611.5231/920
Memorandum by the Assistant Chief of the Division of Western European Affairs (Hickerson)
The Spanish Ambassador was asked to call at the Department yesterday afternoon. He came in at 4 o’clock to discuss with Messrs. Sayre, Grady and Hickerson the memorandum which he handed to Mr. Sayre with Spanish desiderata on January 16. Mr. Sayre stated at the outset that there seemed to be differences in views of the two Governments respecting most-favored-nation policy and quotas, but that he hoped very much that in the course of the negotiations the points of view of the two Governments could be reconciled. He said that we were very much disturbed at two sentences in Señor Calderón’s memorandum—the first two sentences of the final paragraph, which state that according to Spanish legislation no reductions can be effected in the second column in favor of the United States but that reductions must be restricted to countries with which Spain has a decidedly favorable trade balance.
Mr. Sayre stated that we are entering these negotiations prepared to discuss real reductions on important Spanish exports to the United States. He said that we now give Spain most-favored-nation treatment, whereas Spain withholds from American goods their conventional tariff rates on several important commodities. He said that before it was decided to invite Spain to open negotiations with us there had been a rather bitter controversy among our experts, some contending that we should not open negotiations with Spain until she gave us complete most-favored-nation treatment, in order that the two countries might enter the negotiations on a footing of equality. Mr. Sayre went on to say that he mentioned this to illustrate the difficulties which we had faced and surmounted in opening negotiations with Spain despite these discriminations. He said that, to be frank, he [Page 691] did not believe that we could justify a trade agreement to the American people which involved reductions on our part in favor of Spanish goods but obtained in return for us only such reductions as Spain may have granted to other countries. He said that in the circumstances he wanted to know definitely whether the two sentences mentioned above represent the considered position of the Spanish Government.
Señor Calderón, in response to questions by Mr. Hickerson, admitted that there is no Spanish legislation which would prevent reductions in the second column to American goods. He went on to say it had been the policy of Spain in the past to make reductions in this column only to countries with which she has a favorable trade balance and that it would be exceedingly difficult for Spain to change this policy to our advantage. He said that if we could make it worth their while, he believed that his Government could find a way of making an exception which need not embarrass them in their relations with other countries.
Señor Calderón said that he frankly felt that a trade agreement between the United States and Spain which benefited American exports to Spain more than Spanish exports to the United States would be destined to failure and would be contrary to the best interests of both countries. He said that he was having considerable difficulty with our lists, precisely for the reason that he believes that it would increase American exports considerably more than any concessions that we are likely to grant would increase Spanish exports to this country. He said that our desiderata would be scrutinized carefully in that light in Madrid. He intimated that in telegraphing Madrid about what we wanted he proposed to refer to the tariff classifications and items in which we desired concessions without definitely revealing the extent of the concessions which we had asked, pointing out that at this stage of the proceedings he was afraid that it might have a bad effect on his Government to know the full extent of our requests. [This may safely be presumed to be the usual bargaining armor.]7 Señor Calderón suggested that if we could tell him at this time the Spanish products on which we are prepared to consider reductions, it might be helpful in assisting him to induce his Government to change its policy in the matter of granting reductions in the second column duties. It was agreed that early next week we would have a further talk along this line, at which time we would tell the Ambassador in a general way the products on which we are prepared to consider reductions.
Mr. Hickerson suggested to the Ambassador that it would be exceedingly helpful if he would ask Señor Yrujo8 to amplify the [Page 692] Spanish list and let us know precisely what commodities in the various tariff paragraphs which the Spaniards have listed to us Spain is interested in; he showed the Ambassador a memorandum quoting the tariff paragraphs in which Spain has asked reductions, pointing out to him that in some of these paragraphs Spain is obviously interested in only one or two items out of dozens. The Ambassador said that he would see to it that in the next day or so we would receive a list showing the actual products in these tariff paragraphs in which Spain is interested.