611.3531/1625

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

No. 1879

Sir: I have the honor to enclose a copy of a memorandum of a conversation between Dr. Ovidio Schiopetto of the Argentine Ministry of Agriculture and the Agricultural Attaché of the Embassy, relating to the proposed corn marketing agreement between Argentina and the United States.

[Page 502]

The proposals of the American Government relating to a corn marketing agreement were transmitted to the Foreign Office on September 20, 1940, but to date the Embassy has not received a written reply indicating the attitude of the Argentine Government towards these specific proposals. At no time has the Argentine Government taken the initiative in indicating a desire to discuss the suggested provisions of an agreement and the two conferences held with Dr. Schiopetto relating to the proposed agreement were sought by the Agricultural Attaché.

It will be recalled that on September 12, 1940, when the Argentine Government accepted the proposal of the United States to negotiate a corn marketing agreement, the acceptance was closely related to, if not motivated by, the desire of the Argentine Government to secure financial aid for the construction of a distillery which could utilize a portion of the Argentine corn surplus. The distillery project was apparently abandoned after a preliminary study and as indicated above the Argentine Government has evidenced no interest in the corn agreement since that time.

There are, undoubtedly, many abnormal marketing conditions at the present time which would make the operation of a corn marketing agreement extremely difficult but of more significance is the apparent indifference and lack of interest of the Argentine Government in the proposal. It will be noted that Dr. Schiopetto has expressed a personal opinion in favor of suspending the efforts, for the time being, to conclude an agreement. Under the circumstances, there seems to be little prospect of reaching an agreement and unless the Department perceives objections, I feel that efforts to conclude an agreement might be suspended for the time being.

Respectfully yours,

Norman Armour
[Enclosure]

Memorandum by the Agricultural Attaché in Argentina (Nyhus)

It will be recalled that upon leaving Dr. Schiopetto at the time of my last conversation with him on December 21, he stated that he would consider the matter of the proposed corn marketing agreement carefully and after a week or ten days we could discuss the matter again. Upon calling him about ten days ago, he stated that he was about to leave on an extended trip with the Minister of Agriculture and stated that he would get in touch with me upon his return. He returned on Sunday and in view of his leaving again for Uruguay [Page 503]on Sunday, I gave him a ring yesterday in order to confer with him before his departure for Montevideo.

I asked him if he had had time to consider further the proposed corn marketing agreement and he said that he had but with little success. He again raised the question: “What is the world market today?” and I replied that it was essentially the United Kingdom market. He stated that in his opinion it would be difficult to justify and to defend publicly an agreement which divided with another country a market which Argentina already had and which would represent, accordingly, a reduction in the market outlet for Argentine corn. It will be recalled that he raised this same argument in my last conversation with him.

I made it clear that this was an erroneous interpretation of the proposal, that at the present time, due to the greater availability of ships on the North Atlantic and the shorter ocean haul between New York and Liverpool, the United States was in a better position to supply the English market than Argentina, whose grain exports are being restricted sharply by the lack of freight boats.

I stated that in my opinion, the proposal would probably try and secure for Argentina larger corn exports than present shipping conditions will bring about. I maintained that far from being injurious to Argentina, it was intended, and it could prove to be, distinctly advantageous, that the purpose and intention of the proposal could hardly be criticised but its workability under present conditions might be subject to some doubt. I explained that the proposal for a corn marketing agreement was suggested by the American Government as a result of criticism of sales of subsidized American corn to the United Kingdom and that the proposal was made to demonstrate that the United States did not intend to pursue a policy of intense price competition and of acquiring an undue portion of the United Kingdom market.

I think that he accepted my explanation in these respects and stated that for the agreement to accomplish its purpose, it seemed to him that it would be necessary to include England in a three-cornered agreement so as to insure Argentina of that portion of the English market that would be mutually agreed upon between the American and Argentine Governments. He expressed doubt, however, of the willingness of England to enter into an agreement of this character and that national survival might make it essential for her to buy supplies of corn in the United States.

He continued by stating that as he looked at the matter personally, emphasizing that it was from a personal standpoint, he could not see how under present conditions an agreement of the character proposed could be operated. I suggested that in order to provide a reply [Page 504]to our note of September 20, he transmit his points of view through the Foreign Office. He then emphasized that these were his personal opinions and that although he was prepared to advise the Ministry of Agriculture in accordance with the views expressed, nevertheless his opinions could hardly be considered official until they had passed through the usual Government channels. He suggested that the Embassy prepare a report describing the present status of the matter (ambiente) to the American Government, implying thereby that our reply on the basis of this conversation would satisfy the American Government and added, rather incidentally, that the question might be raised in the report if the American Government had other suggestions of a less rigid character than a marketing agreement whereby Argentina would undertake not to “make a present” of her corn, thereby refraining from engaging in ruinous competition, and in return the United States Government would undertake not to take over too much of the world corn market under present conditions. He implied that possibly conversations along these latter lines might be productive, but he did not amplify or urge the above suggestion. I felt that the latter suggestion was inspired by a desire to dispose of the proposal as courteously as possible.

To a previous question if anyone but himself was giving the proposed agreement any study, he replied in the negative and since in neither of our two conversations had there been any evidence, in my opinion, of a serious acceptance or even thorough study of the proposal, I inquired if he thought personally that it would be best under the circumstances to drop the matter. He replied quite promptly: “Yes, I think so.” My reaction was that he seemed to welcome this means of disposing of the matter instead of having to prepare an official reply through the Foreign Office designed to accomplish, ultimately, the same result, I suggested that possibly when the war was over, the agreement would be more acceptable to the Argentine Government and he replied that the agreement might be acceptable prior to the termination of the war if shipping facilities improved.

Paul O. Nyhus