611.2331/204
The Ambassador in Peru (Norweb) to the Secretary of State
[Received April 14.]
Sir: In accordance with the Department’s confidential instruction No. 321 of March 12, 1941, I have the honor to submit the following information and comments on the list of products on which the United States would grant concessions to Peru in the event trade agreement negotiations should be undertaken.
The instruction states that it is highly desirable that the list should include all articles in which the government of Peru is interested and which offer a reasonable basis for negotiation; and requests additional information or comments with reference to Lists A, B, C, and D. As concerns List D, details as to future production or export possibilities in Peru are desired, together with any comment as to the possible value of duty reductions or bindings on such items.
Observations: Since various analyses of trade statistics have been made by the country committee as well as by the Embassy, they are not repeated here. The observations consist largely of statements with reference to potentialities in case current production is not of commercial importance.
List A: The Embassy is in full agreement with the country committee that this list is suitable for inclusion in the public announcement.
The list contains raw cotton and sugar, which are and for many years have been the items of paramount interest to Peru. Concessions sufficient to cause the shipment to the United States of a reasonably large volume of these two products would go a long way toward satisfying the desires of Peru and silencing the perennial demands of the most influential group of producers and exporters.
Several articles of secondary importance also are included in List A. These are cube, coca leaves, grape brandy, flax, wool (alpaca, llama, and vicuña), cochineal, coffee, tara, furs, guano, leche caspi, rubber, balata, hides and skins, tagua, and mahogany. All of these are products of actual current production and are of interest to numerous producers, not only from the viewpoint of present sales possibilities [Page 538] but also, in most cases, with reference to future expansion in production, and exportation to the United States.
All of the minerals listed are of importance to smaller groups of producers.
The remaining items are well chosen and their inclusion undoubtedly will be looked upon with satisfaction in Peru owing to the encouragement that concessions on them will give to development and expansion.
List B: Cottonseed, oil, cake and meal are important by-products of the cotton industry. Numerous producers are interested in marketing these goods in the United States, and some assistance in this respect would be of indirect assistance to the cotton interests, to whom full satisfaction likely cannot be given as pertains to marketing cotton in the United States. It is believed that these items could well be transferred to List A. It is recalled that practically all of these were marketed formerly in Germany and Denmark.
The Embassy knows of no reason why tungsten ore and concentrates should not be included in List A. It is an item in which numerous small producers are interested, and which the Peruvians believe can be produced in substantially greater volume.
List C: It is believed that the Peruvians will acquiesce in the omission of many of these items, for the reason (1) that they are not and in the near future likely will not be produced on a competitive basis, even under a preferential United States import tariff; or (2) because of thoroughly reasonable sanitary requirements in the United States; or (3) owing to inadequate domestic production; or (4) because there is no special economic advantage in obtaining a lower United States import tariff (as petroleum).
- (1)
- Products falling in this class are earthenware (except perhaps those representing art objects of distinctive Peruvian design), silver leaf, gloves of wool, harness, saddles, luggage and leather articles, and coke.
- (2)
- Grapes, raisins, grapefruit, pineapples, melons, quinces, sweet potatoes and yams, and peanuts are affected by reason No. 2 as well as by Nos. 1 and 3.
It may be mentioned further that, generally speaking, the production and consumption situation in Peru does not warrant the exportation of foodstuffs apart from sugar and coffee. It is believed that the current production of all of the foods in List C is inadequate for serving as the basis for an export business, or even for supplying the domestic demand at popular prices. This is evident from the price legislation and regulations of recent years, and particularly at present; and also from the official requirement that farmers in the most densely populated valley obligatorily devote five to ten percent of the cultivated area to foodstuffs in order to relieve the existing shortage.
[Page 539]There are those who are of the opinion that the Peruvian government should prohibit the exportation of most foodstuffs for the current years, rather than seek concessions which would aggravate the domestic shortage and price situation.
Possibly an exception could be made logically in the case of grapes, and it is suggested that consideration be given to the idea of admitting them during the off season in the United States, under the refrigeration system worked out to kill the fruit fly. Such a provision likely would satisfy the official and farm groups desirous of stimulating the grape industry and of rehabilitating vineyards in the lea, Pisco, Moquegua and other valleys in the southern part of Peru.
In the case of molybdenum, the United States might wish to consider granting facilities for the relatively small current output of about thirty tons a month, on condition that output be not expanded further, in order to keep this product out of Japan’s war supply.
Anthracite coal is only a potential export product, but it is of interest to the government as well as several individuals. They believe this coal could be sold to some extent in the Pacific states. It is improbable that production and exportation in commercial quantities will be possible during the next few years without financial assistance from abroad. A concession on this point would be of value from the political or psychological viewpoint, and in all probability would not originate much competition for American producers. But as in the case of many other Peruvian products, the concession cannot be defended on the premise of previous participation in the trade.
