Foreign Relations of the United States Diplomatic Papers, 1939, The American Republics, Volume V

611.3531/875a

The Secretary of State to the Ambassador in Argentina ( Armour )

No. 6

Washington , June 28, 1939.

Sir: There is enclosed a memorandum with enclosures embodying certain considerations and questions in regard to the basis for a possible trade agreement with Argentina. You should, unless you perceive objection, present this memorandum and enclosures to the Argentine Foreign Minister¹⁰ as soon as possible.

It will be noted that the proposed basis for a trade agreement embodied in the memorandum is in line with the suggestions, with respect to the basis for a trade agreement, made to members of the Argentine interministerial committee and to other Argentine officials by officers of the Department during conversations in Buenos Aires. The memorandum contemplates the negotiation of a trade agreement under which, from its effective date, the Argentine Government would accord full equality of treatment to United States trade, as provided in the proposed general provisions, and tariff treatment as indicated for United States products. It is desired to ascertain what concessions the Argentine Government would expect in return for according this treatment to United States trade under an agreement.

This Government does not envisage the negotiation of a conditional agreement or an agreement, such as suggested by Dr. Raul Prebisch (despatch no. 291 of February 24, 1939, from the Consul General¹¹), which would provide for a transitional period during which the Argentine Government could take such steps as might be necessary in order to accord United States trade equality of treatment. This should be made clear to the Foreign Minister and to other appropriate Argentine officials. You should inform such officials that this Government does not desire to negotiate an agreement of that nature and could not consider granting substantial concessions to Argentina for less in return on the part of Argentina than is contemplated by the memorandum.

You should inform the appropriate Argentine officials that the Department is informing the Argentine Ambassador in Washington that, in the event the Argentine Government is inclined to agree to the proposed basis but considers it necessary to approach the Government of the United Kingdom for the purpose of obtaining a release from existing commitments to that country in order to be free to negotiate an agreement with the United States on the proposed basis, this Government, should the Argentine Government desire, will render all possible appropriate assistance.

A copy of the enclosed memorandum is being handed to the Argentine Ambassador. With respect to the products contained in the attached list,¹² he is being informed that it is extremely unlikely that any reduction could be made in the duty on corn.

Please telegraph the Department any suggestions you may have regarding the contents of the memorandum prior to transmitting it to the Argentine Government, and you will, of course, report promptly to the Department the reaction of Argentine officials.

Very truly yours,

For the Secretary of State:

Francis B. Sayre

[Enclosure]

Memorandum To Be Presented by the American Ambassador ( Armour ) to the Argentine Minister for Foreign Affairs ( Cantilo )

The Government of the United States, in pursuance of conversations in Washington between officers of the Department of State of the United States and the Ambassador of Argentina and in Buenos Aires between officers of the Department of State of the United States and officials of the Government of Argentina, desires to present to the Argentine Government certain considerations and questions regarding the basis for a trade agreement between the two countries.

Three essential elements comprise the basis for the negotiation of a trade agreement: 1) possible tariff concessions by the United States; 2) the general provisions of the agreement, particularly those relating to quotas and exchange; and 3) possible tariff concessions by Argentina.

With reference to possible tariff concessions by the United States, the maximum reduction in United States import charges permitted by the Trade Agreements Act, under authority of which trade agreements are negotiated, is 50 percent. As the Government of Argentina is aware, the United States customarily grants tariff concessions only in respect of articles of which the other country concerned is the chief or an important source of imports into the United States. In accordance with this principle, the Government of the United States has exhaustively studied all products of which Argentina is the chief or an important supplier to the United States. As a result of this study, the Government of the United States is now fully prepared to give consideration to any requests which the Government of Argentina may desire to make in respect of the tariff treatment of the products contained in the attached list.

In making the above-mentioned study, the Government of the United States has borne prominently in mind the importance attached by Argentina to the trade in meat, and has reexamined with the greatest care the questions relating to the importation of chilled and frozen meats from Argentina. It has been forced to conclude that circumstances connected with the sanitary laws and regulations of this country are such that no practicable means can be found for effecting any immediate improvement in this situation. However, the Government of the United States, having in mind possible future developments, would be willing to cooperate with interested governments such as those of Argentina, Uruguay and Brazil, should such governments desire, in a study of rinderpest and foot-and-mouth disease. A study of these diseases by an international group of well-qualified scientists, preferably non-governmental, might result, among other things, in a finding that meat prepared in certain ways could not possibly transmit these diseases.

