File No. 763.72112/9929b

The Secretary of State to the Diplomatic and Consular Officers in Latin American Countries

No. 619
General Instruction
Consular

Gentlemen: In the administration of the laws of the United States to prevent trading with the enemy it early became obvious that no such measure could accomplish its purpose without full and frank cooperation on the part of the governments associated in the war against the Central Powers, and that very serious dangers were inherent in the friction and misunderstandings which might be caused by lack of cooperation. The fundamental facts of international [Page 1047] trade and competition compelled some agreement so that, on the one hand, enemy trade, denied facilities from one of the Associated countries, might not nullify such action by obtaining supplies from another of these countries, and, on the other hand, the administrative restrictions of one of the Associated countries might not operate inadvertently and unjustly against the trade interests of the others.

The general principle of coordination has met with cordial acceptance by the United States, Great Britain, France, and Italy, and now is under consideration by Japan. The full plan includes the following elements:

(1)
Assimilation of enemy trading lists and synchronized publication of changes;
(2)
Conferences precedent to issuance of enemy trading licenses;
(3)
Reciprocal adjustment of administrative restrictions on trade due to the alleged enemy character, activities, or connections of the persons involved in it;
(4)
Full and frank interchange of information on enemy trade matters.

The United States and Great Britain are in full accord on all four of these elements. France has agreed to the first, second, and fourth, and has the third under consideration. Italy has agreed to the first and fourth, and has the other two under consideration.

I. Assimilation of Enemy Trading Lists

The assimilation of the published enemy trading lists of Great Britain, France, and the United States is almost completed. It is expected that the Italian list soon will be brought into accord. The confidential lists now are in process of assimilation. A procedure has been devised for accomplishing and maintaining uniformity, which may be outlined briefly, as follows:

1.
Conferences are to be held regularly by representatives of each of the four Governments in each country covered by the lists, at which names suggested for addition to or removal from the respective published and confidential lists will be discussed in the light of all the available evidence. The resulting determinations with specific reasons will be transmitted to each Foreign Office, respectively, and in the case of the countries of Latin America, simultaneously to the respective embassies or high commissions in Washington. If there is a difference of view after conference, the United States representative will transmit to Washington his own opinion with specific reasons therefor and the varying opinions of his colleagues. No recommendations for changes in the published or confidential enemy trading list should be made without such previous conference of the Associated representatives, if possible.
2.
The recommendations for changes in the lists for Latin America are reviewed in Washington by representatives of the four Associated Governments. Those for Spain, Switzerland, Greece, and Morocco are reviewed in Paris, and those for the rest of neutral Europe in London.
3.
The changes in the published lists agreed on by the reviewing committees are published on the same date by the four Governments. Agreed changes in the confidential lists also are put into operation at the same time.

The efficient working of this plan may involve in practice two different conferences in the country in which the subject person or association is to be listed. The consular or other representatives of the four Associated Governments in the locality where the firm resides or does business should first confer, exchange information, and discuss the case. They should then communicate the result to their respective legations and embassies, between which a further conference will be held. The result of this second conference, as well as the recommendations of the local representatives, will be transmitted by the ministers to Washington, London, Paris, and Rome, respectively, and in the case of Latin American countries by the French, British, and Italian Ministers to their respective embassies or high commission in Washington. The Department of State may, at some posts, designate a consulate general or consulate to be in charge of this work, in which case consuls will send their reports to the consular office so designated.

This procedure does not apply to the cloak list for Latin America and Spain, which is to be compiled, printed, and distributed by the United States War Trade Board.

The limited scope of the cloak list is defined by circular instruction, of even date with this, describing the various United States enemy trading lists. No name of an established firm or person engaged in international trade should be recommended for the cloak list. It is to be confined strictly to enemy trade cover names.

Recommendations for changes in the cloak list may be made directly to Washington by consuls and War Trade Board representatives, as well as by the diplomatic missions. Discussion of cloak list recommendations with the representatives of the other three Governments should be held and concurrence or non-concurrence should be reported, but expedition is necessary in the matter of listing these cover names. The cloak list is a rapidly fluctuating one, because new devices constantly are invented to take the place of those which are worn out and discarded. To defeat these devices it is necessary to keep ahead of them. Therefore rapidity of change is the essence of an effective cloak list.

