611.3331/364
The Secretary of State to the Chargé in Uruguay (Chapin)
Sir: Reference is made to the Department’s telegram no. 69 of May 1 [April 30], 1941 stating that the Department would forward a new draft of general provisions for inclusion in the proposed trade agreement between the United States and Uruguay.
There is enclosed such a draft including a proposed draft of Final Minutes29 which, unless you perceive objection, you should transmit to the appropriate Uruguayan officials. In doing so you should state that the articles of the draft are either identical, or similar in substance, to those proposed during the previous negotiations in 1939, except for the modifications indicated below.
Article IV relating to exchange control now provides, in the event that either country maintains any system of exchange control, merely for most-favored-nation treatment with respect to (1) transfers of payment for, or payments necessary or incidental to, the importation of any article originating in the other country; (2) rates of exchange and taxes or charges on exchange transactions in connection with any such payments, on a like article basis. Moreover, numbered paragraph 3 provides an escape clause from these provisions in time of war or other national emergency on the condition only that the Government availing itself of this clause inform the Government of the other country in writing of the action taken. This clause, which is necessary on our part because of existing law (Section 5(b) of the Act of October 6, 1917, as amended by Public Resolution no. 69, [Page 567] 76th Congress, approved May 7, 194030), doubtless will be acceptable to the Uruguayan Government whether or not similar legislation for dealing with emergencies exists in Uruguay.
For the Legation’s confidential information, these modifications of the exchange control article which was proposed by this Government in the previous negotiations with the Uruguayan Government, and which was previously considered as standard for inclusion in trade agreements, have been made in compliance with the wishes of the Treasury Department which desires to retain greater freedom of action, in connection with the operation of its Foreign Funds Control, with respect to matters affecting international transfers of payment than would be permitted by the former exchange control article requiring no restriction or delay on transfers of commercial payments.
[Here follow instructions regarding a number of technical points in the draft articles.]
Very truly yours,