The Ambassador in Uruguay (Dawson) to the Secretary of State

No. 271

Sir: I have the honor to refer to my despatch No. 270 of November 5 reporting on the state of the resumed negotiations for a trade agreement with Uruguay and particularly on the divergence of viewpoint which has been encountered over the proposal to extend complete most-favored nation treatment with regard not only to commodities but also with regard to exchange.

It will be observed from the draft notes submitted by the Uruguayan representatives at the third meeting on November 4 as a counter-proposal, that the Uruguayan representatives take the position that while subscribing to the principle of complete most-favored nation treatment, they have been forced to adopt the bilateral policy by the insistence of the European countries which constitute their principal purchasers, and that in particular they attribute this pressure to the policy of the United Kingdom.

The Embassy has reason to believe that the British Government has in fact exerted considerable influence upon the Uruguayan authorities and has on several occasions brought pressure to bear when the Uruguayan authorities seemed likely to grant more liberal treatment as regards exchange to Uruguayan imports from the United States, when these imports consisted of what are known as “American specialties” but which are competitive to similar British products. Even today when practically all coal imported into Uruguay must be purchased in the United States since shipping facilities are not available for this product to be imported from Great Britain, the British Legation in Montevideo has insisted that each order for coal first be cleared with the Commercial Secretary before being finally concluded.

A representative of the Bank of England and indirectly of the British Treasury, Mr. Phillimore, who has been covering Argentina, Uruguay, and Brazil, recently called at the Embassy when he frankly expressed the considerable interest of his Government in learning of the demands the United States might make in its trade agreement negotiations and specifically whether we might ask for liberal exchange treatment which would conflict with the provisions of the British Trade Treaty. He was informed at the time that the progress of negotiations was not such as to be able to give him any information of a concrete nature, but the frankness of his approach gives further evidence, if such were needed, that the British Government does not look with complete favor upon our efforts in this area [Page 579] at extending the basic principles of the Secretary’s liberal trade policy.

The thought has occurred to me, since as stated above the Uruguayan negotiators base their attitude primarily on their contractual obligations to Great Britain, that it might be helpful if the British Government could be induced to inform the Uruguayan Government that far from placing obstacles in the path of the negotiations between our Government and Uruguay, it looked with favor upon the extension of liberal trade practices and in fact would be prepared to relax some of the provisions of the existing trade treaty between Uruguay and the United Kingdom.

Although it is realized that little concrete has been accomplished in the plans for a post-war policy of trade cooperation and coordination between the British commonwealth of nations and the United States, according to the statements of the new British Minister in Montevideo, Mr. Stevenson, it appears that the British Government may have manifested some interest in the general proposal. In any event, it seems unlikely in view of the cooperation and assistance which we have been extending to the British Government that that Government would not wish in turn to cooperate with the United States in the extension of one of our most cherished policies in the inter-American field. I therefore venture the suggestion that the Department may wish to consider raising with the British Embassy in Washington our general aspirations in South America for the extension of liberal trade principles and more specifically inquiring whether the British Government would be disposed to inform the Uruguayan Government that it might reconsider certain of the provisions of its own trade treaty with Uruguay in order to facilitate the conclusion of the proposed United States trade agreement with Uruguay.

Respectfully yours,

William Dawson