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

No. 2161

Sir: I refer to your telegram No. 477 of March 12, 1942 in which it is stated that the distribution in Argentina of materials imported from the United States is most unsatisfactory, owing to the fact that export licenses are issued without due respect to the merits of the consignee or purchaser. The suggestion was made that all applications for licenses be sent to the Embassy for recommendation before action is taken upon them.

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I have been advised by the Office of Export Control of the Board of Economic Warfare that it is not practicable to delay consideration of all applications for license to export materials to Argentina until the Embassy has given its recommendations with respect to such applications. An alternative procedure, however, has been suggested which appears to be fairly satisfactory in that it will give the Embassy an opportunity to review a majority of the applications approved. This procedure, which is being inaugurated with the forwarding of this instruction, is to transmit daily to the Embassy copies of the reports of the Special Committee which passes on applications for license to export to Argentina. These reports which embody the decisions of the Committee on all applications reviewed by it will be forwarded henceforth by airmail without covering instructions. This Committee takes action on all applications which have a value of $500 or more, and it is understood that the volume of applications considered by it represents over eighty per cent of all applications for license to export to Argentina and includes all items of significance. The Department is represented on this Committee which was established on February 16, 1942 and which has been implementing the Department’s policy with respect to Argentina.

It will be noted that these daily reports of the Committee’s decisions include the name of the applicant, description of the material, including the volume and value, the names of the consignee and purchaser, and, in the case of a rejection, the reason for the action taken. The Embassy should review these decisions promptly and telegraph the Department immediately if it disapproves the granting of a license in any instance. The Embassy should not, except in exceptional cases, advise the Department regarding the decisions of the Committee to reject applications, as due consideration has been given to the supply situation in each instance before this decision was made. As soon as the Department is informed by the Embassy that it disapproves the granting of a particular license, the Office of Export Control will be notified, and that agency has agreed to immediately revoke the license in question. If the Embassy acts promptly in forwarding recommendations, revocation of licenses can be made before shipment of the goods has been made. This procedure should give the Embassy the means of preventing the shipment of all significant items.

With respect to the statement in the telegram under reference that license applications are approved without due consideration to the merits of the consignee, I should like to point out that, under present procedure, all applications must indicate the names of the consignee and purchaser, and these names are checked by the Office of Export Control against the Proclaimed List and the Confidential List. Apparently, these lists are incomplete and unsatisfactory, and, if the above-outlined procedure does not work out satisfactorily, it would [Page 341]appear advisable for the Embassy to prepare a White List against which all applications could be checked.

In connection with the statement in your telegram under reference that goods are arriving consigned “to order”, the Office of Export Control advises that applications are only granted when the names of the consignee and purchaser are given and that if a shipment is indicated as being consigned “to order”, the application is rejected. It is believed that your impression that licenses are granted for the exportation of goods consigned “to order” may be owing to the fact that ships’ manifests often indicate consignments as being “to order”, although the goods in question are covered by a license on which the consignee and purchaser are shown. Licenses are granted, however, to an applicant who indicates that its own subsidiary is the consignee and purchaser. For example, licenses are granted to the United States Steel Corporation for material consigned to the United States Steel Corporation in Argentina. It is assumed that the Embassy can, in a large part, supervise the distribution of materials consigned in this fashion. However, should the Embassy disapprove of the granting of licenses in this manner, you should inform the Department accordingly and the problem will be taken up with the Office of Export Control.

I should like to point out that some of the goods arriving in Argentina were undoubtedly licensed prior to the implementation of the present policy which started with the functioning of the Special Committee on February 16. As licenses are valid for six months, consideration is being given to requesting that outstanding licenses be called in for revalidation, at which time these licenses could be revoked in light of the existing policy. However, if this action were taken with respect to Argentine licenses only, such a step might well be called discriminatory and thus not in accord with our announced policy. I should appreciate your views on such a proposal, as well as those on this entire problem.

Very truly yours,

For the Secretary of State:
Dean Acheson