The American Ambassador in Peru (Cooper) to the Peruvian Minister39 for Foreign Affairs (García Sayán)

No. 360

Excellency: I have the honor to address Your Excellency once again with reference to apparent contraventions of the Trade Agreement between the United States and Peru. Your Excellency will doubtless recall that this matter has been made the subject of several [Page 1020] communications to Your Excellency’s Government, the most recent being the Embassy’s note of August 23, 1946,40 in which the various points at issue have been mentioned in detail together with my Government’s views and observations with respect thereto.

. . . . . . .

I am informed, however, that in view of the circumstance that the above-mentioned laws antedate the signing of the Trade Agreement on May 7, 1942, they are considered by Your Excellency’s Government to be unaffected by the general provisions of the treaty under reference. More specifically, in discussing this matter on September 21, 1946, the Director General of the Ministry of Finance and Commerce together with Sr. José Barreda Moller of that Ministry orally informed representatives of the Embassy that although desirous of reaching an understanding regarding the retroactive effect of the Trade Agreement the Ministry of Finance and Commerce considers it can not do so in the absence of legislative clarification of the meaning of that treaty with respect to Peruvian laws of a date prior to the signing of the trade agreement.

In the absence of a written confirmation of the above-mentioned orally expressed opinion of Your Excellency’s Government on this important subject, I have informed my Government accordingly and I must now advise Your Excellency that my Government does not concur with those views. In this connection, I am instructed to invite Your Excellency’s attention to the fact that the national treatment article appears in substantially the same form in trade agreements negotiated between the United States and seventeen other countries and that this is the only instance in which the opinion is expressed that this article does not apply to laws in effect prior to the signature of the trade agreement.

That the article is intended to cover such laws, and that it has been so understood by many countries, may be seen from the fact that in trade agreements between the United States and ten other countries exceptions have been made in the national treatment article for certain laws already in effect. The trade agreements containing exceptions of this nature are those with the following countries:

Argentina, Article II
Brazil, Article VII
Canada, Article V
Colombia, Article VIII
Haiti, Article IV
Netherlands, Article V
Sweden, Article VI
United Kingdom, Article III
Uruguay, Article II
Venezuela, Article V

[Page 1021]

In the absence of the mention of specific exceptions, it appears clear that the wording of Article II of the Trade Agreement between the United States and Peru is intended to indicate that products imported into either country from the other shall be exempted for all discriminatory internal taxes regardless of whether or not such taxes were in effect at the time when the agreement was signed.

. . . . . . .

It is suggested that if the general provisions of the trade agreement were to be considered applicable only to laws and regulations which come into effect after date of signature of the trade agreement, the result would be to continue in effect many of the very conditions which the agreement was intended to remedy. The national treatment article in trade agreements embodies a recognized principle, just as does the unconditional most-favored-nation provision, both of which are applicable from the effective date of agreement to all the commerce between the two signatory countries regardless of what the practice to the contrary may have been in the past. Hence, it is suggested that the above-cited discriminations in the form of taxes on tobacco products, toilet articles and beverages, which are higher on imports from the United States than on like national products and which were in effect when the trade agreement was signed, should have been removed just as any discrimination in favor of a third country should have been removed because of the unconditional most-favored-nation provision.

. . . . . . .

My Government is of the opinion that this discrimination in favor of foreign countries other than the United States not only infringes the last phrase of Article II of the trade agreement but likewise constitutes a violation of the most-favored-nation provisions set forth in Article I. The wording of Article I indicates that these provisions apply to charges of any kind and with respect to all laws or regulations in connection with the importation, and to all laws or regulations affecting the sale, taxes or use of imported articles within the country. Furthermore, Article I clearly has retroactive effect since it states that “any advantage, favor, privilege or immunity which has been or hereafter may be granted by the United States of America or the Republic of Peru to any article originating in or destined for any third country shall be accorded immediately and unconditionally to the like article orginating in or destined for the Republic of Peru or the United States of America, respectively.”

My Government considers that the foregoing comments apply equally in the case of differences in taxes and charges on toilet articles, [Page 1022] tobacco, and beverages provided under the above-mentioned Laws numbered 5049, 7612 and 9507, as well as to such differential treatment in any other instances as may not yet have come to the attention of the Embassy and the Department of State.

My Government is most interested in and attaches importance to implementation of the reciprocal provisions of the Trade Agreement and in view of the long-standing nature of the above-mentioned taxes and charges so clearly appearing to contravene the terms of that Agreement, I am confident that Your Excellency’s Government will wish to examine this matter at its earliest convenience and to take remedial measures considered appropriate. In order that I may fully inform my Government in the premises I would appreciate a reply from Your Excellency’s Government as soon as circumstances permit.

I avail myself [etc.]

Prentice Cooper
  1. Copy transmitted to the Department by the Ambassador in his despatch 1098, January 31, 1947, supra.
  2. Not printed.