[Enclosure—Extracts]
The Consul General at Buenos Aires
(Davis)
to the Ambassador in Argentina (Weddell)
Buenos
Aires, August 16, 1938.
Sir: I have the honor to submit herewith
for your consideration certain observations on the subject of a
United States-Argentine trade agreement, based on conversations with
Dr. Alfredo Louro and others during the past week. It is believed
that they should be of interest in the light of the speeches made on
August the twelfth and their reception in the local press. Attention
is drawn in this connection to the August fourteenth issue of La Nación which contains an editorial on the
subject of Dr. Groppo’s speech entitled “La politica comercial”.
The frank statements of the Minister of Finance at the Chamber of
Commerce banquet on Friday brought into the open views which have
been expressed unofficially on innumerable occasions by Argentine
officials, bankers and economists. They indicate that the issue is
really clear-cut and that Argentina will retain its artificial
exchange restrictions against United States commerce as long as the
United States keeps its artificial sanitary restrictions against
Argentine meat. There seems to be real fear among Argentines that
the British market for meat is a declining one and that desperate
measures are warranted for the saving of the country’s principal
industry. Attention continues to be focused on this industry and
there is little or no interest in the problematical benefits that
would accrue to Argentina from the lowering of United States tariffs
on items other than meat.
Argentina, while it has an academic interest in the attempts of the
United States through its Trade Agreements program to promote
freedom of trading, is seemingly not interested in a pooling of
efforts towards this end. Dr. Louro when questioned on this point in
unofficial conversation stated that American efforts (1) had failed
to induce Britain, France, Germany and Italy to eliminate their
quotas and clearings, and (2) had not brought about the reduction of
European tariff barriers on products in which Argentina was
interested. He seemed not to believe that Argentina could accomplish
anything by insisting on free and equal treatment from its principal
customers as the United States had done. He thought that United
States acquiescence in the French quotas illustrated the
hopelessness of the task for Argentina, and therefore felt that
Argentina should play safe and get what it could by bargaining in
preferences.
The general feeling seems current among Argentines that formal
adherence to the principle of multilateral balancing would not
materially assist it unless restrictions and duties against
Argentine products
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elsewhere were to be reduced or eliminated. In other words, it is
the “other fellow” that must make the first move. The men at the
helm in Argentina feel that in the present state of world
uncertainty they would prefer not to risk the temporary partial loss
of markets which might be incidental to the period of readjusting
the country’s exports to a new trade agreement policy.
The Roca-Runciman type of trade agreement,25 which
is supposedly Argentina’s standing offer to all comers (except
apparently Japan), has set a strong precedent. Dr. Louro is inclined
to think perhaps this treaty was a mistake since it unnecessarily
limits Argentina’s freedom of action. However, he insists that it is
a definite factor to be reckoned with and Argentina would not dare
to make an arrangement which was at variance with its principles;
that is, reserving exchange created by exports for each contracting
country’s uses on the bilateral principle.
. . . . . . . . . . . . . .
In the meantime it is proposed to make the United States feel the
full weight of Argentina’s ability to restrict imports through
exchange control. Argentina wishes to make it clear that it will not
buy unless it can sell. This same principle has been applied to
Italy for some months past and if necessary will be applied to other
countries also, in accordance with the provisions of Argentina’s
exchange agreements which call for the automatic adaptation of
official exchange allocation to the extent of each country’s
purchases here. (See Consul Ravndal’s letter to the Ambassador of
May 20). Thus there is not exclusive discrimination against the
United States, but rather discrimination against those countries
which have persistently favorable balances in their trade with
Argentina.
Respectfully yours,
