611.3531/1317: Telegram
The Secretary of State to the Ambassador in Argentina ( Armour )
231. Your telegram No. 238, November 25, 10 a.m.
- 1.
- In view of the wide disparity in the positions of the two Governments on important phases of the proposed trade agreement and the extremely limited time available for completing these negotiations, it seems desirable that the situation be discussed with complete frankness with the appropriate Argentine authorities in an endeavor to reach an understanding which will facilitate rapid progress.
- 2.
- From the procedural standpoint, the central fact of which the Argentine negotiators might be reminded is that this Government has presented complete proposals covering all aspects of the agreement and may properly expect that in completion of the first phase of the negotiations, Argentina as its contribution to rapid progress will furnish us at the earliest possible date a complete reply indicating its position on all of these proposals. In this connection, you might say that this Government has conscientiously sought at all times to base its proposals upon the realities of the situation confronting both governments and that it has carefully avoided taking a bargaining position in formulating its proposals. It is earnestly hoped that the Argentine negotiators will approach these problems in the same spirit. It is important that they be made to realize that any effort to maintain what appears to us to be an extreme bargaining position can only result in unnecessary delay which will militate seriously against bringing these negotiations to a successful conclusion.
- 3.
- In line with our general approach to the negotiations as indicated above, our Schedule II proposals were formulated with extreme care on the basis of all available information and were made as liberal as the pertinent facts and considerations permit. These offers are contingent of course upon acceptance of our proposals regarding the general provisions and Schedule I. In order that there may be a clear understanding of the situation, we believe that you should inform the Argentine officials definitely at this point that no substantial improvement [Page 273] in our offers will be possible. We would be willing to reexamine our offers, on the basis of specified and reasonable Argentine requests, with a view to seeing whether any minor improvements might be made. However, even on the basis of requests of that nature, it would be futile and unproductive to ask the trade-agreements organization to undertake a reexamination of Schedule II until we have a complete and satisfactory reply from the Argentine Government on our general provisions and Schedule I proposals. For your information, we fear that as long as the Argentine negotiators think that there is a chance of substantial improvement in our Schedule II offers, they will withhold their Schedule I proposals and will continue their refusal to give us proposals on the general provisions which offer a real basis for negotiation.
- 4.
- Any discussion which you may now have with a view to clarifying the situation should, of course, include frank comment on the attitude of the Argentine negotiators with respect to the general provisions. We entered into these negotiations on the understanding that the agreement would assure us complete nondiscriminatory treatment in the Argentine market. You should make it clear, furthermore, that regardless of any question as to whether the Argentine Government qualified its acceptance of the basis with reference to particular aspects of the general provisions, we cannot conclude an agreement with Argentina which does not assure us of nondiscriminatory treatment. The proposals thus far made by the Argentine negotiators would not give us such assurances; in fact, they do not even appear to offer an improvement over our present situation. For example, their proposals on exchange apparently are intended to assure us nondiscriminatory treatment with regard to exchange rates, but contain no assurances regarding the availability of exchange for permitted imports. With respect to quotas, their proposals envisage substantial discrimination against us over an indefinite, but presumably extended, future period. In “special cases”, which would apparently include many of our most important products, this discrimination would be even more severe under the agreement than at any time in the past. In other words, they apparently contemplate merely substituting one form of discrimination for another.
The Argentine proposals also fail to provide reasonable protection for their duty concessions in Schedule I. Without technically violating the agreement, these concessions might be impaired or nullified through use of selective exchange rates, or through the imposition of highly restrictive quotas. Furthermore, while refusing to obligate themselves to give us notice and an opportunity for consultation regarding quotas on Schedule I products, the Argentine negotiators inform us that the imposition of a quota on any Schedule II product would be regarded as cause for the immediate termination of the [Page 274] agreement. We have, of course, recognized the need of accommodating the agreement to Argentina’s possible needs and to reconcile ourselves to some impairment of concessions in Schedule I, but obviously we cannot acquiesce in a denial of our reasonable request for assurances that we will be notified and have a chance to make our views known before the concessions we have paid for are taken away. It should be clear to the Argentine negotiators that acceptance of such proposals by us, especially under the difficult circumstances in which we find ourselves, would be a manifest impossibility.