The Minister in Portugal (Pell) to the Secretary of State
[Received August 22.]
Sir: I have the honor to refer to the Department’s instruction No. 94 of June 20, 1939, concerning preliminary trade agreement negotiations between the United States and Portugal, and to state that the subject matter therein has had the careful consideration of the Legation. When I called on Dr. Luiz Teixera Sampayo, Director General of Political Affairs in the Ministry of Foreign Affairs, on August 4, 1939, preparatory to going on leave, the trade agreement negotiations were brought up by me. Dr. Sampayo was noncommittal, stating the matter was up to the Director of Economic Affairs, and gave no indication of what would be done by Portugal though I offered to do anything I could in this connection while home on leave. The general [Page 714] problem will not be overlooked. The Department is aware of the suggestion of the Portuguese Minister at Washington, Dr. Bianchi, that a high official of the Department come to Lisbon for direct negotiations. I should hesitate to endorse such a move, unless definitely pressed by the Portuguese Government, and assurance given that such a gesture would lead to positive results. Perhaps, if nothing develops in the natural course of events during the next few months, I can, after consultation with the Department during my leave, put myself in a better position to press this matter, if that is desired, on my return to Portugal in early October.
There are certain questions that do arise in my own mind: (1) Will the Department agree, having exempted Puerto Rico (see Article 6, Section l),11 also to exempt the Portuguese colonies, excepting the Azores and Madeira, which islands are generally considered part of continental Portugal? Owing to special tariff concessions granted in the colonies to Portuguese exports, and in Portugal on imports from the colonies, the question will inevitably be raised. (2) Does not Article 17, Section 1,11 grant special privileges under cover of a small customs union? This may be necessary because of Canada, but it is assumed that the Department will not overlook the possibility of more agreements with Spain, once that country settles down. (3) Would the status quo ante be revived if this agreement were denounced and afterward expire, that is, would the provisions of the notes exchanged on June 28, 1910,12 cancelled by this agreement, regarding the treatment to be accorded to the merchandise of either country again become effective?
The Department’s instruction under acknowledgment has been shown to the Consulate General, which makes no comment at this time.
[In April 1940 the Portuguese Government indicated renewed interest in negotiating a trade agreement with the United States, and in June Mr. Paul T. Culbertson, Assistant Chief of the European Division, went to Portugal as a member of a diplomatic mission for the Portuguese Centennial celebrations with instructions also to undertake exploratory discussions regarding a trade agreement. He reported that further discussions would be futile due to the unwillingness of Count de Tovar, Head of the Economic Section of the Portuguese Foreign Office, to make concessions, especially after the entry of Italy into the war and the defeat of France. Trade-agreement discussions were therefore discontinued.]