611.2331/116
The Chargé in Peru (Dreyfus) to the Secretary of State
[Received November 2.]
Sir: I have the honor to refer to my telegram No. 70, of October 24, 11 a.m., and to enclose the text and an informal translation of the note from the Peruvian Foreign Office in reply to the note enclosed with the Department’s instruction No. 164 of September 7, 1938.
The Peruvian reply asks that any special privilege which Peru now grants or may in the future concede to any contiguous country be excepted from the operation of the most-favored-nation principle. The Foreign Minister had already indicated to me informally that the reply to our request (that Peru specify the exact nature of the exception she wished included) would be of this wide, general nature. (Despatch No. 712 of October 22, 1938.)
In support of its position, the Peruvian Government cites the commercial relations between Cuba and the United States as an example of the peculiarly close ties which bind neighboring countries. Apart from the fact that Cuba and the United States are not, strictly speaking, contiguous, it might be pointed out to Peru that this special relationship has existed for many years, dating from the time of Cuban independence, and is “generally recognized and of long standing”; whereas Peru, up to the present, has granted preferential treatment only to Chile (and Great Britain), and even the Chilean arrangement is of comparatively recent origin.
It might also be pointed out that, on the contrary, the United States does not ask that its commercial concessions to its two actual territorial neighbors—Canada and Mexico—with one of whom it has a trade agreement in force, be excepted from the operation of the most-favored-nation principle.
The citation of our recognition of preferential arrangements between the countries of Central America would appear much more pertinent to the Peruvian case; although the Honduran-Salvadoran free trade treaty29 provided a situation which might be held to be “generally recognized and of long standing”.
In discussing Peru’s trade relations with Chile and Bolivia, the note leans heavily on the argument for bilateral trade balancing. Peru again states that she sells much more to these two countries than she buys from them; and apparently recognizes as valid their claim that this situation must be remedied through increased Peruvian purchases of their products. The contention that these two countries are important markets for Peruvian exports, especially sugar, is warranted.
[Page 860]Attention is invited to the statement that Bolivia and Peru are about to sign a new commercial treaty, to replace the convention of 1905.30 The latter treaty did not concede preferential status to Bolivian exports; and the reference to it would hardly establish that the granting of special treatment to Bolivia is “generally recognized and of long standing”.
It is felt that the reference to the recent treaty with Colombia,31 providing special treatment for commerce in the Amazon basin, is hardly to the point. The United States has a trade agreement with Colombia,32 and has obviously felt that the concessions granted in the Colombian-Peruvian treaty were concerned with frontier traffic and thus exempt from generalization under the most-favored-nation clause of the trade agreement. The proposed (standard) general provisions of the trade agreement with Peru, already submitted to that country for study, make the usual provision for cases of this character. It might be wise, however, for the Department to emphasize this point in its reply to the Peruvian note.
In passing, it may be mentioned that the United States already has in force with three of the countries bordering Peru (Brazil,33 Colombia and Ecuador34) trade agreements containing the most-favored-nation clause. These three countries would thereby be prevented from joining any general scheme of preferences to neighboring nations, such as the Peruvian note would seem to contemplate; for the most-favored-nation provisions of the trade agreements would prevent their granting special privileges to Peru in return for those Peru apparently hopes to be able to grant them. In consequence, Peru’s suggested regime could only be unilateral in its preferential aspects.
Furthermore, since these three countries voluntarily assumed the obligations of most-favored-nation treatment with the United States, the contention that Peru could hardly grant preferential treatment to some of her neighbors and not to others, lest undesirable political distrust be created, would appear to have but limited validity.
In view of the Foreign Minister’s statement to me (despatch No. 712 of October 22, 1938) that he believed in asking for the maximum and receding as necessary, it is not believed that Peru has decided to adopt, as a general policy, preferential customs treatment for all her geographical neighbors. The decision to make the enclosed reply to the United States was not the result of a wide policy study by the entire [Page 861] Advisory Economic Committee, but was made by a sub-committee appointed especially to study the trade agreement with the United States. It is therefore considered probable that Peru will be willing to discuss all phases of the basic problem involved.
Adverting once more to my despatch No. 712 of October 22, 1938, the Department is informed that the memorandum attached thereto was delivered to the Foreign Office late in the afternoon of October 21st. It will be noted that the enclosed Foreign Office note is also dated October 21st. Nevertheless, it may be worth noting that it was delivered in a most unusual manner, being brought to my home by a messenger at 8 p.m., Saturday evening, October 22nd, instead of being taken to the Embassy during office hours, as is customary. It has occurred to me that the Foreign Office, upon receiving my memorandum, decided to give its reply the appearance of having been prepared before receipt of the memorandum, and that it was therefore pre-dated and rushed to completion. In any case, the Embassy was unsuccessful in its attempt to forestall this apparently unfavorable reply to its request for a specific indication of the nature of the exceptions Peru wished to make to the most-favored-nation clause.
Respectfully yours,
- Signed February 28, 1918, British and Foreign State Papers, vol. cxi, p. 750.↩
- British and Foreign State Papers, vol. c, p. 805.↩
- Peru, Memoria (Lima, 1939), p. 113.↩
- Signed September 13, 1935, Executive Agreement Series No. 89, or 49 Stat. 3875; see also Foreign Relations, 1935, vol. iv, pp. 430 ff.↩
- Signed February 2, 1935, Executive Agreement Series No. 82, or 49 Stat. 3808; see also Foreign Relations, 1935, vol. iv, pp. 300 ff.↩
- Signed August 6, 1938, Executive Agreement Series No. 133, or 53 Stat. 1951; see also pp. 509 ff.↩
- League of Nations Treaty Series, vol. clxiv, p. 31.↩