[Enclosure]
Draft of a Memorandum To Be Presented to the
Uruguayan Minister for Foreign Affairs
The serious situation which has confronted American trade with
Uruguay during recent months has engaged the careful attention of
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the Government of the
United States. The existing situation is so unsatisfactory that it
is believed that every effort should be made to find a solution
which will be mutually satisfactory to both Governments and which
will further strengthen their commercial relations.
The point of view of the Government of the United States has been
made known repeatedly to the appropriate authorities of the
Government of Uruguay. It has been made clear that the United States
is opposed to any type of discrimination affecting its trade with
Uruguay (or any other country), whether such discrimination take the
form of differential tariff rates, differential exchange rates, Or
discriminatory allocation of quotas for imports or for the exchange
to be used in payment of imports. On the contrary, the Government of
the United States favors the most complete application of the
principle of unconditional most-favored-nation treatment as applied
to all forms of trade and payments control. As is well known, the
conclusion of trade or payments agreements with foreign countries on
a bilateral basis not only tends to reduce the total of world trade
to the detriment of all countries, but also, as has been made
apparent by the present situation in Uruguay, the existence of such
agreements may have a very discriminatory effect on trade with other
countries, such as the United States, not seeking to impose such
restrictions. It was in recognition of these basic facts, which are
well known to economists, that the Governments of the American
Republics approved resolutions at both the Montevideo and Buenos
Aires conferences condemning such harmful and discriminatory trade
obstacles.
The Government of the United States is fully aware of the difficult
situation in which the Government of Uruguay now finds itself as the
result of the current decline, both in price and volume, of
important Uruguayan exports, particularly wool. It is apparent that
if there is not enough foreign exchange created by exports to
satisfy all the demands of importers, some demands simply cannot be
met under the present system of Uruguayan exchange control. It is
equally apparent, however, that the distribution which has recently
been made of the available foreign exchange has been highly
inequitable and injurious to the important trade relations which
have traditionally existed between Uruguay and the United States,
and which it is hoped will grow stronger in the years to come. The
reason advanced by the Government of Uruguay in its aide-mémoire of February 8, 1938 for its
failure to allot exchange for the importation into Uruguay of
merchandise from the United States is the alleged “unfavorable”
balance of trade and payments of Uruguay with the United States. In
that aide-mémoire it was said further that
during the year 1937 exports of Uruguay to the United States created
exchange amounting to £993,311, whereas exchange sold to cover
imports amounted to £2,137,855.
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The figures quoted above referring to Uruguayan exports to and
imports from the United States present a picture differing widely
from that shown by the official Uruguayan customs statistics.
According to the latter, in the year 1937 Uruguayan exports to the
United States amounted to 13,865,788 pesos, while imports into
Uruguay from the United States amounted to 10,896,744 pesos, leaving
a balance “favorable” to Uruguay of 2,969,044 pesos. The obvious
discrepancy between these two sets of figures renders it highly
desirable to attempt to obtain a clearer and more accurate picture
of the balance of trade and payments between the United States and
Uruguay than it has hitherto been possible to obtain. For this
purpose it would appear to be essential for both Governments to be
in possession of all the facts and statistics bearing on this
important subject. In view of the reliance placed by the Government
of Uruguay on the statistics regarding foreign exchange maintained
by the Bank of the Republic, it would be very helpful for this
Government to benefit also by that same information in order that
there may be no disagreement regarding the facts in the matter and
in order that the finding of a mutually satisfactory solution to the
problem may thereby be facilitated. Although the detailed
information which would be most useful in this connection is of
course best known to the appropriate officials of the Government of
Uruguay and of the Bank of the Republic, it is assumed that the most
helpful information would cover some or all of the following points:
- 1.
- Total purchases and sales of controlled foreign exchange
in 1936 and 1937 (and subsequently) corresponding to
merchandise imports and exports to and from the principal
trading countries, and also the grand totals for all
countries.
- 2.
- Purchases and sales of controlled foreign exchange for
transactions other than merchandise imports or
exports.
- 3.
- Source of these figures.
- 4.
- Information regarding purchases and sales of foreign
exchange in the free market.
- 5.
- Source of information regarding the destination of exports
and the origin of imports corresponding to transactions in
controlled exchange.
- 6.
- Basis on which foreign exchange transactions are
“credited” or “debited” to Uruguayan trade with any given
country.
The Government of the United States is earnestly desirous of seeking
a solution to the current difficulties confronting trade between
Uruguay and the United States, and to that end is prepared to
cooperate to the fullest extent. It believes that the joint
endeavors of the two Governments to arrive at a satisfactory
solution will be greatly facilitated by a frank and free exchange of
all pertinent information. It earnestly hopes that the Government of
Uruguay will approach the
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problem in the same spirit and will make known through official
channels all information in its possession which might contribute to
this end.
