[Enclosure]
The Consul General at Buenos Aires
(
Davis
)
to the Ambassador in Argentina (
Weddell
)
Buenos
Aires
, October 4, 1938.
Sir: I have the honor, with reference to
the Consulate General’s despatch to the Embassy of August
twenty-fifth and previous reports from this office based on
information obtained informally from Mr. Louro, to submit the
following brief outline of points brought up in a conversation
yesterday. A more detailed report will follow.
According to the source mentioned, the Argentine Government is about
to enter a new active phase of study of a possible trade agreement
with the United States. While no country committee has as yet been
formed, a general commercial policy committee charged with the
broader aspects of the questions involved is now functioning and
will probably recommend the personnel of a country committee
shortly. Most of Argentina’s recent “trade agreements” have been in
actual fact little more than exchange agreements and the question of
reducing tariffs has not been given much consideration. The
Argentine Government will therefore have to create an organization
to supply this lack, and is studying the American Trade Agreements
“set up” with this end in view.
Mr. Louro is preparing a report to his Government on the results of
the trade agreements program in the United States and also on
Argentina’s present trade orientation and the country’s
international commercial tendencies. He is comparing Argentina’s
present system of trade treaties with the United States program and
apparently attempting to find points of reconciliation which might
be made the basis of an agreement between the two countries.
Inevitably he will contrast with the American program the operation
of compensation agreements such as that with Germany. Under the
latter system Argentina’s sales are determined entirely by the
measure of its purchases from Germany and supposedly there is no
limit to the possibilities of expansion as long as Argentina is
willing to absorb increased amounts of German products. His report
therefore will discuss among other questions the extent to which the
increased absorption of German goods is possible or desirable from
the point of view of the consumers, the general economy and
Argentina’s international relations. Mr. Louro said the question of
credits will be raised also, and that a point in favor of the United
States may be made in this connection.
On the subject of the exchange question Mr. Louro stated that he was
about to recommend to his Government that it offer the United States
9½ per cent of the total official exchange created by exports as a
basis for opening trade agreement negotiations. He considered [Page 309] that the agreement of the
United States to this percentage, with the understanding that other
merchandise would be allowed to be cleared through the “free market”
as heretofore, would be decidedly to its advantage, especially as
under a quota system the United States might be considerably worse
off than it is now. The present system, with the existence of the
“free market” for non-prior-permit imports, at least has the merit
of flexibility, which of course a quota system would not have.
The Argentine Government, judging by remarks of both Mr. Louro and
Mr. Irigoyen, has been studying the question of making up the loss
of revenue incident to the possible reduction of customs duties on
automobiles by increasing gasoline taxes and the internal taxes on
licenses. It is believed that a decision has now been made to the
effect that Argentina would be able to accept the United States
proposals for a reduction of certain tariff items on automotive
products. Thus it appears that a method of overcoming the fiscal
difficulty, which was considered an important stumbling-block some
months ago, has been found.
As to the dollar loan, in connection with which a further delaying
amendment has been filed, extending the time-limit to October tenth,
Mr. Louro stated that officials of the Ministry of Finance were most
optimistic about the prospects of its flotation. There was no
question but that the Argentine Government needed the money, and he
appeared to consider it probable that the New York underwriters’
terms would be accepted, provided they were no less favorable than
the offer of last August; namely, ninety-two. He added, however,
that only the Finance Minister would really be able to answer this
question.
Respectfully yours,
