611.2331/87

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

No. 83

Sir: Reference is made to your despatches No. 195 and No. 211 of January 8 and 15, 1938, respectively, regarding the possibilities of a reciprocal trade agreement between the United States and Peru. The Department wishes to commend you and your staff for the manner in which the preliminary informal conversations with the Peruvian Foreign Minister are being handled, and the way in which the preliminary data have been prepared and submitted.

Three points raised in the despatches under reference appear to require comment by the Department at this time. They are (1) the question of this Government allowing an exception to the unconditional most-favored-nation clause in a trade agreement with Peru, to cover certain phases of trade between Peru and Chile under the existing commercial agreement between the two countries; (2) the situs of trade-agreement negotiations; and (3) the timing of the removal by Peru of existing discriminations against American trade.

With respect to the first point, the Department is not in a position to give you a definitive reply until it has received an indication as to the views of the Peruvian Foreign Minister following completion of his study of trade relations between his country and Chile. If the Foreign Minister should state that in an agreement with the United States his Government would expect to have all or any part of that trade excepted from the provisions of the most-favored-nation clause, you should inquire upon what basis such an exception is requested, and transmit his reply to the Department for consideration, together with such comments as you may deem appropriate. As you of course are fully aware, the Department would naturally be opposed to any weakening of that principle by exceptions to the most-favored-nation clause which are not founded upon such special conditions as to permit them to be generally recognized as long standing and legitimate.

Regarding the second point, the situs of negotiations, the Department has given careful consideration to the views expressed in your despatches under reference. Unless unforeseen and unusual circumstances should arise which would necessitate a change in the Department’s opinion, no objection is perceived to negotiations being carried on in Lima, once the basis therefor has been agreed upon, and you may so inform the Foreign Minister.

With respect to the third point, the Department does not believe it will be necessary to discuss this question with the Foreign Minister until an accord has been reached on point one, considered above. In the event the Foreign Minister’s conclusion on that point should be that Peruvian trade with Chile would not be excepted from the provisions [Page 841] of the most-favored-nation clause in an agreement with the United States, and the question of any other exceptions has been settled in a similar manner, so that a basis for negotiations satisfactory to this Government has been reached, you may then convey to him the substance of the following: Once an accord has been reached upon the basis for negotiations, this Government would be prepared to issue its preliminary announcement of intention to negotiate a trade agreement, on the understanding that the Peruvian Government would be prepared to extend to American trade, not later than the day of the formal public notice, treatment on a basis of full equality with that accorded the commerce of any other nation. This would imply, naturally, the removal from that time forward of any discriminations against American trade which might then exist.

In connection with the formal notice of this Government, which would be issued subsequent to the preliminary announcement, there would be published a list of the commodities on which this Government would consider granting concessions to Peru in a trade agreement. In preparing this list for publication, this Government would need to be furnished with a list of the commodities on which the Peruvian Government may request concessions of the United States, and as mentioned on page 3 of the Department’s instruction No. 48 of December 31, 1937,8 the Peruvian request list could usefully be furnished as soon as convenient after agreement has been reached as to the general basis for negotiations, in any event not later than shortly after the issuance of the preliminary public announcement.

Prior to publishing, in connection with this Government’s formal public notice, a list of commodities on which concessions to Peru would be considered, the contents of such list would be made known to the Peruvian Government and the approval of that Government would be obtained prior to its publication. While the publication of such a list would not commit this Government to grant concessions on any or all of the commodities mentioned therein, it would probably meet the objection you anticipate to a request for a removal of discriminations by Peru without a knowledge on the part of officials of that Government of the concessions which might be expected in a trade agreement with the United States.

For your information, and in case the question should arise during your preliminary conversations with the Foreign Minister, the reason this Government publishes a list of the commodities with respect to which the granting of concessions to the other Government may be considered, and to which consideration will be restricted in the negotiations, is to provide all interested persons with definite and official notification as to whether any product in which they are interested is [Page 842] under consideration, in sufficient time for them to prepare and submit appropriate briefs to the Committee for Reciprocity Information and to make application to that Committee to appear at the oral hearings, thus saving them the trouble of preparing and submitting briefs and making oral presentations on any product not concerned in the negotiations.

Very truly yours,

For the Secretary of State:
Francis B. Sayre
  1. See the paragraph beginning “With respect to the commodities …”, p. 833.