The Ambassador in Argentina (Armour) to the Acting Secretary of State
Dear Sumner: I am glad to acknowledge your letter of March 27,69 advising me of the manner in which our export control authorities [Page 342]have already started to implement our policy of sharing supplies of scarce commodities with countries siding with us. You ask my further comment on the manner in which we may distribute whatever we find it advisable to supply Argentina in such a way that “the friendly majority of the Argentine people would be strengthened at the expense of the unfriendly but influential minority”.
First let me reiterate that not only do we in the Embassy and other Americans here, leaders in our business community with whom I have spoken, heartily approve of this policy, but I further believe that a large bulk of the thinking Argentine people are of the same feeling. In this connection you will recall the views expressed by Alexander Shaw70 in his memorandum, a copy of which I sent you with my letter of April 11.71 Consequently, it is gratifying to note the emphasis given to make this policy thoroughly effective.
I have discussed at length with members of the Embassy staff the suggestions contained in your letter, covering diversion of materials through operation on:
- The basis of a confidential white list; or,
- The basis of reference of questionable license applications to the Embassy for recommendation; or,
- The institution of a general requirement that Certificates of Necessity accompany all applications for licenses to export merchandise to Argentina.
It is our opinion that the third method should be the one employed. It is true that the adoption of the combined white list and reference to the Embassy of questionable license applications would provide excellent export control, but this system could not be applied to products under allocation. The Central Bank would also be left in the same position as now, namely, with no voice in approving the prospective Argentine consignee or consumer. I emphasize this point because of the cooperation which the Embassy has enjoyed with the Central Bank and which I feel should be maintained to the end that unnecessary irritation on the part of the Argentine Government be avoided. At the same time, with the Central Bank we are in a position to be quite frank in all of our discussions, both of policy and procedure.
The maintenance of a white list also offers practical difficulties in that many firms of excellent reputation would nevertheless not be acceptable for products which they now desire to import, simply because those products are outside their normal business.[Page 343]
Regarding the probable attitude of the Argentine Government, you will be interested to know that only recently Central Bank officials themselves have broached this subject and, in substance, have indicated the hope that a system employing Certificates of Necessity for all imports be adopted. This encourages me even more to recommend that it be placed in effect as soon as is possible.
I believe that some of the essential features of the plan would be:
- Two series of Certificates of Necessity: one for allocated products and another for those not subject to allocation.
- A copy of each Certificate issued by the Central Bank to be supplied to the Embassy immediately.
- The Embassy will recommend to the Department action to be taken on each Certificate; these recommendations would be in numerical order on a special form. The form would include the Certificate number, date, to whom issued, volume and value of product and recommendation of Embassy, with explanation of reason. These sheets would be forwarded with each air mail pouch or preferably by courier.
- The Department should advise the Embassy immediately of all rejections.
Neither the Argentine importing firms nor the Central Bank should know the extent of Embassy authority in decisions concerning export licenses, but I believe that the latter should be advised of the general procedure so that its officials will consult freely with the Embassy before issuing Certificates. There is still a tendency on their part to issue certain Certificates and advise us afterwards, a practice which we hope will soon be discontinued.
To be successful, this control would require the rejection in Washington of all but very exceptional cases where Certificates of Necessity have not been issued. It will be equally imperative that export licenses be granted for Certificates approved by the Embassy except in those cases where scarcity of the material concerned requires rejection. Probably it will be necessary for the Argentine Government to agree to issue limitation orders in keeping with those issued in the United States. The application of the system will also require a full understanding on our part of general policy as regards use of materials, the issuance of Certificates of Necessity to re-selling firms, relative importance of effect upon the economy of the country and of activities which might be considered as contributing in some way to the war effort. I mention these points in the belief that, while the system could probably be placed in effect through correspondence, the Department may feel that it could be more effectively worked out and subsequent confusion avoided if some officer of the Embassy were to spend a short time in Washington for that purpose. It is also difficult to estimate how much additional work would accrue to the Embassy [Page 344]and, of course, it might be found necessary to request some additional personnel, but it is doubtful if any more would be required under this system than under that utilizing the white list and the reference of questionable applications to the Embassy.
I shall await with interest your decision in this matter and in the meantime we shall do everything possible to expedite our replies to the lists you now plan to forward for checking.
With my best personal regards, I am
Very sincerely yours,