611.3531/407

The Secretary of State3 to the Acting Secretary of State

Sir: During the President’s visit to Buenos Aires4 the question of a possible trade agreement between the United States and Argentina naturally presented itself. At the request of the Argentine authorities some preliminary conversations intended to clarify what might be involved in a commercial agreement have been undertaken, with the most complete of understandings that such conversations were merely exploratory, bound neither party either to any course of action or to any particular details, and were of a completely confidential nature. The course of these conversations up to the present are recorded in the two memoranda attached. In accordance further with these conversations the Argentine authorities presented to us last night the attached summary of the main concessions which they would hope to secure in the event a trade agreement proved possible.

Will you please give prompt consideration to the question of the undertaking of negotiations and cable us your views. By virtue of the President’s declaration5 made here, we believe ourselves pledged to make a sincere effort to try to reach the terms of a possible agreement. On the other hand, no promise has been made to the Argentine authorities as to when it might seem to us satisfactory to make formal announcement of public hearings and prospective negotiations. Their wish is that such public announcement be made on the eve of the departure [Page 176] of the Delegation from Buenos Aires. However, this morning in a conversation with Ambassador Espil6 I emphasized the fact that while I believe it might be quite possible to reach finally a moderate agreement, there are many hazards and difficulties in the way and that it was highly important that all care be taken lest the effort be rushed, to the detriment of the objective. I explained that of course the various American agricultural interests that might be affected by the agreement would be subject to fears, often of an exaggerated character, and that if now, while we were down here and therefore unable to deal with efforts to block the negotiation, sensational stories began to appear in the American press, that it was not at all unlikely that certain interests might secure legislation in Congress defeating our purpose. I furthermore fully explained that this was a matter that had to be carefully considered by the Trade Agreements organization and by the interested Government Departments. For all these reasons I did not encourage the hope that any public announcement could be made while we were here.

Will you, in strict confidence, kindly consult with the Secretary of Agriculture in regard to the prospective Argentine requests and transmit his judgment and reaction. Will you also please cable in very brief summary form your judgment of some of the main tariff concessions it is likely that we will ask, it being understood that if this information is transmitted at all to the Argentine authorities, it will be understood to be wholly without commitment.

I am bearing in mind also my memory that it may be desirable in the event that negotiations with Argentina are undertaken, that negotiations with Uruguay be conducted simultaneously.

Yours very truly,

Cordell Hull
[Enclosure 1]

Memorandum by the Economic Adviser (Feis)7

In accordance with a discussion between Mr. Welles8 and Ambassador Espil, I met late yesterday afternoon with Mr. Prebitsch, General Manager of the Argentine Central Bank, and the Commercial Attaché in Washington, in order to exchange in a most preliminary way attitudes and ideas regarding the possibility of an American-Argentine commercial treaty.

[Page 177]

The conversation ranged far and wide. I explained that in accordance with our habitual procedure, before any negotiations could be concluded we would have to hold public hearings, and that thus all exchanges of ideas and information would have to be regarded as informal, non-binding, and confidential. This was understood. In response to their query as to whether it might or might not be possible to complete the negotiation of an agreement before the Trade Agreements Act9 was renewed in June, I stated that I was not in a position to answer this question and that it would depend somewhat upon the course of our informal conversations and on events back home and upon the ultimate decisions of the Department and the President.

We discussed how these preliminary informal conversations might best be made useful. I suggested that they, having the services of all their Government departments available here, were in a position to determine and make clear for transmittal to Washington what concessions would be expected of us, and these could be given consideration in Washington fairly promptly. However, the matter of what concessions we would ask from them was, I understood, rather complex and would require specialized study by different branches of the American Government and by the regular Trade Agreements organization, and I did not believe that it would be possible to formulate them during our stay here.

Our talk was concluded by a discussion of their exchange policy and their agreement with Great Britain.10 I emphasized the discriminatory character of the present exchange arrangements. They explained and defended them on the basis of necessity, and on the fact that important markets such as Great Britain and Germany would only give their trade a chance provided the proceeds of the sale of Argentine goods were pledged for purchases of their goods. This situation, they said, still confronted them. I pointed out that there are many signs that they are now in a position to end the exchange discrimination against American products, not the least of which was their ability to find $35,000,000 with which to pay off their long-term debt in New York. Mr. Prebitsch said this would increase their ability to furnish exchange for American goods. The discussion of this important question was left in suspension. One important point that it brought out was that Article . . of the new agreement with Great Britain11 apparently has in Argentine eyes a precise significance that a quick reading does not reveal; apparently [Page 178] it is viewed as giving the British the right to denounce the agreement if, by virtue of actions of the Argentine Government, such as lifting of the exchange control, British interests do not get the full amount of sterling exchange which they furnish through the purchase of Argentine goods. If the British use this as a continuing threat it will of course restrain the Argentines from lifting the exchange control and from making trade concessions which might cut seriously in upon their purchases from Great Britain. The Argentines apparently have gotten themselves in a situation in which to some extent they will have to trade us off against the British and vice versa.

