611.3531/579

The Department of State to the Argentine Embassy

Memorandum

1.
The Government of the United States is gratified to receive the assurance contained in the Argentine Government’s reply of December 30, 1937,10 to the Memorandum of the Department of State dated November 22, 1937,11 and in the Argentine Government’s communication of January 28, 1938,12 sent in reply to a telegram sent by the Argentine Ambassador to his Government after consultation with officials of the Department of State on January 4, 1938, that the Argentine Government from the date of the formal public notice of intention to negotiate a trade agreement, will not apply any charge or surtax on purchases of exchange for the payment of products imported into Argentina from the United States.
2.
The Government of the United States, in the second paragraph of its Memorandum of November 22, 1937, requested assurances regarding the allotment of official exchange on an unconditional most-favored-nation basis. It is noted, however, that the Argentine Government in its replies under reference gives no assurances in this regard. Nevertheless, in view of its earnest desire to proceed with the negotiations at the earliest possible date, the Government of the United States will not at this time insist for the period up to the conclusion of the trade agreement upon full acceptance of its request on this point.
3.
The Government of the United States is prepared to issue its preliminary public notice of contemplated trade agreement negotiations on the basis of the assurances referred to in paragraph 1 above and on the understanding that pending the conclusion of a trade agreement the treatment of American commerce, in respect of the allotment of official exchange, will be no less favorable than that which is now enjoyed, subject, of course, to the understanding, as stipulated in the third paragraph of the Memorandum of November 22, 1937, “that the Argentine Government is prepared to negotiate the contemplated [Page 277] agreement upon the basis of the unconditional most-favored-nation principle applied to all forms of trade and payments control”.
4.
The guarantee of full unconditional most-favored-nation treatment with respect to all form of trade and payments control is a basic principle of American commercial policy. It is, therefore, essential that any trade agreement concluded by the United States contain suitable provisions embodying this guarantee. It is of prime importance that there be no misunderstanding in regard to it such as would result in a failure of the negotiations after public announcement has been made.
5.
The paragraph above quoted means with reference to exchange control that if either Government establishes or maintains directly or indirectly any form of control of the means of international payment, it shall not use such control in any manner, direct or indirect, to regulate or in any manner to influence the source of its importations to the detriment of the trade of the other country. It means further that enjoyment of the complete freedom from discrimination thus envisaged shall not be subject to any condition or qualification whatsoever, such, for example, as the requirement by either country that the treatment accorded shall in any way depend upon the amount of its exports to the other country or upon the relation between exports and imports in its trade with that country. Under the system and methods of exchange control at present existing in the Argentine, a practical application of this principle would mean that when the trade agreement goes into effect, so long as exchange at the official rate is provided for all merchandise imports from any third country, exchange would be made available at the official rate for all merchandise imports from the United States. As stated in this Government’s Memorandum of November 22, 1937, it would be impossible for this Government to conclude any trade agreement with the Argentine Government unless it contained guarantees fully effectuating the purposes above set forth.
[Enclosure]

Suggested Form of Reply by the Argentine Embassy to the Memorandum of the Department of State of February 1, 193813

The Argentine Ambassador has the honor to acknowledge the receipt of the Memorandum of the Department of State dated February 1, 1938, which reads as follows:

(Insert text of memorandum)

[Page 278]

The Argentine Ambassador has the honor to state that his Government clearly understands the position of the United States as set forth in its Memoranda of November 22, 1937, and February 1, 1938, and declares its readiness to go forward with the proposed negotiations.

  1. Foreign Relations, 1937, vol. v, p. 231.
  2. Ibid., p. 225.
  3. See memorandum by the Chief of the Division of the American Republics, supra.
  4. In a note of February 3, the Argentine Embassy acknowledged the receipt of the Department’s Memorandum of February 1, in the form suggested in this enclosure (611.3531/590½).