611.3531/1031: Telegram

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

179. Referring to the trade agreement in yesterday’s meeting the following objections and suggestions were informally made by the Argentine subcommittee.

1.
The proposed articles governing exchange and quantitative control are not sufficiently flexible to allow satisfactory solution of problems growing out of war such as European blocking of exchange for Argentine exports. They suggested negotiation of ancillary documents to take care of special arrangements during war.
2.
They also suggested that the agreement provides for a permanent mixed commission to which all special problems would be referred. The committee would also be employed on occasions contemplated in final paragraphs of articles 7 and 13.
3.
They thought that the clause of article 8 reading “Unless it is mutually agreed to dispense with such allotment” may provide the flexibility they desire provided it applies to all questions of quantitative control.
4.
Argentina objects to article 9 on the grounds that it would limit it in government purchases to a greater extent than contemplated by Argentine law. The subcommittee was reminded that without such provision the practical effects of most favored Nation treatment would be substantially annulled.
5.
Their objections to article 10 were: prohibition of restrictions or delay on transfers as provided in clause (a) and the exchange rate provisions of clause (b). As indicated in its notes of August 12 and 22, the Argentine Government has taken the position that equality of exchange treatment should be on a commodity basis and this would mean that the wording “any article” to conform to their understanding should read “Any like article”. The Argentine Government understands article 10 as now worded to mean that only one rate of exchange could be employed for all imports thus forcing them to abandon their present policy of employing different exchange rates to assist necessary imports and restrict those not considered as essential.
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I would appreciate instructions on the points raised prior to again discussing the articles covering exchange and quantitative control.

Armour