As regards the second element in the basis for negotiations, namely, the general provisions, the Government of the United States could not consider signing an agreement, involving substantial concessions by the United States which would leave products of the United States exported to Argentina at a disadvantage as compared with like products imported from any other country.

The disadvantage to which United States trade in Argentina is now subjected is due to the practice of the Argentine Government of controlling imports on a bilateral basis, by means of prior permits and differential exchange rates, which favors imports from certain countries to the detriment of other countries, particularly the United States.

The Government of the United States fully appreciates that the Argentine Government may be compelled to control imports in order to safeguard foreign debt service and other necessary remittances abroad and to protect the exchange value of the Argentine currency during periods of foreign exchange stringency due to abnormally low returns from exports. However, the Government of the United States believes that any control of imports deemed necessary by the Argentine Government can be exercised more effectively and more fairly on a commodity basis than, as at present, on a country basis.

The control of imports on a commodity basis would permit the control of total imports, whereas the present practice may result in a diversion of imports from a disfavored to a favored nation and thus cause only a change in the source of imports. The control of imports on a commodity basis would be more fair than the existing practice because all suppliers to the Argentine market and Argentine importers would receive equitable treatment with respect to such imports as were admitted and the burden of restrictions would be spread over all export and import interests involved in the trade in the articles subject to restrictions. Even in the worst years, many articles could be permitted to enter without any restriction whatever. In the case of articles subject to restriction Argentine importers would be free to buy where they could buy to best advantage, within the limits determined upon by the Argentine Government.

Under the procedure here suggested, import quotas, applicable to imports of particular products from all countries, could be established when necessary for the protection of the exchange value of the Argentine currency. The maximum quantity of a given product which would be admitted into Argentina during a specified period, including any imports of such product under compensation arrangements, would not have to be allocated among supplying countries. However, if the Argentine Government should allocate a share of any such quantity to any third country, the United States would be allotted a fair share on the basis of its position as a supplier in a previous representative period. The previous representative period upon which the share of the United States in a total quota would be based would not necessarily be specified in the agreement. The Argentine Government would be free to select a base period for each product subject to an import quota on the general understanding that the period selected would be representative with respect to imports into Argentina of the product in question. If shares of a quota are allotted to a third country and to the United States on this basis, the balance, if any, of the quota over and above these shares could, if the Argentine Government so desires, be made available to all other countries without specific allocation to such countries, or be allotted among several countries or even entirely to one other country. It is assumed, however, that the Argentine Government would as a general rule wish to allocate the balance, which in some cases would be a large part of the total quota, among other exporting countries on the same basis as that on which the allocation to the United States would be made.

Such control of imports, based on careful estimates of exchange available for merchandise transactions after the debt service and other necessary remittances have been provided for and with sufficient flexibility for any revision of such estimates as might appear advisable, would insure that imports would not exceed Argentina’s capacity to pay. Thus the present basis for differential exchange rates as between countries would be removed and since only an amount of imports would be admitted for which exchange was available, payment could be made promptly for all imports.

There are attached a set of general provisions which the Government of the United States would wish to have included in a trade agreement, together with a memorandum^12a explaining the articles pertinent to the above discussion.

With reference to the third element in the basis for negotiations, the Government of the United States would expect the Argentine Government to grant, under a trade agreement, improved customs treatment to important United States products, including:

• Prunes and raisins
• Automotive vehicles and parts
• Lumber
• Cash registers and office appliances, such as adding, accounting, and calculating machines, and parts
• Paints, enamels, and lacquers
• Apples (on a seasonal basis)
• Automatic refrigerators and parts
• Radio receiving sets, parts, and tubes

and to bind existing customs treatment of other products of which the United States is the principal or an important supplier.

The Government of Argentina, like the Government of the United States, doubtless has been giving intensive study to the possibilities of a trade agreement and is therefore in a position to indicate at an early date the concessions it would expect the United States to grant in a trade agreement. In the meantime, it is obviously desirable that both Governments make every effort to avoid any publicity in regard to any proposals under discussion or to the fact that such discussions are in progress.

Washington , June 28, 1939.

[Subenclosure]

Draft of General Provisions for Inclusion in Proposed Trade Agreement With Argentina

The President of the United States of America and the President of the Republic of Argentina, being desirous of strengthening the traditional bonds of friendship between the two countries by maintaining the principle of equality of treatment as the basis of commercial relations and by granting mutual and reciprocal concessions and advantages for the promotion of trade, have through their respective Plenipotentiaries arrived at the following Agreement:

Article I

Articles the growth, produce or manufacture of the United States of America, enumerated and described in Schedule I annexed to this Agreement, shall, on their importation into the Republic of Argentina, be exempt from ordinary customs duties in excess of those set forth in the said Schedule, and shall not be assessed for customs purposes at valuations higher than those specified in that Schedule. The said articles shall also be exempt from all other duties, taxes, fees, charges or exactions, imposed on or in connection with importation, in excess of those imposed on the day of the signature of this Agreement or required to be imposed thereafter under laws of the Republic of Argentina in force on the day of the signature of this Agreement.

