Memorandum of Conversation, by Mr. John C. Ross of the Division of Trade Agreements

Participants: Dr. João Antonio de Bianchi, Minister of Portugal;
Mr. Hawkins, Division of Trade Agreements;
Mr. Ross.

Dr. Bianchi called by appointment at 11 o’clock this morning for the purpose of meeting Mr. Hawkins and of receiving a list of products of which the United States has been an important supplier of Portuguese imports.

After the usual amenities’ had been exchanged Dr. Bianchi repeated what he had said on earlier occasions to the effect that his government is primarily interested in concessions on fortified wines, sardines and Madeira embroideries. The possibility of tariff reclassifications for Port and Madeira wines, boneless and skinless sardines and the higher priced Madeira embroideries were then discussed in a general way.

In this connection Mr. Hawkins referred to our requirements of public notice and hearings and emphasized that this government could give no commitment whatever regarding any aspect of the proposed negotiations until after these requirements had been met. He went on to say that the public hearings are of real importance in determining what might be done in a trade agreement. Meanwhile, in order to avoid any misunderstanding on the part of the public in either country regarding the exploratory conversations designed to find a basis for an agreement, discretion regarding those conversations was of course essential.

The Minister replied that he understood these matters and was sure that his government also understood them.

Dr. Bianchi went on to say that his government was very much disappointed that the Department could not send someone to Lisbon to discuss the proposed agreement. Mr. Hawkins pointed out that it was very difficult to see what might be done about this matter at the present time. He stated further that we would, of course, be quite willing to reconsider the matter at a later date if this should seem appropriate.

Mr. Hawkins then handed to Dr. Bianchi the list of products5 of which the United States has been an important source of Portuguese import. After reading the list the Minister remarked that his government did not have the power in general to reduce Portuguese [Page 710] customs duties, but could only reduce the 20 percent customs surtax (20 percent of the duty paid, not of the value of the goods). In some cases duties could be reduced on reclassification of particular items.

It was pointed out to the Minister that we had referred to this matter in the memorandum handed to him by Mr. Sayre on December 20, 1938.5a Dr. Bianchi was shown a copy of the memorandum, on page 9 of which the following statement is made:

“It would be expected that the Portuguese Government would be prepared to consider, in connection with trade-agreement negotiations, not only reductions of its customs surtax but also reductions as well as bindings of its customs duties and other charges on the importation of products of which the United States is in general the principal or an important supplier of Portuguese imports.”

The disparity between our power to consider 50 percent duty reductions and the apparent restrictions on the Portuguese Government to consider reductions of the 20 percent surtax alone was then pointed out. This difficulty appeared to be rather serious and very careful consideration would have to be given to working out a solution of the problem. Dr. Bianchi agreed that he would ask his government to comment fully on this aspect of the proposed negotiations and added that he would, meanwhile, send us informally a brief analysis of his understanding of the situation.

It was agreed further that the Minister would ask his government to comment on our memorandum of December 20, and on our tentative list of products without waiting for our draft of general provisions with explanatory comments on the various articles. Meanwhile, we would continue preparing this draft as rapidly as possible.