835.24/672

Memorandum by Mr. Harold W. Moseley, American Hemisphere Exports Office88

Present Export Control Procedure Which Has Been Established To Meet The Objections of the Embassy in Buenos Aires That Present Controls Are Unsatisfactory

Reference is made to Mr. Meltzer’s letter of April 3 to Mr. Acheson and Mr. Armour’s letter to Mr. Welles of April 16 regarding what appears to be an unsatisfactory control procedure on the part of the export control authorities in that imported commodities are still reaching undesirable firms. Several suggestions are made whereby this situation can be met. In this connection I should like to set forth the steps that have been taken to remedy the situation, and to give my views on the matter.

The following are the forms of control procedure which were placed in effect in March and April and which, it is believed, will in part meet the situation:

1. A list of all applications approved and rejected by the Reviews-Appeals Committee giving full information as to the material involved, consignee, and purchaser, and action taken on the particular applications is daily airmailed to the Embassy. The Embassy has been advised to notify the Department immediately if it disapproves the granting of any of the licenses. When the Department receives word to this effect from the Embassy it informs the BEW, which has agreed to revoke the licenses.

The Reviews–Appeals Committee considers all Argentine applications with a value of $500 or over and all applications to export chemical products with a value of $100. I am advised that this amounts to about eighty per cent of all applications received. Although this only gives the Embassy a check after the licenses have been issued, the shipment can be prevented by the ready revocation of the license. (This procedure was worked out as a compromise after the BEW refused to hold all applications pending clearance with the Embassy).

2. In order to check cloaking operations on shipments to Argentina, the World Trade Intelligence Division, in cooperation with the BEW, has arranged to regularly telegraph to the Embassy lists of export license applications on which action has been suspended by the BEW because the consignee is unknown here or the transaction appears questionable.

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This form of control should in a large part affect cloaking operations which exist as the result of new firms being established in Argentina. In this way, the Embassy is given an opportunity to check on all cases in which the name of the consignee is unknown to the BEW or WT.

3. Embassy review of Certificates of Necessity in effect provides control by the mission of the issuance of licenses for the export of allocated materials.

A copy of all Certificates of Necessity issued by the Central Bank are sent to the Embassy. If the Embassy disapproves an order, it can either get the Bank to revoke it or notify the Department that the license should not be issued.

These new measures of control plus the implementation of the Argentine policy in general should in large part meet the objections of the Embassy. A means of complete control over every single shipment has not yet been found practicable. For example, the Embassy first requested that it be allowed to advise on all applications. The BEW pointed out that it was impossible to hold up shipments until the Embassy had investigated and approved each application, but agreed to the procedure outlined above. The BEW recommended that the Embassy make up a White List but this proposal was turned down by the Embassy.

The Embassy was further consulted on the question of calling in for revalidation all outstanding licenses issued to Argentina with a view to revoking those which the Embassy disapproved of; however, the Embassy turned down this suggestion as it would obviously be a discriminatory act.

Referring to the suggested measures of control set forth on page 2 of Mr. Meltzer’s letter to Mr. Acheson, these have all been considered and are either being carried out or have been found impracticable. As to suggestion (1) that specific licenses be required for all articles, it should be pointed out that general licenses are rapidly being cancelled and that it would be most discriminatory to require individual licenses for Argentina when not requiring them for the other republics. Proposal (2) that all applications be cleared with the Embassy was found to be impracticable by the BEW. Suggestion (3) that cases involving consignees considered questionable be checked with the Embassy is now in effect. Proposal (4) to furnish copies of the confidential list to collectors is not in effect but if it were it would only have the value of stopping the small amount of material such as foodstuffs going out under general license. All individual applications are checked by the BEW against the confidential list.

Mr. Armour’s proposal that all orders for imports be covered by Certificates of Necessity bears merit in that it could indeed give the Embassy control at its end. Possibly this is the only means available [Page 359]of obtaining the complete control desired by the Embassy. Before it is attempted the present means of control now functioning should be fully explained to the Embassy, and a further report from it should be received as to whether it is satisfactory.

Difficulties to be considered in the functioning of Mr. Armour’s proposal are:

(1)
Exporters in this country and importers and certifying agencies in all of the other republics have been advised repeatedly that certificates should be used only with allocated materials. Confusion would arise which might spread to other countries. Furthermore, the charge of discrimination might be made. Undoubtedly these would be procedural difficulties at the BEW.
(2)
Certificates cannot readily be used for materials going out under general license unless a new procedure involving the customs is worked out.

Harold W. Moseley
  1. Addressed to the Chief of the American Hemisphere Exports Office (Ravndal), the Executive Secretary of the Board of Economic Operations (Collado), the Acting Chief of the Division of World Trade Intelligence (Dickey), and Mr. Jacques J. Reinstein, Assistant to the Assistant Secretary of State (Acheson).