Article II

Articles the growth, produce or manufacture of the Republic of Argentina, enumerated and described in Schedule II annexed to this Agreement, shall, on their importation into the United States of America, be exempt from ordinary customs duties in excess of those set forth and provided for in the said Schedule, subject to the conditions therein set out. The said articles shall also be exempt from all other duties, taxes, fees, charges or exactions, imposed on or in connection with importation, in excess of those imposed on the day of the signature of this Agreement or required to be imposed thereafter under laws of the United States of America in force on the day of the signature of this Agreement.

Article III

The provisions of Articles I and II of this Agreement shall not prevent the Government of either country from imposing at any time on the importation of any article a charge equivalent to an internal tax imposed in respect of a like domestic article or in respect of a commodity from which the imported article has been manufactured or produced in whole or in part.

Article IV

The Schedules annexed to this Agreement, and the notes included in them, shall have force and effect as integral parts of the Agreement.

Article V

Articles the growth, produce or manufacture of the United States of America or the Republic of Argentina, shall, after importation into the other country, be exempt from all internal taxes, fees, charges or exactions other or higher than those payable on like articles of national origin or of any other foreign origin.

Article VI

In respect of articles the growth, produce or manufacture of the United States of America or the Republic of Argentina enumerated and described in Schedules I and II, respectively, imported into the other country, on which ad valorem rates of duty, or duties based upon or regulated in any manner by value, are or may be assessed, it is understood and agreed that the bases and methods of determining dutiable value and of converting currencies shall be no less favorable to importers than the bases and methods prescribed under laws and regulations of the Republic of Argentina and the United States of America, respectively, in force on the day of the signature of this Agreement.

Article VII

No prohibition, restriction or any form of quantitative regulation, whether or not operated in connection with any agency of centralized control, shall be imposed by the Republic of Argentina on the importation or sale of any article the growth, produce or manufacture of the United States of America enumerated and described in Schedule I, or by the United States of America on the importation or sale of any article the growth, produce of manufacture of the Republic of Argentina enumerated and described in Schedule II.

The foregoing provision shall not apply to quantitative regulations in whatever form imposed by the United States of America or the Republic of Argentina on the importation or sale of any article the growth, produce or manufacture of the other country, in conjunction with governmental measures or measures under governmental authority operating to regulate or control the production, market supply or prices of like domestic articles, or tending to increase the labor costs of production of such articles, or to maintain the exchange value of the currency of the country. Whenever the Government of either country proposes to impose or to effect a substantial alteration in any quantitative regulation authorized by this paragraph, it shall give notice thereof in writing to the other Government and shall afford such other Government an opportunity within thirty days after receipt of such notice to consult with it in respect of the proposed action; and if an agreement with respect thereto is not reached within thirty days following receipt of the aforesaid notice, the Government giving such notice shall be free to impose or to alter the regulation at any time, and the other Government shall be free within fifteen days after such action is taken to terminate this Agreement in its entirety on thirty days’ written notice.

Article VIII

No prohibition or restriction of any kind shall be imposed by the Government of either country on the importation of any article the growth, produce or manufacture of the other country or upon the exportation of any article destined for the other country, unless the importation of the like article the growth, produce or manufacture of all third countries, or the exportation of the like article to all third countries, respectively, is similarly prohibited or restricted.

No restriction of any kind shall be imposed by the Government of either country on the importation from the other country of any article in which that country has an interest, whether by means of import licenses or permits or otherwise, unless the total quantity of such article permitted to be imported during a specified period, or any change in such quantity, shall have been established and made public. If the Government of either country allots a share of such total quantity to any third country, it shall allot to the other country a share equivalent to the proportion of the total imports of such article supplied by that country during a previous representative period, and shall make such share available so as to facilitate its full utilization, unless it is mutually agreed to dispense with such allotment. No limitation or restriction of any kind other than such an allotment shall be imposed, by means of import licenses or permits or otherwise, on the share of such total quantity which may be imported from the other country.

The provisions of the preceding paragraph shall apply in respect of the quantity of any article permitted to be imported at a specified rate of duty.

