Dear Sir,

I would refer to discussions regarding the foregoing which I had with you in November last and also with Mr. H. Kemp, Director, Commercial Relations,

in connection with the standing of the long drawn out negotiations which have been going on ever since Mr. Pedro Beltran's trip to Ottawa in January 1941 and the visit of the Hon. James A. MacKinnon and his Trade Mission to Peru in August of that year.

You will remember that these negotiations were temporarily shelved on the basis that while no obstruction existed from a commercial angle to the signing, the Peruvian Government wished the Canadian Government to open up diplo­matic relations with Peru. However, this consideration was naturally finally removed by the establishment of the Canadian Embassy in Lima in October 1944. Then another delaying factor was injected by the fact that the Peruvian authorities thought they might prefer to conclude inter-South American agree­ments before accepting any new commitments in world areas. The numerous delays which have been experienced in getting any kind of South American cooperation on an economic plane have militated against the conclusion of such accords and Peru is now in the situation that the importation of merchan­dise from all parts of the globe is of vital necessity to keep her economy going. All through the early negotiations I felt that one of the main reasons Peru did not wish to conclude this agreement was that the officials here did not see that such a treaty would be of any advantage to Peru as the range of com­modities which they could expect to export to Canada was small and as we showed no inclination whatsoever towards importing any volume of their two principal commodities, cotton and sugar. Also the various Peruvian officials have been so pre-occupied in the last couple of years with federal elections and the disturbed political situation that they have had little time for dis­cussions of commercial agreements.

Treaty negotiations in Peru are under the direction of the Minister of Foreign Affairs and unfortunately since our Ambassador's arrival there have been numerous changes of Ministers so that it was difficult to get continued action. However, during these one and a half years the Ambassador has un­ceasingly kept the subject of our commercial agreement with Peru before the various Ministers of Foreign Affairs who have succeeded themselves since he came here, (Dr. Solf y Muro, Dr. Gallagher, Dr. Correa and finally Dr. Garcia Sayan), as also with many other Peruvian personalities interested in our commercial relations. The present Minister of Foreign Affairs, Dr. Enrique Garcia Sayan, is much more favourably disposed and has assured Dr. Laureys that he will do everything he can to bring negotiations to a successful con­clusion within a reasonably short time. He informed the Ambassador that it would [be] in order for me to get into touch with Mr. Juan Chavez Dartnell, Chief of the Commercial Section in the Ministry of Foreign Affairs, and to work out with him the necessary details concerning the treaty. I have now been in touch with Mr. Chavez for the past month and you have probably already been informed of the progress made by the receipt of copies of the Ambassador's despatches to the Secretary of State for External Affairs, in particular the one dated April 3rd† which is being followed by the last one under date of April 15th.†

I have had approximately six interviews with Mr. Juan Chavez, in the first of which I left him with a copy of the Spanish text of the projected treaty. He was in general agreement with most of the clauses with the exception that he felt his Ministry would be more inclined to sign a most favoured nation treaty for the term of one year instead of two. This is due to the unsettled state of international trade and the possibility that after a year's period the Peruvian Government would be in a better position to review the matter and possibly suggest definite schedules in place of the general treaty. Mr. Chavez admitted no one in the Ministry had either the time or the staff to make a thorough study at present. I suggested consideration of the two year term as it seems unlikely that international trade conditions will be much more settled after the lapse of one year than they are now; also if the term was so short we would have to re-open negotiations for the new treaty immediately after the first one was signed. Although I did not express it I also doubted if their com­mercial section would be re-organized sufficiently in the one year period. However, Mr. Chavez still felt the one year term would be better as far as they were concerned and was willing to recommend a general agreement for that period. I suggested that at least provision should be made for renewal of the most favoured nation agreement and Mr. Chavez appeared conformable thereto. I believe this fits in with the views expressed to me by Mr. H. Kemp, that the Canadian Government would prefer a general most favoured nation agreement rather than one embodying detailed schedules and rates.

Subsequent interviews with Mr. Chavez were more to see that he was fol­lowing up with the officials in his Ministry and in the last talk I had, on April 13th, he informed me that he had had a further conversation with the Minister of Foreign Affairs on April. 12th. He had also consulted with -Dr. Francisco Tudela, who as you will remember was President of the Foreign Political Economic Commission of Peru at the time of Mr. MacKinnon's visit, and which Commission has now been more or less bodily incorporated into the new Consultative Committee of the Ministry Foreign Affairs. On April 10th Dr. Laureys had a long conversation with the Minister of Foreign Affairs in the course of which Dr. Garcia assured the Ambassador that he would endeavour to see that this treaty was signed as soon as possible. With this background, and the favourable reports from Mr. Chavez and Dr. Tudela, the Minister informed Mr. Chavez that the Economic Sub-Committee of the Consultative Committee of the Ministry of Foreign Affairs should be convened at once to discuss the projected Canadian-Peruvian trade treaty. Mr. Chavez told me that he was arranging for this Sub-Committee to meet but that he felt it would take a week or so to get various gentlemen to agree on a fixed date. I shall be getting into touch with him again immediately after the Easter week-end.

I wrote to Mr. Kemp on April 2nd asking for some additional background material which he might have in case the Economic Sub-Committee should ask for any more detailed information than I possess here. I presume this will reach me shortly.

I am attaching an additional copy of my today's letter in case you wish to refer it to the Department of External Affairs and I have also provided a triplicate for the Ambassador's files. Dr. Laureys is consulting with his De­partment in regard to the actual process of signing as the Peruvian authorities have requested that this should take place in Lima. I shall keep you advised of further developments.

Meanwhile, believe me to be,

Yours faithfully,
WILLIAM G. STARK

¹Voir Canada, Recueil des traités, 1945,
¹See Canada, Treaty Series, 1945, No. 2. N° 2.