611.5331/190
The Secretary of State to the Minister in Portugal (Pell)
Sir: Reference is made to the Department’s instruction no. 65 of January 9, 1939 transmitting certain memoranda relative to preliminary trade-agreement negotiations between the United States and Portugal and requesting that the Legation submit any comments which it might wish to make regarding the proposed agreement. There is enclosed herewith a copy of a memorandum which was handed to the Portuguese Minister on February 17, 1939, transmitting a list of products of which the United States has been the principal source of Portuguese imports. There are also enclosed copies of memoranda of conversations with the Minister on January 27, February 13,7 and February 17, 1939 in regard to trade-agreement matters.
Draft general provisions, together with comments explaining the nature of each article, will be given to the Portuguese Minister in the near future. However, it is understood that in the meantime the Minister has asked his Government to comment on the memorandum of December 20 and on the list of products of which this country has been the principal supplier.
Prior to the discussion of February 17, the Minister had on various occasions expressed the belief that his Government would encounter no difficulty in regard to any of the bases for trade-agreement negotiations [Page 712] which were discussed in the memorandum handed to him on December 20, 1938. It will be noted, however, that on February 17 the Minister stated that his Government did not have the power in general to reduce customs duties but could only reduce the customs surtax of 20 percent on these duties. Thus, in general, the maximum duty reduction which the Portuguese Government would be able to grant to this country in a trade agreement would be equivalent to only 16⅔ percent of the total charge (duty plus surtax), whereas the United States Government is empowered to grant a 50 percent reduction in the duty on Portuguese products. It was pointed out to the Minister that any such inability to grant substantial duty concessions would appear to constitute a rather serious difficulty. In this connection, you are requested to inform the Department of any instances of reductions in the basic duty, whether effected by means of reclassification or otherwise, which have been granted by the Portuguese Government in any recent commercial agreement with another country.8
Very truly yours,