611.3331/204
The Minister in Uruguay ( Dawson ) to the Secretary of State
[Received August 15.]
Sir: I have the honor to refer to my despatch No. 301 of July 29, 1938, concerning trade relations with Uruguay and recent conversations with President Baldomir and the Ministers of Foreign Relations and Finance. In the closing paragraph of my despatch, I stated that I hoped to have a further conversation within a few days with the Minister of Foreign Relations.
Dr. Guani gave me an appointment yesterday afternoon when I had half-an-hour’s talk with him.
He opened the interview with a reference to our recent trade-agreement proposal which had, he said, reached him only on July 4. He remarked that it was, of course, very difficult to study and decide upon so important a matter in the short time suggested, adding that he realized that there were special circumstances and that he was neither criticizing nor complaining. He went on to say that he and the other officials concerned had examined the proposal very carefully and that, while they had been unable to accept it, this did not mean that the Uruguayan Government and he personally were not very desirous of continuing conversations and reaching an agreement with the United States. He said that the American market meant much more to Uruguay than the Uruguayan market to the United States and that for himself he was much more interested in mutually satisfactory commercial relations with the United States than with a number of other countries. As respects specific points of our proposal, the Minister said that it was very much regretted that no concession in the duty on canned meat had been envisaged, as this was a product of the greatest interest to Uruguay. I mentioned wool, to which he replied that the Uruguayan experts felt that concessions on [Page 918] wool were of considerably less value since wool sales to the United States seemed to be affected much less by import duties than by current and varying market conditions. With regard to our proportional formula for exchange, Dr. Guani said that his Government could not possibly accept it for the simple reason that exchange would not be available unless provided by American purchases, Uruguay’s hands being tied by its treaties with other countries and it being impossible to apply to imports from the United States exchange created by exports to Great Britain, Germany, and other countries.
This led naturally to a discussion of the fundamental difficulty resulting from the divergent commercial policies followed by the United States and Uruguay—a difficulty which Dr. Guani said he fully realized. In so far as was possible in the time available, I endeavored to acquaint the Minister with our aims and with our views as respects the need for the restoration and freedom of international trade. In the hope that my remarks might make some impression, I dwelt on the restrictive nature of the bilateral system and its tendency to prolong and aggravate the effects of emergency measures born of the depression. Dr. Guani himself had already remarked that it was to be hoped that sooner or later the world would return to the state of affairs existing before the depression. I pointed out in particular that the bilateral system if carried to its logical conclusion meant barter and a balanced interchange of goods with each individual country and that such a system could not in the long run suit countries like Uruguay which must of necessity export much more than they import in order to maintain their balance of payments. I pointed out also that under present conditions Uruguayan importers were being prevented from buying in the United States agricultural machinery and many other articles which they prefer to purchase from us and that, as respects exchange control, it was resulting in artificially high prices for Uruguayan products which were tending to restrict exports. I suggested to the Minister that I had hoped that with his great experience and knowledge of international affairs he would review Uruguay’s whole commercial policy. He said that he had appointed a committee in the Foreign Office to study the matter. He intimated at the same time that commercial policy was largely in the hands of the Minister of Finance, Dr. Charlone.
At the conclusion of our interview and also repeatedly during its course, Dr. Guani assured me of his keen interest in reaching a satisfactory agreement with the United States. He said that I should always find him—or any one else who might be in the Foreign Office—very well disposed and that it was to be hoped that by the end of the year conditions would be more propitious as respects particularly an anticipated increase in Uruguayan exports to the United States.
[Page 919]I was interested in Dr. Guani’s reference to “any one else who might be in the Foreign Office.” It is generally believed that he would have preferred further diplomatic service in Europe to a Cabinet post and several of my colleagues predict that he will not remain very long at Montevideo.
Respectfully yours,