Foreign Relations of the United States, 1955–1957, American Republics: Multilateral; Mexico; Caribbean, Volume VI

170. Instruction From the Secretary of State to All Diplomatic Missions in the American Republics¹

CA–3710

Washington, October 21, 1957.

SUBJECT

• Proposed Inter-American Economic Agreement: Resolution 2 of the Buenos Aires Economic Conference of the OAS

A major item on the agenda of the Economic Conference of American States, held at Buenos Aires, Argentina, August 15 to September 4, 1957, was the negotiation of a general inter-American economic agreement. For over two years the representatives of the American countries on the Inter-American Economic and Social Council had endeavored to draft such an agreement: first through an ad hoc working group, then through the Council’s Executive Committee, and finally through a committee charged with preparing for the Buenos Aires Conference. None of these bodies succeeded in producing a draft text upon which the representatives could agree as suitable for transmission to the Buenos Aires Conference. Finally, in January of this year, the Council requested its secretariat to attempt a new draft, giving due consideration to the work already done by representatives on the Council. The secretariat’s draft was presented for discussion by the Council’s special committee preparing for the Buenos Aires Conference. Despite several weeks of discussion, however, agreement could not be reached upon acceptable texts relative to many important matters treated in the secretariat draft. Some of the representatives, including that of the United States, proposed substitute texts for various articles; others reserved the right of their delegation to comment or propose changes at the Conference. The Inter-American Economic and Social Council finally, on July 8, decided to transmit the secretariat draft, as modified by the Council, to Buenos Aires, together with the alternative texts proposed by its members up to that time; those proposals are contained in document 12 of the Buenos Aires Conference.

At Buenos Aires the work on the economic agreement was entrusted to five subcommittees of Committee I. Members of the U.S. Delegation worked faithfully with members of other delegations in an effort to arrive at an acceptable text. A considerable measure of agreement was achieved, although much of this pertained to general principles regarding which there had previously been little disagreement as to substance. But the United States was unable to accept nine articles; Mexico, four; Chile, Peru and Uruguay, one each. The articles which these delegations could not accept usually involved principles which, in the opinions of the delegations at least, are of fundamental importance. The reservations relative to these unacceptable articles were indicated at the final plenary session of Committee I.

Meanwhile, as it became apparent that no agreement could be negotiated that would be acceptable to all countries, the delegations adopted a Declaration of Principles which became Resolution 1 of the Conference. Resolution 2, requesting the Council of the OAS to continue efforts to negotiate an economic agreement, was then also adopted to satisfy those who did not wish to permit the idea of an agreement in treaty form to die.

Resolution 2 was carefully worded to avoid a mandatory order to the Council of the OAS to proceed immediately with the negotiation of an economic agreement, it being the view of at least several delegates, including the Delegation of the United States, that such efforts were, for the present, at best of questionable value. As indicated above, the articles regarding which reservations were entered, usually involved fundamental principles upon which it appears doubtful that a real meeting of minds could be achieved. Political as well as other factors play a part in this, of course.

However, there are indications that some Latin American governments may shortly take the initiative to press for resumption of efforts to conclude an agreement in the Council pursuant to Resolution 2. One indication of this interest was the recent speech of President Ponce of Ecuador, who, in commenting on various aspects of the Eleventh Inter-American Conference which is to be held in Quito in 1959 or 1960, expressed the hope that the Council would by that time have completed its work on an economic agreement which could be signed at the Quito Conference.

The basic reasons for the Department’s objection to the resumption of efforts to negotiate an inter-American economic agreement are, of course, substantive. The fundamental objective of the Latin American countries in seeking such an agreement is to commit the United States to certain policies which it is not prepared to accept: notably, an obligation to support the prices of raw materials; a commitment to provide increased public financing for economic development; an obligation to consult prior to disposing of agricultural surpluses or before imposing any restriction on the sale of Latin American products in the United States market, etc At the same time, the desire of the United States to get the Latin American countries to obligate themselves to take certain measures to protect private investment has met with opposition on their part. The fundamental divergence of view between the United States and Mexico on this last-mentioned subject is alone sufficient to prevent the successful conclusion of any inter-American economic agreement so long as the present policies of those governments continue.

Consideration has been given to the possibility of adopting a short and more general form of inter-American economic agreement in order to satisfy the wishes of the Latin American governments to have a juridical document in the economic field that would constitute a companion piece to the Treaty of Rio de Janeiro in the political-security field. However, efforts of the United States at the Buenos Aires Conference to promote a project of that kind that would be acceptable to this government met with no success, since such a document would not contain certain ideas which the Latin American governments greatly cherish in the field of economic cooperation. Also, even a short and general treaty would have to contain certain provisions regarding private investment which we know would prove unacceptable to certain Latin American governments. Any document acceptable to all the Member States, indeed, could differ but little from the Economic Declaration of Principles, to which all the delegations agreed at Buenos Aires.

