Memorandum of Conversation, by the Chief of the Division of Commercial Policy and Agreements (Hawkins)

Participants: The Honorable David Dasso, Minister of Finance of Peru,
Señor Hector Boza, Adviser to the Minister of Mining,
Señor P. G. Beltran,
Señor Don Juan Chavez, Commercial Counselor of the Peruvian Embassy,
Mr. Hawkins

The Finance Minister accompanied by the other gentlemen above mentioned called to discuss certain matters connected with the proposed trade agreement with Peru. The Minister was principally concerned with the question of a concession in the trade agreement on long-staple cotton. The concession he had in mind was a reduction [Page 685] in duty and a lifting of the quota. He felt that failure to include a suitable concession on as important a product as long-staple cotton would be very hard to defend in Peru. He said he could not understand how we could deny such a concession consistently with the principles of commercial policy which we have advocated and proclaimed for a number of years. He said that that policy would require that instead of putting quotas and high duties on the product, Peru should be given the chance and encouraged to supply our needs. Instead of this, he finds that in addition to the most restrictive kinds of import barriers erected against the Peruvian product, we are now subsidizing our growers heavily in order to induce them to grow more of it and thereby to displace what might be obtained from Peru to the advantage of both countries.

Referring further to the political implications of leaving a cotton concession out of the trade agreement, the Minister went on to say that the Peruvian public cannot be expected to analyze the situation so closely as to appreciate whatever considerations there may be against the granting of such a concession; that the public is likely to view the situation superficially and to remember that, irrespective of circumstances and motives, the fact is that a while ago their cotton problem was largely solved by heavy purchases from Japan.

With respect to the remainder of the agreement, the Minister felt that no serious difficulties are likely to be presented. He felt that in general Peru could satisfy our requests for concessions by that country and that other concessions offered by the United States were satisfactory.

The Minister said that he expected to bring up the matter of the trade agreement next week with a view to pushing the negotiations to a conclusion before he leaves this country. He hoped that this could be done within a week or ten days and felt that this would be possible if the question of the cotton concession could be disposed of satisfactorily.