Memorandum of Conversation, by Mr. H. Gerald Smith of the Division of Commercial Policy and Agreements

Señor Chavez called at the Department to receive the list of the products on which this Government was prepared to offer concessions in the proposed trade agreement with Peru. The absence of long-staple cotton from the list was, of course, noted by Señor Chavez and he was informed that a final decision had not yet been reached whether it would be possible to include a concession on this product in the agreement. There was a brief discussion of the relation of a possible concession on cotton in the trade agreement to the negotiations now being carried on for the purchase by an agency of this Government of the Peruvian cotton surplus, and it was agreed that further discussions regarding cotton in the trade agreement would await outcome of the negotiations for the purchase. In the meantime it was decided that we could proceed as far as possible with the negotiations on other questions in the agreement, including Schedule I and the General Provisions. Regarding Schedule I Señor Chavez said that he was awaiting receipt of information from his Government. He said that in the discussions which he had had while he was in Lima, there were a few specific commodities in which difficulties would probably be encountered, particularly those where Peruvian concessions to Chile were involved or where certain domestic industries were affected, but on the whole he did not think that too great difficulty would be encountered in reaching a satisfactory agreement. Señor Chavez mentioned also, of course, the general question of the 20 percent increase in basic Peruvian import duties, which would have to be settled to arrive at the basis upon which duty reductions or bindings on specific commodities would be calculated. On the General Provisions, Señor Chavez said that he had only just received a Spanish translation of our proposals, but as there was no indication whether this meant that our proposals as presented were acceptable to the Peruvian Government, he had immediately written to Lima for clarification on this point.