Memorandum of Conversation, by Mr. Murray M. Wise of the Division of Caribbean and Central American Affairs

Participants: Dr. J. J. Vallarino, Ambassador of Panama
Señor Julio Ernesto Huertematte, Commercial Counselor
Fred Latimer, American Embassy, Panama
Mr. Wilson—CP12
Mr. Keating—CP
Mr. Cochran—CCA13
Mr. Anderson—CCA
Mr. Wise—CCA

Ambassador Vallarino, at his request, with Sr. Huertematte called at the Department to initiate a series of discussions which he hoped would lead to the negotiation between the United States and Panama of a Treaty of Friendship, Commerce and Navigation. The Ambassador explained that there were various economic problems in the relations between the two Governments which had been pending for many years and which should be frankly discussed with a view to arriving at a mutually satisfactory solution. He believed that the negotiation of a commercial treaty would be advisable and would be the answer to problems which had so long worried the Panamanians. The Ambassador said that because of the partnership interest in the Panama Canal both governments should be willing to face squarely the question of the ruinous competition of Canal Zone commissary and post exchange sales which confront Panamanian merchants. He added that American businessmen in Panama were interested in a commercial treaty since it was felt their own interests would likewise be protected.

Mr. Cochran pointed out to the Ambassador his understanding that sometime ago the American Embassy at Panama had informed the Panamanian authorities that this Government would be quite willing to discuss with them the possibilities of negotiating a commercial [Page 1276] treaty whose provisions would be somewhat similar to those of the treaty negotiated with Liberia. The Ambassador replied that that was true but that because of the unique relationship between the two Governments resulting from the presence of the Canal Zone there would have to be inserted in such a treaty provisions adaptable to this situation which does not exist in any other part of the world. Mr. Cochran pointed out that since the negotiation of the Liberian treaty substantial revisions had been made in some articles of the “standard” treaties but agreed that the negotiation of a commercial treaty with Panama would involve special considerations. He warned, however, that it would not be possible to solve many of the economic problems which the Ambassador had in mind, since they really fell beyond the scope of commercial treaties.

Sr. Huertematte rather spiritedly launched into an explanation, giving in some detail various examples, of how sales in the Canal Zone unjustly adversely affected Panamanian business. (The basis for some of his complaints could be understood although it appeared he might be speaking from a rather biased and prejudiced point of view since it is his family that owns and operates the famous Bazar Frances. It was felt that some of his statements may have been somewhat exaggerated.)

Mr. Wilson then discussed the type of treaty under discussion and said that it includes establishment provisions, provisions on commerce, and provisions relating to navigation and transit. Sr. Huertematte suggested that provisions on such a subject as transit might be of little use in a treaty between the United States and Panama, and urged that some of the problems which were peculiar to the relations between the two countries would need to be considered.

At the conclusion of these introductory exchanges of ideas Ambassador Vallarino felt that progress had been made and that agreement could probably be reached as to what should be included in the treaty and added that the mere announcement in Panama that negotiations had started would be most helpful and well-received by the Panamanian Government and merchants. (The Ambassador has felt that his mission to Washington has been rather unsuccessful insofar as actual accomplishment in the solution of pending negotiations is concerned, and appeared pleased over the possibility of getting somewhere on the negotiation of a commercial treaty.)

Mr. Cochran said he wanted to make it clear to the Ambassador, although the two matters were not related, that the Department could not take to the Congress of the United States for approval a draft commercial treaty with Panama as long as the settlement of the el [Page 1277] Encanto–Mariposa claim14 is pending. The Ambassador said that before the words were spoken he knew what was coming and that the Department could rest assured that he was doing everything he could to get his Government to make a move on the claims’ settlement.

Mr. Cochran and Mr. Wilson informed the Ambassador that the Department had already drawn up in draft form articles for inclusion in a “standard” commercial treaty15 of the general type which was negotiated with Liberia, and explained that it would be discussed with the Panamanians as soon as the Embassy at Panama had been given a chance to study and comment on the draft articles.

In conclusion the Ambassador referred to his concern over the status of Panamanian students with relation to the Selective Service System, the details of which are covered in separate memoranda. Mr. Wilson did point out, however, that many of the past commercial treaties of the United States have contained provisions concerning the conscription of nationals of one party in the territory of the other, and felt that this phase of the relationships between the two Governments might be discussed in connection with the present negotiation. Officers of CCA said that, since Panama has no Army it might be difficult to cover the special nature of Selective Service cases which arise over Panamanian youth in the United States; they were willing to explore the possibilities of working out something feasible in the line of Mr. Wilson’s suggestion, which, of course, would not be considered applicable in a retroactive sense.

  1. Division of Commercial Policy.
  2. Division of Caribbean and Central American Affairs.
  3. The claim, of long standing, was for compensation for a tract of land which was confiscated by the Panamanian Government. A considerable portion of the land was at one time the possession of the Mariposa Development Company.
  4. Draft agreement, not printed, transmitted to the Ambassador in Panama in instruction 531, December 4, 1945 (711.192/12–445).