Fish scrap and fish meal are potential products in which the Peruvian government is definitely interested. It believes that they represent a possible source of trade with the United States, and that consideration might be given to this matter in view of the difficulty in marketing any substantial amounts of cotton and sugar there. The establishment of a fishing and fish products industry was one of the principal objectives in obtaining the service of the United States fishing experts who are now in Peru.
Sterling silver ware, in typical Peruvian designs, is a product which appeals to American travelers and tourists in Peru. Production is and probably will remain small. It is our opinion that a concession in this case should be given further consideration.
Mica. Two or three well-known government officials are encouraged by recent inquiries from New York with reference to mica, of which small exports have been effected (10,831 kilos in 1939, of which 8,849 were shipped to Japan, 996 to Ecuador, and 986 to Germany). The product appears to be of minor importance, but nevertheless it may be classed in the group of items of some interest to Peru.
[Page 540]List D: Silver manufactures. Peruvian manufacturing of these wares is very small at present and it is likely that no great expansion will take place in the near future; but the workmanship, designs, and fine content of the articles are attractive to travelers and tourists. Since all of the output is by hand, the relatively small volume that could be produced probably would be marketable in the United States without any inconvenience to American producers. These are among the small number of manufactured commodities which the United States could import from Peru in partial compensation for our heavy sales of manufactures in this country.
Watermelons (also muskmelons): The summary of the situation given in the lower right-hand corner of page thirty-nine of the enclosure to instruction No. 321 is correct as pertains to Peru. This fruit is rather expensive and not abundant in the Peruvian market, and it is doubted if a profitable trade with the United States could be built up. Most-favored-nation treatment in this case could be granted for the purpose of meeting Peru’s desires without any fear of burdening the American market.
Still wines. Annual production is around 12,000,000 liters and exports have always been insignificant.
Quina wine, and coca wine are items of inconsiderable production, but could be developed on a modest scale. It is our opinion that this request could be granted without any inconvenience.
Blankets, carpets, mats, rugs, and other manufactures of wool: The principal items are blankets and rugs, of Incaic design.
Production statistics are not available, but the total output in mills and by hand labor apparently is too small to meet domestic demands plus orders from abroad, the latter amounting to probably not more than a few hundred units annually. A definite inquiry from San Francisco for one thousand alpaca wool blankets could not be filled, and we have never heard of any important transactions resulting from trade lists supplied by the Embassy to American manufacturers. It is to be mentioned also that representatives of the Grant stores and Gimble’s who visited Peru with the object of purchasing these and other goods for sale in department stores reported no success whatsoever. They found that lots of a few dozen could be assembled; and in the case of rugs were told that the producers are occupied in supplying the domestic demand, which includes sales to tourists and business travelers. This information coincides with the experience of the Embassy in endeavoring to discover sources of supply for American importers who have made inquiries.
On the other hand, the Peruvians have the materials and the knowledge of weaving, so that these items represent export potentialities. [Page 541] Tariff concessions might encourage sufficient expansion in the industry to eventually produce a fairly good source of supply for this class of goods.
Asbestos manufactures: The statements made on page sixty-eight of the enclosures to instruction No. 321 pertaining to the absence of these products in Peru’s industrial production are correct to the best of our knowledge. It would appear that the reductions in the Belgian and British trade agreements, which are applicable to Peru on the m. f. n. basis, would satisfy all of the present necessities of Peru.
Embroidered and other leather articles, such as luggage, handbags, pocketbooks, gloves, etc.
The observations on pages 70, 73, 74, and 76 of the enclosures, are correct as to the absence of Peru from the list of suppliers to the United States.
Again in this case Peru has sufficient leather on which to build a small industry, but it is commonly known that the finer grades of leather have been imported up to the present time, as well as the better grades of leather manufactures, except shoes.
It is understood that Peru’s request for a tariff concession on these items originated primarily with Mr. Pedro Diaz, of Arequipa, who during the last few years has developed a small industry and opened retail stores in Arequipa and Lima. The products are good, but according to an American buying agent who visited Peru a few months ago and bought samples of various items and obtained details on others, they cannot compete in price or perfection of finish with the American equivalent in the United States, with the exception of hand embroidered and hand tooled leather. But the number of master workmen is low, and the output of embroidered or tooled articles is insufficient to produce an abundant supply for sale in the stores of Peru.
This appears to be another case in which a tariff concession, if granted, would have to be for the purpose of encouraging a source of supply in the western hemisphere.
Production figures or even rough estimates for the items appearing in List D are not available, except in the case of wine.
Items of interest not included in Mr. Beltran’s list: Ceibo (or kapok). Several Peruvians have stated that this product is available in quantities in Peru; and at least one American firm, the Dry Zero Corporation, of Chicago, has unsuccessfully endeavored to establish purchasing connections.
Frozen tuna and fish livers are being sought by American firms and reduced quantities have been collected and shipped by two Peruvian firms during the last two years.
[Page 542]It is possible that the country committee and the Peruvians would like to include these products in List A.
Respectfully yours,