The Secretary of State to President Roosevelt
My Dear Mr. President: On March 28 Mr. Welles wrote to you concerning the conclusion of the proposed trade agreement with Peru, indicating that full accord had not yet been reached in the trade-agreements organization on the question of the action to be taken on long-staple cotton.
The negotiations on all other points have virtually been concluded. However, the Peruvian officials, including the Finance Minister now visiting here, have taken the position that a trade agreement between Peru and the United States, with its long-range implications, which did not include any concession at all on as vitally important a Peruvian export commodity as long-staple cotton, would be very difficult to defend in Peru. In short, the Peruvian officials are unwilling to sign an agreement not including long-staple cotton.
In order to provide a concession of any great value to Peru, it would be necessary not only to reduce the duty but also to increase or remove the quota at present imposed pursuant to Section 22 of the Agricultural Adjustment Act, which limits imports from Peru to about 4,000 bales annually. We propose merely a reduction of 50 percent in duty in the agreement, with the right reserved to impose quotas under the Agricultural Adjustment Act, and separate and subsequent action to consolidate the present individual country quotas into a global amount equal to the individual quotas. This would allow Peru to compete with other countries for the entire amount of whatever imports are permitted under quota. This would be useful because of the present and impending shortage of long-staple cotton in connection with the war effort, and should hardly cause concern to domestic growers who are now being encouraged, by means of guaranteed [Page 691] premiums and otherwise, to produce as much long-staple cotton as possible.
Secretary Wickard,38 who has indicated opposition at this time to any change whatever in either the import duty or the import quota, will be absent from the city all of this week and we have been informed that he cannot be reached. However, it is highly desirable that the agreement with Peru be concluded before the return to Lima of the Finance Minister, which may be in the next few days.
I should appreciate being advised whether the foregoing proposal, which will be accepted by the Peruvians and will enable us to conclude rapidly a generally satisfactory and valuable agreement, meets with your approval.39
As you know, I have always sought to act in close consultation and cooperation with the Secretary of Agriculture in these matters and should like to have consulted him further on the subject now under consideration, with particular reference to the moderate proposal outlined above. However, the presence in this country of the Peruvian Minister of Finance furnishes a highly favorable opportunity to bring these negotiations to a successful conclusion, and we are confronted with the danger of losing this opportunity if we postpone action until Mr. Wickard returns. However, this is a matter for you to pass on.