611.5231/808

Memorandum by the Assistant Chief of the Division of Western European Affairs (Hickerson)

The Spanish Ambassador was requested to call at the Department this afternoon to discuss with Mr. Sayre15 the matter of commercial relations between the United States and Spain and the possibilities [Page 700] of instituting conversations looking to a trade agreement. Mr. Moffat and Mr. Hickerson were present at the conversation.

Mr. Sayre began by saying that perhaps it was unnecessary for him to review in any detail the differences which have existed for some years between the two Governments. He went on to say that for a number of years the Spanish Government has objected to the height of the American tariff on certain Spanish products and that American officials in the past have been compelled to reply that so long as our duties were no higher against Spanish products than against other foreign products, there was no legitimate ground for objection. He contended that we are aware of the feeling in Spain respecting Spain’s unfavorable trade balance with the United States. Mr. Sayre went on to say that the Ambassador would, he was sure, agree with him that this unfavorable balance was occasioned almost wholly by the fact that Spain for her industries imports a large amount of American raw cotton, and that the many-sided nature of world trade, with its resulting balancing of payments between all countries, has worked in a satisfactory manner in the past.

Mr. Sayre stated that whereas in the past American officials have been compelled to state that they had no authority to discuss the height on individual products of our tariff rates, the American Government is now happily in the position to discuss such questions and that it is our hope that, in pursuance of the recent authority conferred upon the President by Congress, a trade agreement can be negotiated which will expand the trade of both countries to their mutual advantage. He continued that recent trade figures are most encouraging; during the first five months of 1934, American exports to Spain were valued at $17,000,000, an increase of 59 percent over the corresponding period of last year, and American imports from Spain during the same period were valued at $8,700,000, an increase of 148 percent over the same period of 1933. The Ambassador seemed very much impressed with these figures and remarked that he was very much pleased; he agreed with Mr. Sayre that it would be highly desirable for the two Governments to “help” this increase along by any measures which they might take to expand trade in both directions.

Mr. Sayre went on to say that now that we have authority to negotiate, he would like to see the conversations start with Spain at the earliest possible date, but that there are certain obstacles in the way which have been troubling us. He mentioned first of all the Spanish quota or contingent system. He referred to the Ambassador’s statement to him the other day that no quota had been adopted by Spain which adversely affected American products and inquired whether the Ambassador had had in mind the decree of June 24, 1934, [Page 701] which restricts, among other things, imports of ordinary lumber, Diesel and semi-Diesel engines, electric motors, motorcycles, toilet soap and essences. It was pointed out to the Ambassador that our exports of lumber to Spain are important and that we also export considerable quantities of the other products mentioned. It was added that although the global amount of these contingents has been announced, Ambassador Bowers has not yet been able to obtain any information whatever respecting an American share of these contingents. Ambassador Calderón said that he could definitely assure us that these quotas had not been directed at American trade and that Spain would grant an equitable share of the contingents to American products. He stated that he was prepared to give us an undertaking that in any quotas that Spain might adopt, she would give to American trade a share proportionate to imports from the United States during a period of unrestricted trade; in passing, he mentioned the period of three years as a fair period. After a considerable amount of discussion and consideration of a draft paragraph of a modus vivendi which Mr. Sayre had before him, this draft was revised as it appears on the annexed statement [No. 2],16 which was, at the end of the conversation, handed to the Ambassador.

Mr. Sayre said that he was very much pleased at the attitude which the Ambassador took in respect to contingents and that that attitude impelled him to hope that something might be done in respect of the few products imported from the United States into Spain which are charged higher duties than corresponding products from certain other countries. He expressed the hope that it would be possible during the period of negotiations between the United States and Spain for the latter to extend its minimum conventional rates to those products, which includes automobiles, sulphur, automobile tires and tubes. The Ambassador stated that he did not believe that his Government could do this. He admitted frankly that these schedules are the result of bargaining between Spain and other countries, and that Spain expects us to bargain to obtain these reductions. He went on to say that in Spain it is felt that the obligations of the most-favored-nation principle are discharged when Spain accords the benefits of its minimum tariff schedule to countries’ products. He added that in a few cases, after special bargaining with foreign countries, reductions are made from this minimum schedule, in the case of a few products of a particular country, and that when other countries desire to obtain these reductions, they must “pay for them”. He went on to say that in these circumstances he did not believe that it would be a good idea to press this matter.

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Mr. Sayre replied that his purpose was merely to explore with the Ambassador the possibilities of reaching a formula under which the two countries could open negotiations. He went on to say that he had not discussed the details of this matter with the Secretary but that he believed the Secretary would approve any reasonable formula whereby the countries could open negotiations. He added that he appreciated the Ambassador’s frankness and that in the circumstances he would not press this aspect of the question. He stated further that it would be worth a great deal to us if our people could be assured that they would have the benefit of any further reductions in the Spanish tariff rates which might be granted to other countries while negotiations are under way. He stated that we would, of course, give Spain a similar pledge. The Ambassador said that he did not know how his Government would react to a proposal of this sort but that he would submit it for consideration and urge its acceptance. This proposal is No. 1 on the annexed statement which was handed to the Ambassador by Mr. Sayre.

In response to an inquiry from Ambassador Calderón as to the probable duration of the negotiations, Mr. Sayre replied that if the Spanish Government acquiesced in our present proposals for a modus vivendi to cover the period of negotiations, he would immediately appoint a special committee of experts to make a complete survey of trade between the United States and Spain and to prepare a statement of our desiderata. He said that he assumed that the Spanish Government would designate experts to decide upon what they want the United States to do. He said that when these surveys had been completed it would probably be some time in September. It was his idea that he and the Ambassador would then sit down and make a survey of the possibilities of reaching an agreement and if it seemed likely that an agreement could be reached, formal negotiations would then be opened between the two countries. He suggested that this whole matter be kept confidential for the present. The Ambassador acquiesced in this and said that he would get in touch with us as soon as he had a reply from his Government.

  1. Francis B. Sayre, Assistant Secretary of State.
  2. Brackets appear in the original; statement not printed.