Article IX

In the event that the Government of the United States of America or the Government of the Republic of Argentina establishes or maintains a monopoly for the importation, production or sale of a particular article or grants exclusive privileges, formally or in effect, to one or more agencies to import, produce or sell a particular article, the commerce of the other country shall receive fair and equitable treatment in respect of the foreign purchases of such monopoly or agency. To this end such monopoly or agency will, in making its foreign purchases of any article be influenced solely by considerations, such as those of price, quality, marketability and terms of sale, which would ordinarily be taken into account by a private commercial enterprise interested solely in purchasing on the most favorable terms.

In awarding contracts for public works and in purchasing supplies, the Government of neither country shall discriminate against articles the growth, produce or manufacture of the other country in favor of those of any third country.

Article X

In the event that the Government of the United States of America or the Government of the Republic of Argentina establishes or maintains, directly or indirectly, any form of control of the means of international payments, it shall, in the administration of such control:

(a) Impose no prohibition, restriction, condition or delay on the transfer of payments for imported articles the growth, produce or manufacture of the other country, or on the transfer of payments necessary for and incidental to the importation of such articles;

(b) Accord unconditionally, with respect to rates of exchange and taxes or surcharges on exchange transactions in connection with payments for or payments necessary and incidental to the importation of articles the growth, produce or manufacture of the other country, treatment no less favorable than that accorded in connection with the importation of any article whatsoever the growth, produce or manufacture of any third country; and

(c) Accord unconditionally, with respect to all rules and formalities applying to exchange transactions in connection with payments for or payments necessary and incidental to the importation of articles the growth, produce or manufacture of the other country, treatment no less favorable than that accorded in connection with the importation of the like articles the growth, produce or manufacture of any third country.

Article XI

Articles the growth, produce or manufacture of either country shall not be subjected, upon importation into the other, from whatever place arriving, to other or higher duties or charges of any kind or to any rules or formalities other or more burdensome than those to which the like articles the growth, produce or manufacture of any third country are subject.

Articles exported from either country to the other shall not be subjected to other or higher duties or charges of any kind or to any rules or formalities other or more burdensome than those to which the like articles exported to any third country are subject.

Any advantage, favor, privilege or immunity which has been or may hereafter be granted by the United States of America or the Republic of Argentina in respect of any article originating in or destined for any third country in regard to customs duties and other charges of any kind imposed on or in connection with importation or exportation, to the method of levying such duties or charges, to all matters concerning the rules, formalities and charges imposed in connection with importation or exportation, and to all laws or regulations affecting the sale or use of imported goods within the country, shall be accorded immediately and unconditionally in respect of the like article originating in or destined for the Republic of Argentina or the United States of America, respectively.

Article XII

Laws, regulations of administrative authorities and decisions of administrative or judicial authorities of the United States of America or the Republic of Argentina, respectively, pertaining to the classification of articles for customs purposes or to rates of duty shall be published promptly in such a manner as to enable traders to become acquainted with them. Such laws, regulations and decisions shall be applied uniformly at all ports of the respective country, except as otherwise specifically provided in statutes of the United States of America relating to articles imported into Puerto Rico.

No administrative ruling by the United States of America or the Republic of Argentina effecting advances in rates of duties or in charges applicable under an established and uniform practice to imports originating in the territory of the other country, or imposing any new requirement with respect to such importations, shall be effective retroactively or with respect to articles either entered for consumption or withdrawn for consumption prior to the expiration of thirty days after the date of publication of notice of such ruling in the usual official manner. The provisions of this paragraph do not apply to administrative orders imposing anti-dumping duties, or relating to regulations for the protection of human, animal or plant life or health, or relating to public safety, or giving effect to judicial decisions.

Article XIII

If the rate of exchange between the currencies of the United States of America and the Republic of Argentina should vary considerably from the rate obtaining on the day of the signature of this Agreement, the Government of either country, if it considers the change in rate so substantial as to prejudice the industries or commerce of that country, shall be free to propose negotiations for the modification of this Agreement; and if agreement is not reached within thirty days after the receipt of such proposal, the Government making the proposal shall be free to terminate this Agreement in its entirety on thirty days’ written notice.

Article XIV

Greater than nominal penalties will not be imposed in the United States of America or in the Republic of Argentina upon importations of articles the growth, produce or manufacture of the other country because of errors in documentation obviously clerical in origin or where good faith can be established.

The Government of each country will accord sympathetic consideration to, and when requested will afford adequate opportunity for consultation regarding, such representations as the other Government may make with respect to the operation of customs regulations, quantitative regulations or the administration thereof, the observance of customs formalities, and the application of sanitary laws and regulations for the protection of human, animal or plant life or health.

