the negotiation of trade agreements. As soon as possible after agreement has been reached upon the basis for the negotiations, a preliminary public announcement is made by this Government that negotiations are contemplated. The purpose of this announcement is to afford interests in this country an early opportunity to present suggestions as to the import and export products to be considered in connection with the agreement. After an interval of not less than five weeks, formal public notice of intention to negotiate is given. Accompanying the formal notice, there is published a list of products on which the United States will consider granting concessions to the other country. This list, however, does not constitute a definite commitment by this Government to grant a concession on any of the products listed. In order to be in a position to publish such a list, it is necessary for this Government to have a list of products on which the Government of the other country contemplates requesting concessions from the United States.
With respect to the commodities which the Peruvian Government might eventually wish to include in such a list, you may inform the Foreign Minister that this Government in the negotiation of trade agreements follows in general the rule of the principal supplier, that [Page 834] is, that concessions usually are granted in the first instance to those countries which are the chief source of supply of imports into this country of the respective commodities. In this connection, however, you may also point out to the Foreign Minister that through the application of the unconditional most-favored-nation clause in an agreement with the United States, Peru would obtain the benefit of any concession granted to a principal supplier of any commodity which Peru, although not such a principal supplier, exports to the United States. Keeping in mind the foregoing, a tentative list of the commodities on which the Peruvian Government contemplates requesting concessions of this country might usefully be furnished by that Government as soon as convenient after accord has been reached on the basis for negotiations.
In connection with the preliminary work here on the commodities on which concessions might be requested of the Peruvian Government, it would be helpful if the Embassy were to supply the Department at an early date with a list of the products imported into Peru from this country upon which it believes concessions could most usefully be requested by this Government. If possible, this information should be compiled without approaching commercial interests in Peru. If it should be necessary to consult such interests, the approach should be made in such a manner as not to reveal the purpose of the inquiry. In presenting this information, it would be desirable, in the case of each commodity discussed, to point out whether or not the present Peruvian tariff constitutes an undue burden on importation from this country; whether a lowering of the tariff might be expected to result in increased imports from the United States; whether there exist any special local factors which should be taken into consideration, such as, for example, the competitive situation with respect to similar commodities imported from other countries, the possible influence of the internal tax structure on the sale of the product, any domestic production of the commodity, or any local distribution problems which it would be desirable to consider; and, in general, any other information which the Embassy deems pertinent to a complete study of the items upon which this Government might request concessions. In compiling this information you may wish to secure the cooperation of the Consul General and the Commercial Attaché.
There is being forwarded to you under separate cover a copy of the “standard” general provisions2 which have been developed for use in reciprocal trade agreements. It would be helpful if the Embassy were to provide the Department with its comments on the applicability of these provisions in connection with an agreement [Page 835] with Peru, pointing out particularly any instances where it would appear that legislative measures or other practices existing in Peru might be in conflict with any of these standard provisions. You should also provide the Department with your views as to the adequacy of these general provisions in the light of such measures or practices.
The Department appreciates the views expressed in your despatch No. 149 of December 3, 1937, as to the advantages to be derived from the prompt inauguration of negotiations and from a sustained effort to consummate these negotiations as rapidly as possible. For this reason the Department trusts that it will be possible for the Embassy to compile and forward at the earliest possible moment, consistent with the other work of the Embassy and Consulate General, the information requested in this instruction and in the Department’s instructions Nos. 23 and 28 of November 3 and 13,3 respectively.
You should report fully the results of any conversations you may have with the Foreign Minister on the question of a possible trade agreement.
The Department is greatly interested in your comments with respect to the question of ocean freight rates, as contained in your despatch No. 140 of November 30, 1937,4 and in accordance with the established practice followed in similar situations has brought your comments confidentially to the attention of the Maritime Commission. However, the Department does not yet know what action it may be possible for the Commission to take regarding this matter, but will keep you apprised of developments.
Very truly yours,
- Signed March 17, 1934; for text, see Peru, Tratados, Convenciones y Acuerdos Vigentes entre el Peru y otros Estados (Lima, 1936), vol. i, p. 214.↩
- For text of original standard general provisions, see Foreign Relations, 1935, vol. i, j. 541. Minor changes in these standard provisions were made from time to time.↩
- Neither printed.↩
- Not printed.↩