611.3531/1031: Telegram
The Secretary of State to the Ambassador in Argentina (Armour)
170. Your no. 179, September 23, 3 p.m. Your paragraph (1). You should reiterate, on the basis of the pertinent parts of the memorandum enclosed with instruction no. 6 of June 28, that the Articles on quantitative restrictions and exchange control, taken together, leave a large degree of flexibility by permitting the regulation of imports, through quotas, in conformity with exchange availabilities. If, as we hope and expect, the Argentine Government will be successful in avoiding commitments or arrangements which would have the effect of earmarking for purchases in third countries exchange arising out of Argentine exports to such countries, and retains its freedom to restrict when necessary the imports of particular products by means of quotas, the Articles as drafted would appear to provide ample flexibility even under war conditions in Europe. In this connection you are authorized to say to the inter-ministerial committee that if the Argentine authorities run into such difficulties in current negotiations with the British Government or any other government, and desire our assistance in avoiding hampering commitments or stipulations, we would, upon request, do all in our power to aid them.
For your confidential information, we perceive the possibility that the British may seek to block exchange arising out of Argentine exports to the United Kingdom. At the first convenient opportunity therefore you should, unless you perceive objection, broach this subject orally with high Argentine officials and impress upon them the great disadvantage from Argentina’s own standpoint as well as ours of any such blockage of exchange which would, among other things, seriously prejudice the trade-agreement negotiations between our two countries. You should state that if blockage of exchange is threatened in the case of the United Kingdom or any other important country, the Government of the United States would upon request take our interest in the matter up with the foreign government or governments concerned.
Your paragraph (3). This Government does not contemplate that the quoted clause could be used as a means of weakening or waiving the effectiveness of Article 8. We might, in the light of all pertinent facts, agree to a global quota which could not be allocated among countries of origin, or even in some special cases agree to dispense with allocation to the United States of a share of a particular quota which has been partially allocated to a third country or countries. [Page 267] However, we obviously could not be expected to do so if the allotment to third countries but not to the United States would deprive this country of an opportunity to obtain a fair share of the total quota. The flexibility provided by the quoted clause is not, therefore, very great.
Your paragraph (5). Prompt payment for permitted imports should be possible under the provisions of the quota and exchange Articles by keeping imports within the capacity to make payments through the imposition of whatever quotas may be necessary. Furthermore, since regulation of imports would be exercised through the imposition or non-imposition of quotas on individual products and through the amount of the quotas established, there would appear to be no necessity for differential exchange rates between products for the purpose stated. The basic purpose and intent of the articles as drafted is to substitute quotas for exchange rates as a means of trade control.
Your paragraph (4). You should request copies of the pertinent Argentine laws dealing with government purchases of foreign articles and transmit a set to the Department. It does not seem reasonable that the Argentine Government wishes to retain freedom to discriminate against the United States in regard to such purchases or that Argentine law should so provide.
Your paragraph (2). A permanent mixed commission for the purpose mentioned would not be practicable from our viewpoint. In fact this Government could not agree to the establishment of any such commission the existence of which might be construed as a delegation of the powers conferred on the President by the Trade Agreements Act or whose functions might conflict with those of existing American Government agencies. The purpose in mind would be served best, in our opinion, by intergovernmental communications through the usual channels. Each government may find it desirable, of course, to maintain or establish one or more interdepartmental committees to study the operation of the agreement, with particular reference to matters calling for consultation between the two governments.
Reply to your no. 174, September 20, 6 p.m. is in preparation.