611.2331/86
The Ambassador in Peru (Steinhardt) to the Secretary of State
[Received January 18.]
Sir: I have the honor to refer to the Department’s instruction No. 48 of December 31, 1937, regarding the possibility of a reciprocal trade agreement with Peru. Immediately upon receipt of the Department’s instruction I conferred with Dr. Concha and conveyed to him the substance thereof.
As Peru has not in the past either accepted or practiced the unconditional most favored nation principle, I feared that the required informal assurance of the acceptance of this principle as a preliminary to the opening of negotiations might constitute an insuperable barrier. Dr. Concha intimated, however, that he was not opposed to the acceptance [Page 836] of this basis of negotiation, contenting himself with the observation that he might find himself confronted with practical difficulties arising out of the existing commercial agreement between Peru and Chile.5 He made particular reference to the free entry of Chilean wheat.
I asked him whether Peru had any commitments to Ecuador, Colombia, Brazil or Bolivia—as the other contiguous countries—which might create special problems in the course of negotiations with the United States based on the unconditional most favored nation principle. Dr. Concha replied that so far as he could recall, there were none. I inquired particularly as to Peruvian-Bolivian commercial relations and was informed that they were at present on a most favored nation basis and would not create any difficulty in the course of negotiations with the United States.
Dr. Concha then asked me whether, if he agreed to the unconditional most favored nation principle as the basis for the negotiations, it would be possible—should he find it imperative—to make one or more reservations or exceptions arising out of the commercial agreement with Chile which he added was all important to Peru. I told him that this was a question which I was neither competent nor authorized to answer, but that I would be glad to transmit his inquiry to the Department for an expression of its views.
Dr. Concha expressed his preference for a trade agreement with the United States as against the existing agreement with Great Britain6 and voiced his chagrin at having been virtually compelled to negotiate the agreement with Great Britain, emphasizing that he would much preferred to have made an agreement with the United States. He added that the United States having closed its doors to every Peruvian export which permitted the country to eke out an economic existence, he had been compelled to make trade agreements with those countries which had been prepared to receive Peruvian exports. He said he hoped there had been a change in the position of the United States and that if such a change became manifest in the course of the negotiations, it would afford him great personal satisfaction to be the individual to conclude a trade agreement with the United States.
He then remarked that he assumed additional concessions on sugar could or would be granted by the United States and that while such concessions would be welcome and were unquestionably desired by Peru, he was more anxious to obtain concessions on commodities and products which were not—as he put it—like sugar, in the hands of three or four large foreign interests. He particularly mentioned baleta, copper, wool, hides, alpaca, vanadium, and a long staple cotton [Page 837] which he said he understood was not grown in the United States. I again remarked that I was neither competent nor authorized to discuss specific commodities or products, but said that when his list of desired concessions was prepared it would, of course, be examined by the Department for appropriate comment. I added that the only assurance I could give him was that every suggestion or request made by the Peruvian Government would receive sympathetic consideration from the Department, and that if no concession could be made in respect of any one or more specific commodities or products, I was sure that he would find the reason for the inability to make a concession rested upon a sound basis and would not be occasioned by a failure to understand or sympathize with Peru’s export problems.
Dr. Concha thanked me for this assurance and said he was convinced that the Department was really desirous of helping Peru and of relieving his country insofar as it was possible for the United States to do so, from the necessity of granting exceptionally favorable treatment to those countries which have been freely accepting Peruvian exports.
Dr. Concha asked me where the negotiations would take place and I told him that while I did not know the Department’s disposition on this point, it had been customary for the negotiations to be carried on in Washington. While I gained the impression that he would prefer to conduct them in person and that a much more expeditious and perhaps satisfactory outcome could be thus achieved, I do not believe he will raise the slightest objection should the Department express a preference for Washington as the situs of negotiations.
. . . . . . . . . . . . . .
I referred to the existing discrimination against imports from the United States and particularly to our loss of a substantial part of the Peruvian market for commodities and products which Peru has heretofore freely purchased in the United States. Dr. Concha replied that he had sought to avoid this undesirable development by offering to negotiate a trade agreement with the United States some years ago, but that he had been given to understand at that time that the United States was not prepared to negotiate, and that in consequence he had been obliged to make arrangements with those countries which at the time were prepared to accept Peruvian exports. He added that in most instances the terms which had resulted in discrimination against the United States had been forced upon Peru.
Dr. Concha remarked that as a result of his many years in the United States he had understood at the time that political considerations, and particularly the necessity of ratification by the Senate, had stood in the way of a trade agreement with the United States, and that in his opinion the authority granted the President under [Page 838] the Trade Agreements Act7 to negotiate commercial treaties without the consent of the Senate—thereby minimizing the effects of lobbying and eliminating sectional and political considerations—constituted the greatest single step by the United States towards the recapture of at least a part of its lost trade with Central and South America that had been made within a generation.
This being our first detailed discussion of the subject, I deemed it inexpedient to urge Dr. Concha to take immediate steps looking towards the removal by Peru of the discrimination that now exists against our trade. In my opinion were I to succeed in persuading him to take such steps, he would meet great resistance which might seriously imperil the successful outcome of the negotiations about to be undertaken. Peruvian mentality, coupled with the psychology of the individuals whose cooperation he would require, and of those most affected by such action, would demand immediate disclosure of the concessions to be made by the United States in return for the removal of existing discriminations. In the absence of Dr. Concha’s ability to state just what concessions are to be received from the United States, his position in the trade negotiations would be materially weakened.…
At the close of our conversation, Dr. Concha stated that he was not at the moment prepared to give me the definite informal assurance required by the Department that the Peruvian Government would negotiate upon the basis of the unconditional most favored nation principle and would not be until he had first made a study of all of Peru’s existing trade agreements, but that he would make such a study at the earliest possible moment and would discuss the subject further with me as soon as he was in a position to do so. He added that he might find it expedient to appoint a committee to furnish him with the necessary data and to advise with him if and when the negotiations began.
I entertain the hope that I may have some further word for the Department on this subject in the near future.
Respectfully yours,