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

835.5151/979: Telegram

The Chargé in Argentina (Tuck) to the Secretary of State

Buenos Aires, December 15, 1938—3 p.m.
[Received 3:59 p.m.]

327. For the Acting Secretary. The Department will have grasped the significance of the information contained in the Consulate General’s strictly confidential telegram of December 12, 1938,²⁷ reporting that beginning January 1 imports into Argentina through the free market of 136 classifications of merchandise will be prohibited entirely.

A careful analysis of the complete list of these articles, which has been forwarded by air mail, shows that American trade stands to lose some $25,000,000 United States currency annually.

Contrary to expectations of the automobile importers, imports of automotive products through the free market are to be restricted to approximately 20 per cent of the 1938 sales. Importers had been led to believe that their business would not be restricted beyond the natural 30 per cent reduction anticipated for the new season.

Next to automotive products the most important restriction is in tin plate of which we sold 4,500,000 pesos during the first 9 months of the current year. Local frigoríficos, whose plants are adapted to cut American tin plate, assert that if they should not be able to obtain the necessary supplies of raw material from the United States they will have to purchase new equipment designed to handle British or German varieties.

The inevitable result will be a substantial diversion of our trade to European competitors and the establishment, on a more or less permanent basis of competitive lines heretofore inferior to ours.

The countries in order of importance which will be most affected by these restrictions are the United States, Japan and Italy. However the United States stands to lose four times more than either of the remaining two.

While these restrictions, according to the Consulate General’s information, will become operative on January 1, they will in all probability gradually become known within the next few days inasmuch as beginning December 11 exchange brokers were authorized to submit applications for prior permits for free exchange for use up to the end of March 1939 and the American Chamber of Commerce has circularized its members to report if any application for free exchange for use in the new year should be refused.

Under the circumstances and in view of the far-reaching effect of these restrictions upon American trade I recommend that as soon as they become generally known, I be instructed to call upon the Minister for Foreign Affairs and to register a strong protest. I further suggest that I be authorized to inform him confidentially of the purpose of the visit of Fowler and Sappington²⁸ (Department’s 177, December 2, 6 p.m.)²⁹ and urge that his Government should [agree] to a truce, or to a gentlemen’s agreement, at least for the duration of their visit, during which time it is hoped to reach a mutually satisfactory basis for trade agreement negotiations.

Tuck

27. Not printed.
28. By instructions of November 29, 1938, William A. Fowler, Assistant Chief of the Division of Trade Agreements, and James C. Sappington, Jr., of the same Division, were directed to proceed to Buenos Aires and Montevideo to discuss trade relations with officials in those countries (611.3531/692a, 692b).
29. Not printed.