710 F.E.A.C./228

Statement by the Chairman of the Inter-American Financial and Economic Advisory Committee (Welles)

Statement Made by Mr. Sumner Welles to the Inter-American Financial and Economic Advisory Committee With Reference to Organization for Considering and Handling Export Control and Related Policies8

The broad program in which the United States is engaged of production of materials and equipment essential to national and continental defense has led to a situation of scarcity with respect to many commodities and the establishment by the United States of a system of control of the export and, in many cases, the domestic consumption of such items. At the present time some sixty percent, by value, of the articles exported from the United States are subject to export licensing and/or priorities.

It is the objective of this policy on the one hand to restrict the exportation, and in some cases domestic consumption, of goods produced in the United States to amounts consistent with the demands of the defense program, while on the other hand to facilitate in so far as is feasible the exportation to the other American nations of at least their essential import requirements, and in general as large amounts of particular United States products as are consistent with the exigencies of defense. A separate but related phase of policy concerns the acquisition abroad of strategic materials essential to the defense program, and, in general, the utilization of the materials of the Hemisphere in the continental defense.

It is the view of the United States that these objectives are of interest and importance to all of the American republics, and that they may best be realized by the creation of an inter-American system of export control involving strict restriction and control of the exportation of products outside of the Western Hemisphere with a maximum of free commerce within the Hemisphere which is compatible with defense requirements. To this end the United States has been seeking in individual conversations the fullest cooperation of all of the American republics, and it is the opinion of the Government of the United States that such cooperation could most advantageously [Page 157] take the form of the establishment by each of the American republics of a system of export control over:

Materials subject to export control by the United States which are exported to the other American republics by the United States or which are produced in the other American republics.
The United States will continue to permit exports to the other American republics in all cases unless United States stocks of the commodity in question are dangerously small and are essential to the defense program. In the cases of products the supply of which is not affected by such considerations an attempt will be made to issue licenses freely for use within the American republics or at least in amounts up to the recent import requirements of the nations in question.
It has been found possible to issue general licenses for the export of certain of such products to all of the other American republics. Moreover, it is possible to issue general licenses to products in this category for export to American republics which also control the exportation and re-exportation of such products whether imported from the United States or elsewhere or produced domestically. Such general licenses greatly facilitate trade among the American republics.
In the case of articles of the greatest stringency and importance to the defense program, it has been and it will continue to be necessary to impose a system of priorities as between the demands of the defense program, the requirements of the other American republics, and civilian consumption in the United States. In these cases it will at best be possible to grant priorities for only the most urgent requirements of the other American republics, and, in view of the control thus obtained, it will be possible to simplify the administrative procedure by issuing general licenses for the exportation of articles for which such priorities have been granted.
In the case of all other articles the United States supply of which is less than the several demands, it will be necessary to impose some quantitative restriction on exports, and, in many cases, on domestic consumption. In all of these cases an effort will be made, if it is at all possible, to fulfill the most urgent requirements of the other American republics, deferring fulfillment of less urgent requirements until the supply situation improves. In these cases exportations must be individually licensed, and it will be necessary that the Government of the United States be assured that the materials so exported reach their specific destinations.
Strategic materials and materials important in the national and continental defense, which are produced in the American republics.
This is an essentially separate though closely related phase of policy involved in the defense program. As a result of the great expansion in production, there exist in the United States strong commercial markets for most, if not all, strategic and critical materials produced in the Western Hemisphere. Moreover, the appropriate agencies of the Government of the United States stand ready to give consideration to purchasing supplies of such commodities as a regular [Page 158] part of its program for building up its own defense reserves and stock-piles.

This approach on the part of the United States for cooperative action among the American republics has met with a most gratifying general response, and, indeed, many of the other American republics had already embarked on similar and related courses of action. At the present time all of the American republics have established, or are actively considering, some form of export control directed to ends similar to those set forth above. As a result, the United States has been in a position already to issue general licenses for the export to Argentina, Brazil, Cuba, and the Dominican Republic respectfully [respectively] of lists of commodities in category 1(a) mentioned above, as well as of certain commodities which are subject to priority approval. Arrangements for the issuance of similar general licenses for the export of commodities in these categories to a number of additional American republics are also being completed.

With respect to the related policy of acquisition of strategic materials, appropriate agencies of the United States have entered into arrangements for the purchase of many commodities from individual producers, groups of producers, or the Governments of a number of the American republics.9

As is inevitable, the several systems of export control already imposed or in contemplation, although they point towards the same end, differ considerably in scope and form. There arise as a result a number of practical problems such as for example the question of the control only of the re-exportation of articles imported from one particular country as contrasted with control over all exports of the particular articles, whether imported from any source or produced domestically. Another problem which gives rise to extensive and complex administrative difficulties lies in application by the several republics of controls to varying lists or groups of commodities. As a result, the United States, and other nations, have been compelled to limit the issuance of general licenses and to restrict the exportation and re-exportation of the goods therein covered to such other American republics as happen to control the particular item.

Commerce among the American nations can obviously be made most free under present world conditions which have occasioned the imposition of all of these types of export control, if all of the American republics adopt parallel systems of export control thus [Page 159] establishing an inter-American system. To this end, the Government of the United States suggests:

That the Inter-American Financial and Economic Advisory Committee undertake the consideration of problems of export control and the formulation of a plan for an inter-American control system.
That the matter appropriately be referred to Subcommittee II on Commercial Problems.
That Subcommittee II elicit information from the several Delegates and Governments regarding the essential import requirements of the individual American republics, and concerning the various systems of export control already established by a number of them.
That Subcommittee II consider the steps towards a broad Hemisphere program of control already taken by a number of the republics, and formulate detailed recommendations for an inter-American system which would permit a maximum of freedom of interchange among the American republics.

If this suggestion meets with general approval, the Government of the United States is prepared to place at the disposal of the Advisory Committee and Subcommittee II information regarding the policies and administrative procedures with respect to export licensing and priorities controls established by it; special arrangements entered into with and general licenses issued for exports to particular American republics which have adopted some form of export control; data available to it regarding the systems of control in effect in other American nations; and such information as it has collected with regard to the import requirements for certain materials of some of the American republics.

  1. Submitted as Annex A to the report of Subcommittee II of the Inter-American Financial and Economic Advisory Committee and transmitted by the Chairman of the Committee (Welles) to the Secretary of State, July 8, 1941; for report, see infra. For correspondence on this Committee’s resolution and plan concerning foreign vessels in American ports, see pp. 185 ff. For correspondence concerning the activities of the Committee in 1940, see Foreign Relations, 1940, vol. v, pp. 345 ff.
  2. For correspondence regarding the obtaining of strategic materials from certain American Republics, see: Argentina, pp. 357 ff.; Bolivia, pp. 452 ff.; Brazil, pp. 538 ff.; Chile, pp. 578 ff. See also vol. vii: Colombia, pp. 40 ff.; Mexico, pp. 403 ff.; Peru, pp. 524 ff.