611.19/9–2853
Memorandum of Conversation, by the Assistant Secretary of State for Inter-American Affairs (Cabot)
Subject:
- Call on President Eisenhower by President Remon of Panama.
- Participants: The President
- The President of Panama, Colonel Jose Antonio Remon
- The Secretary of State
- Dr. Harmodio Arias, Adviser to Panamanian President
- Dr. Ricardo Alfaro, Adviser to Panamanian President
- Sr. Henrique de Obarrio, Comptroller General of Panama
- Ambassador John C. Wiley, U.S. Ambassador to Panama
- Mr. John M. Cabot, Assistant Secretary of State
The President of Panama began the substantive conversation by referring to the question of post exchange and commissary competition with Panamanian business. He pointed out the injury the latter was receiving and expressed the hope that the United States would be prepared to take effective steps to prevent this allegedly unfair competition. He referred particularly to the sale of luxury items such as perfumes by the post exchanges and complained that, while in the United States post exchanges were obliged to pay duty, in Panama they operated tax free. The Panamanian merchant was unable to compete.
President Eisenhower said that he was very familiar with this problem since he had served in the Canal Zone from 1921 to 1924 and that the same old problems that he remembered from his service there still seemed to exist. He assured President Remon that we would give most sympathetic consideration to the Panamanian viewpoints. President Remon then briefly referred to the labor dispute and thereafter spoke of the questions which had arisen regarding treaty revision. He pointed out that under the 1903 Treaty the Panamanian Government could not tax Panamanians employed by the Canal Zone even on Panamanian territory although the Panamanian authorities had to supply schools and other services for these Panamanian families. If treaty revision were not to be accepted, this injustice could not be corrected.
[Page 1421]President Eisenhower was somewhat shocked and indicated that this was a situation which seemed to require correction. Secretary Dulles then proposed that in a matter of this nature it would perhaps be possible to negotiate a new treaty covering tax matters. The Secretary made it clear that the United States had no intention of altering the present treaty structure with Panama. He remarked inter alia that while the United States negotiated new treaties with Spain, for example, the treaty involving the purchase of Florida was never touched; neither did any treaty with Russia have to do with the status of Alaska, which had likewise been purchased by the United States.
President Eisenhower pointed out that it would, of course, be impossible to reach any final conclusions in the course of President Remon’s visit to the United States. He suggested that a joint statement might be issued regarding their conversation to be published when President Remon left Washington. Secretary Dulles mentioned that a draft was already under consideration. President Eisenhower said that in his opinion a communiqué would simply have to say that he had assured President Remon that all of the points which the Panamanians desired to raise would receive the most sympathetic consideration in the light of the specially close relations existing between the two countries and that he had expressed his confidence that the negotiators could agree upon mutually satisfactory arrangements which would, on the one hand, satisfy just Panamanian aspirations and, on the other, protect vital United States interests in the Canal. This seemed to meet with general approbation.
Mr. Cabot pointed out that with one exception all of the matters so far brought up by the Panamanian negotiators could probably be settled without any need for treaty revision. He said that the principal difficulty was to overcome the opposition of established interests to giving up the advantages they had. President Eisenhower said that the established interests would have to give way where they justly should. Mr. Cabot said that he quite agreed with that but that, for example, there were some established interests which were very firmly entrenched, such as the American labor unions in the Canal Zone. The President indicated that what he had earlier said applied also to the labor unions. The party then broke up; the conversation had lasted about forty minutes.