611.3531/665b
The Under Secretary of State (Welles) to the Ambassador in Argentina (Weddell)
My Dear Mr. Ambassador: We have just been informed by the Argentine Ambassador that his Government will not undertake to grant to the United States more than 6.50 percent of the total allocation of official exchange for imports. In view of our inability to accept a share so far out of line with any previous representative period, it appears certain that trade agreement negotiations are postponed for the present. This affects, therefore, some of the interesting points raised in your letter of June 17.24a
We have given some thought, and no doubt American exporters and producers may give some thought, to the prospect that any recourse of the Argentine Government to this market for loans may presently result in the Argentine Government’s citing the loan service as a reason Argentina must take less of our goods or take them on terms less fair to the American producers. It is anomalous that access to American credit facilities should be regarded by the borrowing country as a reason for treating American products worse than the competing products of other countries. For the present this consideration may have no practical effect on the ability of Argentina to borrow here on favorable terms but it can hardly be disputed that this is a weakness in the Argentine commercial policy and system of reasoning in these matters, and bankers and underwriters are always sensitive to any state of public opinion which may affect the marketing of any issue of bonds.
We understand that European creditor countries regard access of foreign borrowers to their public credit markets as a privilege for which they find means to stipulate for compensation in other aspects of their relations with the borrowing country. We do not seek to treat Argentina in this way but it is certainly fair to expect that their [Page 305] further entry into our loan market should not be turned to our added disadvantage in exchange matters.
On your second point, the fact is that the concessions we have granted in trade agreements with other countries and have generalized to Argentine products have probably not been of importance to Argentine exports. The articles which are of interest to the Argentine have not been included in other trade agreements precisely because Argentina is the principal supplier of the United States for these products. Our concessions on industrial products are naturally of little interest to Argentina, and it happens that our agricultural concessions have not been on goods that Argentina could supply.
Neither is there any very satisfactory statistical reply to the question as to what increases in Argentine exports of wool, linseed, et cetera, might be anticipated from a trade agreement. I am sure the Argentine authorities can see that such an agreement would give them real and important advantages, whether it increased sales or increased return on whatever sales they actually do make here, which, of course, may vary from year to year with our crop and market conditions. The swings in our purchases of such products as wool and linseed may be and recently have been extreme. When we import 14,893,000 bushels of flaxseed in the first five months of 1937 and 6,619,000 bushels, under the same tariff conditions, in the same period in 1938, we would have to be cautious in discussing anticipated increases in export volume. In both wool and flaxseed we could expect that future average imports will exceed past average imports from Argentina, but not the imports we have had in abnormal years. In view of the inability of the two Governments to reach a common basis of negotiation, however, this all has to remain only hypothetical for the time being.
Sincerely yours,
- Not found in Department files.↩