It was agreed that these gentlemen should consult again with various branches of their Government, looking towards a further exchange of ideas.

H[erbert] F[eis]
[Enclosure 2]

Memorandum by the Economic Adviser (Feis)

By arrangement with Mr. Welles, Mr. Espil, the Argentine Ambassador to Washington, called this afternoon, accompanied by the head of the Central Bank and the Commercial Attaché in Washington.

The Ambassador—I believe in accord with a talk with Mr. Welles—had in his mind the possibility that the Secretary of State might announce on the day of his departure the intention to enter negotiations and that simultaneous public notice might be given in the United States, as required by the Trade Agreements Act.

I stated that I was in no position to pass upon the feasibility of this proposal but that I would be glad to refer it on for decision.

I ventured the judgment that a necessary step in our consideration of the question would be some consultation with the other interested Departments of our Government and the Trade Agreements organization. In the event that the Secretary and Mr. Welles were in favor of making the effort to carry out the idea, I expressed the opinion that it could be best facilitated if the Argentine Government would at once formulate in very brief form, and on the understanding that the formulation was neither formal nor binding, a short summary of the chief concessions they would hope to get from us. I expressed the opinion that I thought that it would be found desirable to transmit this to Washington for immediate consideration, at the same time requesting from Washington a similar brief formulation of the main concessions that we were likely to request of Argentina.

On one point I said I thought I was in a position definitely to formulate one of the leading American requirements, to wit, the ending of all discrimination in the exchange field. This gave rise to an [Page 179] animated discussion as to the reasons why the Argentine Government created and maintained the discriminations. I vigorously maintained the point of view that this discriminatory treatment represented an obstacle to trade different from that of the ordinary tariff barrier and that our insistence upon its removal would be a matter of principle as well as of dollars and cents. The Argentine representatives upheld the point of view that it was just another kind of obstacle—not different in effect from a tariff—to be dealt with as part of an arrangement for facilitating the trade movement. Mr. Prebitsch, however, did indicate the view that there was a good possibility that something could be done in gradual stages to lessen or remove the discrimination.

Since Mr. Welles had still not returned and they felt strongly desirous of facilitating discussion, I said I would seek approval, that immediately upon the receipt from them of the memorandum referred to above, a cable would be sent to Washington, transmitting this tentative statement of Argentine requests, along with the request that the informed Departments in Washington immediately formulate a similar outline of what our main requests were likely to be in addition to modifications of exchange arrangements, and that immediately upon receipt of word from Washington (if possible, not to be delayed any longer than a week from today) a decision could be reached regarding the possible announcement of the commencement of negotiations. They stated that they would have such a memorandum in my hands by tomorrow night.

Incidentally, in the discussions the Ambassador indicated that the Argentine authorities were willing to forego the making of any request for concession on fresh beef, and I requested them to study our trade with them, particularly with a view of discovering items in the agricultural field in which they might be able to make concessions to us.

One final point of interest on which a word might be added is that in discussing the exchange discrimination, Mr. Prebitsch said that the present situation is to be regarded as somewhat abnormal because it was being affected by the very substantial inflow into Argentina of short term capital leaving Europe.

H[erbert] F[eis]
[Enclosure 3—Translation]

Memorandum by the Argentine Government12

Being interested in the possibility of arriving at a trade agreement with the United States, which will establish a basis for the future [Page 180] development of trade between the two countries, more adequate than that of the old treaty of 185813 and,

Bearing in mind the difficulties that have arisen at every attempt to bring about an agreement in the last 78 years;

The Argentine Government would be disposed to enter into negotiations on the following minimum bases:

1. In order to eliminate difficulties, the suggestion is accepted that in these conversations all reference to fresh and chilled meat be excluded, in view of the fact that such commerce is not possible without the previous elimination of the present embargo and that such embargo should be raised for reasons of justice in favor of said measure and not for reasons of reciprocal concessions.

2. Of the seven principal articles which, in normal times, represent more than 80 percent of our exportations to the United States, namely; flax, cowhides, wool, maize, preserved meat, intestines and quebracho extract, concessions should be granted at least as to the following four items:

Flax. A reduction of the present duty of 65 American cents per bushel to 32½ cents per bushel. The imports of flax, which represented 35 percent of the total of the trade and which amounted to more than 40 million dollars have been reduced to a third, in consequence of the high customs duties imposed in 1929 and 1930. The high duty has not brought about an increase of domestic production, nor, for known reasons, is it possible that this will provide for the total consumption.