In view of the very clear evidence of the situation described above that was given by the negotiations at the Buenos Aires Conference, confirming a long history of futile negotiations ever since the Ninth Inter-American Conference at Bogotá in 1948, the Department believes that a number of individuals in many Latin American governments are beginning to appreciate the futility of carrying on efforts to negotiate an economic agreement in treaty form. The Department very strongly agrees with this point of view and feels that it is highly desirable to take such steps as may discreetly be taken to discourage any thought of initiating work immediately in the Council of the OAS on the negotiation of an economic agreement, or to put that subject on the agenda of the Eleventh Inter-American Conference to be held in Quito. Diplomatic officers are therefore urged to take any appropriate opportunity that may be offered to discourage, whether on the part of official or private citizens, the thought that an inter-American economic agreement should be expected within the foreseeable future.

Although the United States cannot, in view of its approval of Resolution 2 of Buenos Aires, oppose any consideration of the subject in the Council of the OAS, we can argue against rushing blindly into a repetition of the same frustrating negotiations that have gone on heretofore. The position the United States would take would probably be to urge that the COAS first ascertain the timeliness of a renewed study before entering into substantive consideration of the proposed agreement.

In further support of the basic position set forth above of questioning the usefulness of an economic treaty such as was proposed at Buenos Aires, the following arguments may be found useful:

1. The value of an inter-American economic agreement such as has been envisaged would be more illusory than real. Governments are prepared as a matter of policy to extend economic cooperation to other members of the OAS in excess of what they are prepared to commit themselves in treaty form to undertake. For example, the United States has undertaken, and continues to undertake, a broad program of economic cooperation involving public loans for the economic development of the other American republics, but is not prepared to sign a treaty obligating itself to such action at any given level. Other governments do in fact extend favorable treatment to private capital without being in a position to sign a treaty committing themselves to a specific course of action in that regard. The lack of an economic treaty does not, therefore, prevent or interfere with constructive economic cooperation among the American states.

2. Economic cooperation concerns the circumstances and conditions within each of the American republics. These conditions are subject to change both under the influence of outside forces and under the influence of the very improvements which are the objective of economic cooperation. Any attempt to stipulate in treaty form the ways in which all forms of economic cooperation should be carried out presents the serious danger of establishing a rigid system of operation to cope with conditions that inevitably change. Such a rigid system might well become a stumbling block rather than an aid to real economic progress.

3. In view of the fact, that is recognized by all concerned, that the United States is the principal source of economic assistance and the twenty Latin American countries generally share a position seeking such assistance, the question of what kind of economic cooperation can suitably be carried out through multilateral channels and what kind through bilateral channels remains to be clarified. Every other American government will recognize the importance of bilateral relations in the economic field with the United States. The bilateral relationship permits a realistic approach to the individual economic problems of each country. To be sure, there are certain basic problems common to most, if not all, the American countries and on certain problems multilateral cooperation provides an effective and excellent approach. However, it is easy to exaggerate the significance of a multilateral approach to all economic questions, such as has been envisaged in an inter-American economic agreement.

4. It is clear that the problems which prevent the conclusion of an inter-American economic agreement are large and complex and affect basic economic policies of various member countries. The only possibility of working out methods for coping with these problems is through sustained and adequate study and discussion of each one individually. An important accomplishment of the Buenos Aires Conference was to delineate some of these problems and arrange for further study thereof. Further efforts, therefore, to conclude a general agreement on all aspects of economic cooperation would merely encounter and sharpen these basic policy differences without contributing any new element or method to their resolution.

The Department leaves to the discretion of the diplomatic missions their use of the foregoing material in the light of attitudes, personalities, and circumstances in the various countries. However, certain additional specific instructions will be sent to some posts. The missions are requested to report to the Department any discussions of this subject which are held with officials of the governments to which they are accredited and to cable any indications that the government may have in mind steps to get the Council of the OAS to take up immediately the question of an economic agreement pursuant to Resolution 2 of the Buenos Aires Conference.

Unless special supplementary instructions are given to the contrary, the Department does not wish the missions to take the initiative in bringing up the subject of this circular with other governments; the views set forth herein are intended for use in the event the matter arises in conversations, or if officials request the views of the United States on the subject.

Dulles

1. Source: Department of State, Central Files, 365/10–2157. Confidential. Drafted by James Corliss and Ambassador Dreier; approved by Assistant Secretary Rubottom.