In the event that the Government of either country makes representations to the other in respect of the application of any sanitary law or regulation for the protection of human, animal or plant life or health, and if there is disagreement with respect thereto, a committee of technical experts on which each Government shall be represented shall, on the request of either Government, be established to consider the matter and to submit recommendations to the two Governments.

Article XV

The provisions of this Agreement relating to the treatment to be accorded by the United States of America and the Republic of Argentina, respectively, to the commerce of the other country shall apply, on the part of the United States of America, to the continental territory of the United States of America and such of its territories and possessions as are included in its customs territory on the day of the signature of this Agreement. The provisions of this Agreement relating to most-favored-nation treatment shall apply, furthermore, to all articles the growth, produce or manufacture of any territory under the sovereignty or authority of the United States of America or the Republic of Argentina, imported from or exported to any territory under the sovereignty or authority of the other country. The provisions of this Article shall not apply to the Panama Canal Zone.

Article XVI

The advantages now accorded or which may hereafter be accorded by the United States of America or the Republic of Argentina to adjacent countries in order to facilitate frontier traffic, and advantages accorded in virtue of a customs union to which either country may become a party, shall be excepted from the operation of this Agreement.

The advantages now accorded or which may hereafter be accorded by the United States of America, its territories or possessions or the Panama Canal Zone to one another or to the Republic of Cuba shall be excepted from the operation of this Agreement. The provisions of this paragraph shall continue to apply in respect of any advantages now or hereafter accorded by the United States of America, its territories or possessions or the Panama Canal Zone to one another, irrespective of any change in the political status of any of the territories or possessions of the United States of America.

Article XVII

Subject to the requirement that, under like circumstances and conditions, there shall be no arbitrary discrimination by either country against the other country in favor of any third country, and without prejudice to the provisions of the second and third paragraphs of Article XTV, the provisions of this Agreement shall not extend to prohibitions or restrictions (1) imposed on moral or humanitarian grounds; (2) designed to protect human, animal or plant life or health; (3) relating to prison-made goods; (4) relating to the enforcement of police or revenue laws.

Nothing in this Agreement shall be construed to prevent the adoption or enforcement of measures prohibiting or restricting the importation or exportation of gold or silver, or to prevent the adoption or enforcement of such measures as either Government may see fit with respect to the control of the export or sale for export of arms, ammunition, or implements of war, and, in exceptional circumstances, all other military supplies, and it is agreed, further, that nothing in this Agreement shall be construed to prevent the adoption or enforcement of measures relating to neutrality.

The provisions of this Agreement relating to laws and regulations affecting the sale, taxation or use of imported articles within the United States of America are understood to be subject to the constitutional limitations on the authority of the Federal Government.

Article XVIII

In the event that the Government of the United States of America or the Government of the Republic of Argentina adopts any measure which, even though it does not conflict with the terms of this Agreement, is considered by the Government of the other country to have the effect of nullifying or impairing any object of the Agreement, the Government which has adopted any such measure shall consider such representations and proposals as the other Government may make with a view to effecting a mutually satisfactory adjustment of the matter.

Article XIX

Nothing in this Agreement shall be deemed to affect the rights or obligations arising out of the Treaty of Friendship, Commerce and Navigation signed at San José on July 27, 1853.¹³

Article XX

The present Agreement shall come into full force on the thirtieth day following proclamation thereof by the President of the United States of America and the President of the Republic of Argentina, or should the proclamations be issued on different days, on the thirtieth day following the date of the later in time of such proclamations, and shall remain in force for the term of three years, subject to the provisions of Article VII and of Article XIII. The Government of each country shall notify the Government of the other country of the date of its proclamation.

Unless at least six months before the expiration of the aforesaid term of three years the Government of either country shall have given to the other Government notice of intention to terminate this Agreement upon the expiration of the aforesaid term, the Agreement shall remain in force thereafter, subject to the provisions of Article VII and of Article XIII, until six months from such time as the Government of either country shall have given such notice to the other Government.

In witness whereof the respective Plenipotentiaries have signed this Agreement and have affixed their seals hereto.

Done in duplicate, in the English and Spanish languages, both authentic, at the City of Washington, this . . . . . . . . . . . . . . . . For the President of the United States of America: . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . For the President of the Republic of Argentina: . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

10. José M. Cantilo.
11. Not printed.
12. Not printed.
13. Memorandum not printed.
13. Treaty between the United States and the Argentine Confederation, Hunter Miller (ed.), Treaties and Other International Acts of the United States of America, Vol. 6, p. 269.