The Chargé in Panama (Donnelly) to the Secretary of State
[Received April 21—1:20 a.m.]
366. Reference Department’s telegram 146, April 2, 5 p.m. I quote below a free translation of a note of April 20, 1945, from the Ministry of Foreign Affairs in reply to the Embassy’s note of March 15, 1945, copy of which was transmitted with the Embassy’s despatch No. 1411 of March 16:99
“The Ministry of Foreign Affairs presents its compliments to the Embassy of the United States of America and has pleasure in acknowledging receipt of its verbal note dated March 15, 1945 with reference to certain legal dispositions existing in Panama which regulate the exercise of commerce and which, according to the Embassy, place obstacles in the way of the conduct of commercial activities in Panama for foreigners.[Page 1268]
In the same sense this verbal note refers to some articles of the proposed constitution prepared by a committee of jurists appointed for this purpose by the executive branch of the government.
The Ministry of Foreign Affairs has taken due note of the observations and comments of the Embassy of the United States of America and in turn desires to make the following statements:
The Government of Panama considers that the regulation of commerce is not a matter that should be embodied in the constitution of a nation since this should be limited to describing the general standards which constitute the essential bases upon which the entire juridical structure of a nation rests. Nevertheless, the constitution should contain a basis on which to legislate commerce in accordance with the needs of the country.
The modified project which the government proposes to present to the constitutional convention when it meets will eliminate all the articles of the project of the commission which constitute regulation of commerce.
Although it is not a function of this government to impose obligatory rules on the constitutional convention the government is confident that the convention will not adopt measures that may cause harm to the nationals of the United States of America.
It has never been the intent of the present government to discriminate against citizens of the United States on the conduct of their commerce. The government considers that it would be beneficial that a commercial treaty be entered into by the two countries which would establish an equitable basis for a just commercial interchange between the Republic of Panama and the United States of America and by which all matters pertaining to commerce which interest the nationals of both countries would be clearly and permanently settled.”
While the Embassy regards as very favorable the statements in the note from the Foreign Office and the repeated assurances of President de la Guardia that the discriminatory commercial legislation will not be applied against American business in Panama, it suggests that the Department take no action at this time with respect to a proposed commercial treaty with Panama. It is clear that the Panamanian Government is not interested in negotiating a treaty of friendship, commerce and navigation, but desires to enter into negotiations for a commercial treaty so as to embody provisions relating to freight rates, trade with the Canal Zone, et cetera. While the Panamanian Government has expressed the belief that the constitutional assembly will delete from the proposed constitution all restrictions on trade that might prejudice American interests, it is important to remember that the assembly will not convene until June and that it will take at least 2 or 3 months to adopt the new constitution. The Embassy is in entire agreement with the Department that a proposed commercial treaty should not be used to bargain for the removal of discriminations and suggests that if the Department will continue to emphasize this point to the Panamanian Ambassador to the United States the Panamanian [Page 1269] Government will within a reasonable time legislatively exclude Americans and possibly other nationals from the provisions of the present discriminatory legislation.
The Embassy is pleased with the note because it is the first time that the de la Guardia Government which, together with the short lived Arnulfo Arias2 regime, enacted and later reinforced the laws excluding all foreigners from engaging in commerce in Panama has confirmed its frequent oral statements in writing that Americans were excepted from the legislation.