561.311F1 Advisory Committee/1074e
The Secretary of State to the Ambassador in Argentina (Armour)
Sir: With reference to the Department’s instruction no. 1964 of March 9, 19427 enclosing a copy of the “Drafts of Memorandum of Agreement, Convention, and Minutes of Final Session” as approved by the delegates to the Washington Wheat Meeting, it is desired to point out that the wheat discussions have been difficult and prolonged largely because of the difficulty of finding a price formula acceptable to the United Kingdom and because of the fear that regardless of the merits of a wheat agreement it might be regarded unfavorably by non-participating countries, especially Russia. On the other hand, all the delegates recognized that failure of the Washington Wheat Meeting to make any advance toward a solution of the wheat problem would result in deterioration of the international wheat situation. Furthermore, such failure, it is believed, would reflect unfavorably on the possibilities of international cooperation in other fields.
The delegates to the meeting finally worked out a limited provisional agreement which has been submitted to their respective governments for approval and which, it is learned from the Embassy at London, is acceptable in form and substance to the United Kingdom.
The agreement, as may be seen from an examination of the enclosures to the Department’s instruction under reference, takes the form of a Memorandum of Agreement to which is attached a Draft Wheat Convention. The purpose of the Memorandum is (a) to emphasize the need for a future world wheat conference and to provide for the convening thereof by the United States as soon as the international situation permits, (b) to facilitate the work of that conference by making available to it the results of the Washington Meeting in the form of the attached Draft Convention, and (c) to provide a basis for bringing into force such measures contained in the Draft Convention as may be found necessary to prevent the wheat situation from deteriorating pending the calling of the conference. The proposed Minutes of the Final Session of the Washington Wheat Meeting refer [Page 511] specifically to the provisions of the Draft Convention which are brought into force under various paragraphs of the Memorandum and make it clear that at one stage or another practically all of the principal articles of that Convention may, depending on circumstances, be brought into force before a future conference is held. The Memorandum is intended to be informal and non-legalistic in order to stress, for the benefit of the non-participating countries, the temporary and provisional character of the arrangement. It is believed that copies of the Memorandum, Convention, and Final Minutes which Viacava8 sent his Government may have arrived in Buenos Aires by this time.
Viacava has indicated that since the now proposed agreement does not offer prospects of as favorable prices for wheat as did the provisional August draft, the interest of his government in a wheat agreement is not what it formerly was. The Memorandum of Agreement provides that the four exporting countries will, upon termination of hostilities, continue as the price of wheat the last contract price paid by the United Kingdom for wheat from the principal source of supply (Canada). Should any country object to that price, the export price of wheat will then be determined by the Council under the price provisions of the Draft Convention, the vote of the United Kingdom being required for any price determination under those provisions. The Canadian Government’s decision, just announced, to pay a basic price of 90 cents for the 1942 wheat crop, as against the previous price of 70 cents, greatly increases the likelihood in our view that the price of wheat which would be continued under the Memorandum upon termination of hostilities will be reasonably acceptable to the exporting countries.
Without anticipating objections by Argentina, you are requested to point out to the appropriate Argentine authorities that, although the agreement set forth in the Memorandum falls short of the objectives earlier in view, this Government nevertheless attaches great importance to it and believes that its acceptance offers substantial prospects of averting immediate development after the war of chaotic conditions in the world wheat market. It will serve through the establishment among the five countries of a Wheat Council to coordinate their production and trade policies in regard to wheat and thus facilitate international consideration of the problem later when the world will be faced with many complex post-war problems pressing for immediate attention. Without the agreement, such policies may become so divergent under the stress of war conditions and competition in international trade in wheat in the post-war period so destructive that there will be little possibility after the war to work out [Page 512] a satisfactory solution. This Government, therefore, earnestly hopes that the agreement in question will be considered favorably by the governments concerned and that an effort will be made to expedite its conclusion.
Very truly yours,