. . . . . . . . . . . . . .
I particularly desire to refer to the paragraph in the Argentine
Government’s memorandum which reads as follows:
In a conversation which I had yesterday evening with Señor Ceferino
Irigoyen, Financial Counselor of the Argentine Embassy in Washington,
who is now in Buenos Aires, he volunteered the information that it was
his Government’s intention to “stick to the present list” and that the
reference to the possibility of proposed amplifications had only been
inserted in order to “pacify” the Minister of Agriculture. It would seem
that certain officials of the Ministry of Agriculture had desired more
time to study our memorandum and insisted upon the insertion of this
reservation before they were willing to approve the final text of the
Argentine reply.
In the light of Señor Irigoyen’s explanation it would therefore appear
probable that in the steps leading to negotiations the Argentine
Government would not insist upon the inclusion of this reservation.
[Enclosure—Translation]
The Argentine Ministry for
Foreign Affairs to the American
Embassy
Memorandum
The Argentine Government has studied with the greatest interest the
memorandum of the Government of the United States of June 28 last
concerning the bases for the conclusion of a commercial treaty
between the two countries. The considerations and suggestions of
this document are of a constructive character to which the Argentine
Government will be disposed to be responsive by making the necessary
effort to enable these considerations and suggestions to lead to an
early understanding. Thus far, the restrictions that hinder the
entry of chilled and frozen meat into the United States, on the one
hand, and the existence of a system of exchange control in our
country, on the other hand, have constituted a powerful obstacle to
negotiations. In the meantime, commercial intercourse has suffered
from the inevitable pressure of circumstances. For this reason the
Argentine Government attributes special importance to the statements
of the memorandum in
[Page 247]
which
the necessity of controlling exchange in order to protect the value
of the currency is recognized. And for its part, prompted by a
similar spirit of understanding, it realizes the impossibility of
removing at this time the obstacles which prevent the entry of
Argentine chilled and frozen meat into that market. It continues to
hope, however, that a solution of the problem created by the
sanitary regulations may be reached, making possible the
encouragement of an increase in the trade of both countries. To this
end the Argentine Government is ready to cooperate with other
governments interested in the study of hoof-and-mouth disease in
general and of the means to avoid it, and it adheres to the proposal
of the Government of the United States.
The President of the Republic, Dr. Ortiz, explained in his last
message that Argentina does not pursue any policy whatsoever of
bilateral compensation of trade and expressed his firm conviction
that the return to multilateral trade with the minimum of obstacles
is what best suits the economic interests of this country. It is to
be hoped that such a categorical statement will contribute to
dissipate all doubt as to the direction of our commercial policy,
taking into account the temporary character of the provisional
measures which this country has found it necessary to adopt.
The first of the three points of the memorandum refers to the
possible tariff concessions by the United States. This is the
fundamental key to the entire problem. The physical volume of
Argentine exports remains at the same level which existed prior to
the world crisis; and owing to the conditions prevailing in the
European markets it is only from the United States that it is
possible to hope for an increase in purchases which would permit
Argentina to increase the imports which it requires in order to
continue its economic development intensively.
In previous conversations the officials of the United States
estimated the possible increase of our exports to that country at
approximately 30 to 40 million dollars in the event of certain
customs reductions within the limit of 50% of the Trade Agreement
Act being granted. Naturally such an increase could only be expected
under very favorable economic conditions in the United States.
Otherwise the figures would be considerably lower. Therefore it will
be necessary to await the concrete results of the agreement before
forming a definite opinion on the subject. Meanwhile the essential
thing is to come to an understanding which may provide Commerce a
firm and stable base for its progressive development.
During the conversations carried on in 1938, the Argentine Government
proposed a list of products more extensive than that submitted in
the last memorandum of the United States.
Desirous of hastening the negotiations, the Argentine Government
accepts the present list, in the understanding that maximum
reductions
[Page 248]
can be obtained
on the products mentioned therein; it reserves for itself the right
to propose the amplification thereof during the negotiations in
order to include other products of interest.
The second point of the memorandum relates to the exchange control
system. In view of the present situation of the balance of payments
the Argentine Government is considering the possibility of gradually
establishing a system of quantitative control of important groups of
imported articles, in order to prevent the reduction of the quantity
of an article proceeding from certain regions from being neutralized
by the simultaneous increase of imports front other regions. This
control would be applied generally and without any difference
whatsoever in the rate of exchange with regard to the same
article.* Therefore, the pertinent suggestions
formulated in the memorandum have been favorably received and the
Argentine Government takes pleasure in stating its conformity, in
principle, with regard to the suggestions in themselves as well as
to the principles on which they are based.
The concrete application of this method of quantitative control by
articles must be thoroughly studied. Feeling certain that the
Government of the United States will do everything necessary to
increase the importation of products from this country, the
Argentine Government is not particularly concerned on the subject of
the application of these regulations except with regard to the first
period or the period of transition which might cause difficulties of
importance. However, it believes that these difficulties may be
avoided thanks to the flexibility of judgment with which the
pertinent suggestions are set forth in the memorandum. In effect,
the agreement does not establish bases to determine the
participation of each country in the importation of articles subject
to quantitative control; the possibility is also admitted that the
percentile participation may increase or decrease by reason of
special factors. This will surely make it possible to find a
satisfactory solution in certain cases which might otherwise cause
considerable disturbance at first: a reasonable initial percentage
might later be increased as the result of an increase in the
quantity of exchange available whether through an increase of
exports or through an influx of foreign capital.
Lastly, the third point of the memorandum concerns customs reductions
to be granted for articles proceeding chiefly from the United
States. The Argentine Government considers this point very favorably
insofar as prevailing conditions may permit. In this respect the
following must be borne in mind: (a) customs
duties on articles in the list submitted in the memorandum are
essentially for revenue and not for protection. The reductions must
be such that they will not affect
[Page 249]
materially the revenue at times when it might
be necessary to increase other taxes in order to balance the budget;
(b) customs duties do not weigh on the
American exporter but on the Argentine consumer; and (c) the substantial reduction of duties on
certain articles would only injure revenue without increasing
appreciably the volume of sales of American exporters; sales will
increase in proportion with the buying power of the Argentine people
through the increase of exports; this, and not the price, is the
determining factor in the problem.
With a view to hastening the study of this point the Argentine
Government wishes to know what reductions the Government of the
United States is interested in obtaining.
The desire expressed in the memorandum to have a prompt reply has
made it possible to consider only those fundamental subjects set
forth in order that the discussions may proceed. There are other
points of minor importance which will have to be studied immediately
and on which it will not be difficult to obtain a concurrence of
opinion.
Buenos Aires,
August 12,
1939.