Preserved meats. The present duty of “6 centavos* per pound but less than 20 percent ad valorem” is unjust, because it makes no distinction as to qualities and the schedule of meats of less value sometimes amounts to more than 100 percent ad valorem. In consequence, it is requested that a sub-classification be in the tariff on canned meats, and that in the item “corned-beef in cans”, which represents more than 90 percent of Argentine exports of preserved meat, a duty be established of “3 centavos per pound, but not less than 20 percent ad valorem”. As there is no production of corned beef in the United States and it is not economically possible as experience has shown in purchases for the United States army, and as this is an article which is chiefly consumed by the poor classes, whose income does not permit them to buy fresh meats, the reduction of the duty in this way cannot cause very great opposition on the part of North American cattle [Page 181] raisers, whose interests the Argentine Government understands and respects.

Cowhides. Reduction of the present duty of 10 percent ad valorem to 5 percent ad valorem. The duty is unjustified, as the United States does not produce, nor can it produce all the hides it needs (the complete elimination of the duty and a return to the situation prior to the tariff of 1930 cannot be requested, as, under the present law it is impossible for the President of the United States to reduce duties more than 50 percent).

Quebracho extract. Being an absolutely non-competitive product, the maximum reduction is requested, namely that the present duty of 15 percent be reduced to 7½ percent ad valorem.

3. As to the other articles the total amount of which is at present of little importance in most cases, not for lack of commercial possibilities, but on account of the high United States tariff, we are confident that by detailed analysis in the course of the negotiations regarding each case, a satisfactory solution will be reached. However, the following three items are considered of importance and must be mentioned in these bases.

Caseine. The present duty of 5½ cents per pound, should be reduced to 2¾ cents per pound. The increase of the duty by more than 100 percent by the Tariff of 1930 drastically reduced imports of this article, without the desired result being obtained in the domestic production, which cannot increase in normal years, on account of the technique of the milk industry. The duty requested is higher than that in force in 1929.

Canary seed. The duty should be reduced from 1 centavo per pound to ½ centavo per pound. The domestic production is insignificant and the specific duty which was not very burdensome on the high prices of previous years is excessive for the present prices.

Frozen turkeys. The high duty of 10 centavos per pound should be reduced to 5 centavos per pound. This item was excluded from the other of article 712 of the Tariff when by the Canadian Agreement literally Treaty) the duties were reduced on gallinatos and other birds. This reduction is requested for the same reasons that motivated the concession to Canada.

4. Seasonal Trade should be specially considered in the Agreement (Tratado) and the Maximum concessions are requested for it in exchange for like treatment in the reciprocal seasonal trade on the ground that this trade is non-competitive and of mutual benefit for both countries. The concessions will be confined to a few months of the [Page 182] year. Among other concessions it is principally requested that in suitable months the duty on fresh grapes be reduced from 25 cents, American per cubic foot, to 12½ cents per cubic foot.

5. It is requested that a declaration be made in the Agreement (Tratado) that the Argentine articles whose importation into the United States is on the free list will not be taxed during the time the Agreement is in force, especially: salted and dried intestines, sheep, mare and ass hides, goat and kid skins, guanaco skins, common fox skins, nutria skins, bones, guano and dried blood, horsehair, horsehair (manes), quebracho logs and wine dregs. It is also requested that a declaration be made that the duties on imported Argentine articles whose rates have not been changed by the Agreement (Tratado) will not be raised hereafter.

6. A declaration in the Agreement is requested in the sense that internal duties will not be imposed on the articles considered therein equivalent to a customs duty, as happened with tallow, the importation of which was practically eliminated by the imposition of an internal tax on the imported article by the United States Tax Law of 1936/37.14

  1. Then at Buenos Aires as Chairman of the American delegation to the Inter-American Conference for the Maintenance of Peace, Buenos Aires, December 1–23, 1936; see pp. 3 ff.
  2. December 1–2.
  3. For the text of President Roosevelt’s address to the Conference, December 1, see Department of State, Press Releases, December 5, 1936, p. 423.
  4. Felipe Espil, Argentine Ambassador in the United States and delegate to the Inter-American Conference.
  5. Herbert Feis, Special Adviser to the Inter-American Conference.
  6. Sumner Welles, Assistant Secretary of State and delegate to the Inter-American Conference.
  7. June 12, 1934; 48 Stat. 943.
  8. See section entitled “Representations Regarding the Exchange Provisions of the Anglo-Argentine (Roca) Agreement of May 1, 1933, and Argentine Exchange Regulations,” Foreign Relations, 1933, vol. iv, pp. 722 ff.; for text of the agreement, see League of Nations Treaty Series, vol. cxliii, p. 68.
  9. A commercial agreement between Argentina and Great Britain signed at London on December 1, 1936, was not ratified by Great Britain.
  10. This memorandum is undated; it was presented to Secretary of State Hull on December 11.
  11. Correct date is July 27, 1853; Hunter Miller (ed.), Treaties and Other International Acts of the United States of America, vol. 6, p. 269.
  12. This is a literal translation, but “United States cents” must be meant. [Footnote in the file translation.]
  13. No precise definition of this word can be found, but it is evidently some kind of fowl. [Footnote in the file translation.]
  14. Revenue Act of 1936, approved June 22, 1936; 49 Stat. 1648, 1742.