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II. Conferences Precedent to Issuance of Enemy Trade Licenses

The agreement on enemy trading licenses provides that, except in certain classes of cases, no such license shall be issued by any of the agreeing Governments without previous discussion by their representatives in Washington, if the listed or enemy person or association is located in Latin America; in Paris, if located in Spain, Switzerland, Greece, or Morocco; in London, if located elsewhere in neutral Europe or in Portugal.

III. Adjustment of Administrative Restrictions to Avoid Friction between Trade Interests of the Associated Governments

Although assimilation of the various enemy trading lists is to be accomplished as far as possible, there are and will be cases on which the Associated Governments cannot agree. Each will then take its own course as to listing. Furthermore, facilities may be denied a firm by one or more of the Associated Governments before the process of coordinated listing is completed. The scope and purpose of this phase of the coordination plan can be indicated best by illustration. It is obvious that if, for any reason, trade with a firm in Bolivia, for instance, should be refused United States facilities and not refused British facilities, British trade conceivably might be interfered with by American authorities at a transshipment port in the United States or elsewhere, or by American shipping refusing to carry the goods. Similarly, American trade with firms listed by the British Government and regarded as unobjectionable by the American Government might be hampered by British restrictions enforced by their consular authorities and by British control over shipping and bunkering facilities. The agreement to which the British and United States Governments have come provides that trade between the United States and a third country which is unobjectionable under United States enemy trade regulations shall not be interfered with by British regulations or authorities merely because the consignor or consignee or their connections are objectionable from the viewpoint of the British administration; and that the United States will act reciprocally with respect to similar British trade. Furthermore, it is understood that British authorities without consent of the United States Government will not interfere directly with trade between the United States and third countries or with American firms or their agents in those countries, even though there is evidence that trade is being carried on in violation of American restrictions and British policies. In such cases the British authorities will communicate the facts to the proper American representatives, who will take appropriate action. The United States will reciprocate in similar cases.

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IV. Interchange of Information on Enemy Trade Matters

Full and successful cooperation must rest on common information and understanding of the facts. Therefore it is important that all the Associated representatives in the different countries who have to do with these enemy trade matters should establish an effective system of a continuous and expeditious exchange of information and views on current cases and transactions. Even when a change in the coordinated enemy trading lists is not involved, it is important that American representatives should have the information and views of their associated colleagues on the case before making a report. If such interchange of views and evidence is made a general rule, much of the divergence in treatment of firms not listed in coordination by the four Governments can be avoided, and opinions reported to Washington will tend to possess a higher degree of assured accuracy and permanency.

If efficient, cordial, and frank cooperation is established throughout the different countries, the reports on the same case to each of the four Governments should be substantially alike except where unavoidable divergence of judgment arises. Thus the opportunities for common action will be increased. It is desired that the United States representatives make a special effort to establish the custom of reciprocal conferences and interchange of information on all enemy trade matters not peculiarly of a strictly confidential nature, and to bring about concordance in enemy trade reports to the respective home governments.

It is very desirable that the utmost good feeling, frankness, and concord should be established between the representatives of the Associated Governments in the various countries on these enemy trade matters. Harmony is essential to the proper working of the plan arranged, and in lack of harmony and variances in enemy trade restrictions as between the various Associated Governments lurk very grave dangers. Where misunderstandings exist they should be cleared up. Differences of opinion and friction caused by natural trade rivalries should be reconciled and adjusted. By proper and skillful cooperation on the part of the various representatives it is believed that the common interests of all the countries will be served without harm to the separate commercial interests of any, and it is only by such cooperation that this result can be reached.

Substantial intentional infringements of the coordination agreement of course should be reported. If it is found that any commercial or consular agents or representatives of business firms are making improper use of their opportunities to the detriment of American interests, steps will be taken at once to rectify the situation. Captious complaints should be avoided, however, and the broader [Page 1051] purposes of the policy of coordination should be kept steadily in view.

When the process of assimilation of the lists is completed, the lists will be, with slight variances, in practical effect, though not technically or physically, a single Allied list. If it is thought advisable, you may discreetly announce to the public this fact and also the fact that changes in the list are made after conferences between representatives of the four Associated Governments and by concerted action.

I am [etc.]

For the Secretary of State:
William Phillips