Foreign Relations of the United States Diplomatic Papers, 1938, The American Republics, Volume V

611.3531/591

The Argentine Embassy to the Department of State¹⁴

undated

[Translation]

Memorandum

The Argentine Embassy transmitted to its Government the text of the Department of State’s memorandum of February 1 and has just received the following reply, which it is instructed to bring urgently to the attention of the Department of State:

“In principle there would be no objection to accepting that the negotiation of the treaty shall be on the basis of unconditional and unlimited most-favored-nation treatment with respect to any form of control of exchange and international payments.

“The scope of this clause can be no other for the Argentine Government than that of granting exchange for the importation of American products on the same conditions as the other countries with which agreements have been made, namely up to the equivalent of the F. O. B. value of our exports to the United States after deduction of a reasonable annual sum.

“As to the United States goods which could not be imported with advance permits owing to the insufficiency of foreign exchange produced by our exports to the United States, it has already been specified in the previous memorandum that they would be liquidated at a rate of exchange which would in no case be higher by burdens, charges or surcharges than that which is applied in the same market to any other country.

“Any other interpretation such as that which seems to appear from the communication of the United States State Department is absolutely inacceptable for the following reasons:

• “1. It would not be possible to adopt it within the régime of the agreements made without establishing a situation of manifest inequality for the countries with which agreements have been made.
• “2. The Argentine would lack the necessary foreign exchange inasmuch as the larger part of the foreign exchange originating from its exports to other countries outside the United States is assigned to the fulfillment of the various agreements made and to the acquisition of indispensable articles such as jute. This impossibility would be so much the greater in the present state of the balance of payments.

“The new demand which seems to appear from the communication of the United States State Department has not failed to cause profound surprise and disappointment after there had been made, in view of the realization of an agreement, concessions so important as the reduction of the surcharge which has led to its elimination.”

[Annex—Translation]

The negotiation of the treaty shall be on the basis of unconditional and unlimited most-favored-nation treatment with respect to every form of control of interchange and international payments.

The Government of Argentina states that it will abolish the system of exchange control as soon as circumstances shall permit. As long as the present period of emergency shall last, the Argentine Government shall manage the system of control of exchange so that it shall include no restrictions which place United States products under disadvantageous conditions with respect to products from other countries which have signed commercial conventions with Argentina.

14. Handed to Under Secretary of State Welles by Ambassador Espil on February 5.