611.3531/574: Telegram
The Consul at Buenos Aires (Ravndal) to the Secretary of State
[Received January 11—12:45 a.m.]
I have just been informed by a member of the Argentine Inter-Ministerial Committee, which is studying the proposals of the United States Government with respect to a trade agreement, that this committee has recommended to the Finance Minister, for the decision of the Cabinet, that the Argentine Government inform the United States [Page 273] Government that it will, coincident with the formal announcement by the Government of the United States of trade agreement negotiations with Argentina, (1) grant prior permits for official exchange up to the average annual, total of dollar exchange created by Argentina’s exports to the United States over a representative period, less a reasonable amount for debt service, and (2) permit the balance of Argentina’s imports from the United States to enter Argentina through the free market without payment of the 20% surcharge.
The Argentine committee considers that the removal of the surcharge upon United States merchandise entering Argentina through the free market would meet the charge of discrimination against the United States.
It was added that with the removal of the surcharge, the Argentine Government would probably cease to support the free market by feeding foreign exchange to it; so if imports through free market should produce an excessive demand for foreign exchange, the peso might depreciate to a point where the spread between the official exchange rate and the free market rate would amount to 20% or more.
The extent to which American trade would be affected adversely by such a spread in exchange rates would of course depend upon the excess of United States sales to Argentina over its purchases from Argentina. This, in the opinion of the Argentine committee, would not constitute discrimination against the United States but merely the practical effect of bilateralism.