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

611.3531/604a

The Secretary of State to the Argentine Ambassador (Espil)

Washington, February 12, 1938.

My Dear Mr. Ambassador: The reason this Government has brought the question of exchange treatment to the forefront at this stage of discussion regarding a possible trade agreement between the Argentine and American Governments, is solely, as I believe you recognize, the desire to avoid unfruitful disturbance of trade both in this country and in Argentina if preliminary interchange of the type that had been going on reveals the likelihood that this question of exchange would prove an unsurmountable obstacle to agreement. Therefore my Government has been striving to formulate the type of exchange arrangements which it regards as an essential element in any trade agreement that might be arrived at. I attach herewith a formulation of such arrangements; this formulation consists of a single draft article for inclusion in a trade agreement and a draft letter of explanation and interpretation of the article.

If an agreement can be reached that trade agreement discussions will proceed on the definite understanding that if and as any trade agreement is concluded these shall be the exchange provisions, this Government will be very pleased to initiate negotiations.

More precisely if the Argentine Government can state its agreement before February 25, this Government is prepared to make preliminary announcement within three days thereafter.

I shall ask the American Ambassador in Buenos Aires to supplement the discussions which have taken place with a full presentation of the considerations shaping our views. I greatly hope that preliminary understanding can be reached on this point so that trade agreement negotiations can be promptly initiated.

Sincerely yours,

Cordell Hull

[Enclosure 1]

Draft of an Article Relating to Exchange Arrangements for Inclusion in Trade Agreement

In the event that the Government of the United States of America or the Government of the Republic of Argentina establishes or maintains any form of control of international payments, it shall, in the administration of such control, accord to the commerce of the other country the most complete application of the unconditional most-favored-nation principle.

[Enclosure 2]

Draft of Letter of Explanation and Interpretation of Article Relating to Exchange

Mr. Secretary of State: Animated with the purpose of making Article _ of the trade agreement signed today between the Republic of Argentina and the United States of America perfectly clear, my Government has authorized me to advise Your Excellency that so long as the Argentine Government maintains control over foreign exchange, it will so administer that control under the provisions of Article _ that the exports of the United States will suffer no competitive handicap in exchange matters, as compared with the like products of other countries. This undertaking will be carried out as follows:

(1) There shall be prepared jointly by the American Embassy in Buenos Aires and the Argentine Government a list including all articles in respect to which the Argentine Government intends to make official exchange available for payment for imports from any country. This list shall include all articles in respect of which any official exchange was made available to any country during the twelve calendar months next preceding the date of the conclusion of the trade agreement. This list shall be revised bi-monthly, so as to show the products as to which official exchange was given to any country during the twelve months immediately preceding. The American Government shall be free to publish this list for the convenience of its exporters.

(2) The Argentine Government will make official exchange available promptly, unconditionally, and without restriction in respect of importations of all articles the growth, produce or manufacture of the United States of America enumerated in such list.

(3) In respect of importations of any article the growth, produce, or manufacture of the United States of America not enumerated in the aforementioned list, the Argentine Government will place no restriction on the transfer of payment through the free market, and no tax which is other or higher than that made to apply in respect of payments for importations of the like article the growth, produce, or manufacture of any third country.

(4) In addition to the above, my Government undertakes that in respect of the transfer of all non-commercial payments, the Argentine Government will continue to accord to the United States of America treatment no less favorable than that accorded to any third country.