611.2331/303
Memorandum of Conversation, by Mr. 1H. Gerald Smith of the
         Division of Commercial Policy and Agreements

                                    [WASHINGTON,] April 3, 1942.
  Senior Chavez called at the Department to receive the list of the
products on which this Government was prepared to offer concessions
in the proposed trade agreement with Peru. The absence of long-
staple cotton from the list was, of course, noted by Senior Chavez
and he was informed that a final decision had not yet been reached
whether it would be possible to include a concession on this product
in the agreement. There was a brief discussion of the relation of a
possible concession on cotton in the trade agreement to the negotia-
tions now being carried on for the purchase by an agency of this
Government of the Peruvian cotton surplus, and it was agreed that
further discussions regarding cotton in the trade agreement would
await outcome of the negotiations for the purchase. In the meantime
it was decided that we could proceed as far as possible with the
negotiations on other questions in the agreement, including Schedule
I and the General Provisions. Regarding Schedule I Se-nor Chavez
said that he was awaiting receipt of information from his Govern-
ment. He said that in the discussions which he had had while he
was in Lima, there were a few specific commodities in which difficulties
would probably be encountered, particularly those where Peruvian
concessions to Chile were involved or where certain domestic industries
were affected, but on the whole he did not think that too great diffi-
culty would be encountered in reaching a satisfactory agreement.
Se-nor Chavez mentioned also, of course, the general question of the
20 percent increase in basic Peruvian import duties, which would
have to be settled to arrive at the basis upon which duty reductions
or bindings on specific commodities would be calculated. On the
General Provisions, Senior Chavez said that he had only just received
a Spanish translation of our proposals, but as there was no indication
whether this meant that our proposals as presented were acceptable
to the Peruvian Government, he had immediately written to Lima
for clarification on this point.

611.2331/306
Memorandum of Telephone Conversation, by Mr. H. Gerald Smith
       of the Division of Commercial Policy and Agreements

                                     [WASHINGTON,] April 8, 1942.
  Sefior Chavez telephoned and said that he had just had a chance
to examine in detail the list of our definitive Schedule II offers



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