The Ambassador in Peru (Cooper) to the Secretary of State

No. 2245

Sir: I have the honor to report that with reference to the Embassy’s despatch 1835 of July 21, 1947,61 in which there was submitted an interim report on negotiations re trade agreement violations by Peru, an official reply, per copy and translation enclosed,61 has at long last been received to the Embassy’s note 360 of February 6, 1947, on this subject.

While agreeing in principal with our Government’s point of view that discriminatory tax laws although enacted prior to the date of the Trade Agreement nevertheless cannot under the terms of that Agreement be applied to articles imported from the United States, the Peruvian Government’s reply is deficient in that (1) the remedy offered would be extended only to products included in Schedule I of the Agreement, and (2) in the case of the measure individually most burdensome (Supreme Decree of August 24, 1936, governing application of the tax on tobacco authorized by Law 8433) the remedy is made contingent upon future legislative action, the possibility of which now appears distinctly remote. Moreover, and contrary to repeated promises in this connection, the Embassy has not received copies of official communications or indications of any other nature confirming the Peruvian Government’s statement in the subject note that “measures have been taken so that in the future products included in Annex I of the Agreement of May 7, 1942, will not be taxed differently than similar national products.” Reference in paragraph six of the subject note to Laws 10576 and 10806 is altogether superfluous, matters relative thereto having long ago been settled satisfactorily [Page 1031] (see Embassy’s despatches 1098 of January 31 and 1727 of June 23, 1947).62

. . . . . . .

In summary, the present status of the Embassy’s representations on discriminatory taxation is as follows:

–Peru has officially recognized the validity of our claims re applicability of the general provisions of the Trade Agreement to discriminatory taxation based on laws antedating the Agreement.
–The Embassy has been promised and is now awaiting receipt of a supplementary note correcting the Peruvian Government’s note of November 12, 1947, to include as susceptible to the limitations imposed by Article II of the Agreement all, instead of merely a portion, of the articles imported into Peru from the United States.
–With respect to Laws 5049, 9507 and 10880, immediate corrective action has been promised.
–Depending upon the Government’s success in promulgating by edict a new 1948 budget, remedial action of a similar character has been promised in connection with Supreme Decree of August 24, 1936.
–For the sake of convenience to the Peruvian Government, corrective measures affecting other taxation on tobacco products—i.e. Laws 7612 and 10090 as well as Supreme Decree of June 12, 1946—is postponed temporarily to permit action simultaneous with that relating to the decree of August 1936.

The Department will be opportunely informed in respect of future developments.

Respectfully yours,

For the Ambassador:
Thomas S. Campen

Commercial Attaché
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