The second contract, signed on 27 December 1703 (commonly known as the “Porto Treaty”), helped establish trade relations between England and Portugal. The conditions allowed the application of the English language to be admitted to Portugal duty-free; In return, Portuguese wines imported into England would be subject to one-third less tariffs than wines imported from France. This was particularly important in supporting the development of the port industry. When England was at war with France, it became increasingly difficult to buy wine, and the port thus began to become a popular substitute. Cypher and Dietz, in the book “The Process of Economic Development,” say that “Portugal specialized in a commodity that did not have the same growth potential as The Fabric for England. The Portuguese economy has therefore suffered by the fact that the structure of production and the institutions have been shaped in the direction of wine production. After a rapid expansion of trade under the Treaty of Methuen in 1703, Portugal remained in deficit, with exports to England remaining below imports from England. The trade boom in Portuguese England coincided with a gold rush in Brazil, the colony of Portugal, which allowed the Portuguese to cover their deficit with a colonial gold stream for some time, but the benefits of specialization and trade were illusory. The Kingdom of Ireland introduced Portuguese wine to low tariffs on methuen, but was excluded from export under shipping legislation. In 1779, “free trade” was granted to Ireland, but Portugal imposed higher tariffs on imports of Irish textiles than on English textile imports, which are not under the terms of the Methuen Treaty. This was a tactic in Portugal`s broader attempt to get Britain to renegotiate the Treaty of Methuen. When the dispute lasted, Ireland imposed higher tariffs on Portuguese products and the Dungannon resolutions of 1782 of the Irish Volunteers contained calls for a boycott of its wines.  The Eden Agreement between Great Britain and France in 1786 led Portugal to give in in 1787 and allow Ireland to benefit from low tariffs.
 The early years of the Spanish War of Succession in Flanders had been rather barren. The Conservative Party in England was concerned about the cost of the war and believed that commanding the maritime war was a much cheaper option with greater potential for success. Portugal offered the advantage of a deep-water port close to the Mediterranean, which could be used to fight the French naval base of Toulon. The contract provided that Portuguese wines (but see below), exported to England, may not be subject to a tax greater than the tax for an equal amount of French wines (see below) exported to England and that no English textile exported to Portugal is collected regardless of the geopolitical situation in each of the two nations (to ensure that England would accept Portuguese wine at a time when it is not at war with France).