811.20 Defense (M) Cross Trade/8

The Chief Civil Administrator in French North Africa ( Murphy ) to the Secretary of State

No. 162

Sir: I have the honor to enclose for the Department’s information five (5) mimeographed copies of a memorandum dated May 16, 1943, setting forth a proposed procedure for resuming trade exchanges between French North Africa and Spain and Portugal.

It is suggested that copies of this memorandum will be of interest to the Board of Economic Warfare and to the Office of Lend-Lease Administration.

Respectfully yours,

For the Chief Civil Administrator:
Alexander B. Royce

Director of Economic Operations

The British, American and French representatives agree on the following procedure for resuming trade exchanges between French North Africa, which expression in this memorandum is understood to include French West Africa, and Spain and Portugal:

Having regard to:
the desirability of avoiding lengthy technical negotiations and
the desirability at a time when the war situation is moving in [Page 44] favor of the Allies of avoiding long term commitments, no formal agreements on this subject should be negotiated with the Governments of Spain and Portugal.
It is proposed, therefore, to proceed as follows—
The French authorities will immediately send to Madrid and Lisbon one or more representatives to take part in discussions with their British and American colleagues and to represent the French authorities in negotiations with the Spanish and the Portuguese.
In order to facilitate regular inter-allied consultation and collaboration, informal Franco-British-American Committees shall be set up in Madrid and Lisbon to supervise the operation of French North African-Iberian trade. At the same time, a sub-committee of the Joint Economic Commission in Algiers will be constituted in order to coordinate action from Algiers.
As soon as possible after the arrival in the Peninsula of the French representative or representatives he/they (in association with his/their British and American colleagues) will inform the Spanish/Portuguese Governments that French authorities are prepared, subject to the exigencies of the military situation, to make available for transport by Spanish/Portuguese vessels from French North African ports to be specified from time to time, a list of French North African commodities (of which phosphates will be the principal item). These goods will, however, only be available provided that Spanish/Portuguese Governments are prepared to give facilities to French North African authorities for purchasing and exporting on the Spanish/Portuguese vessels engaged in the trade an agreed list of Spanish/Portuguese goods.
In their discretion, the allied negotiators (British, American and French) may inform the Spanish/Portuguese Governments that they expect the Spanish/Portuguese authorities to give facilities for export and carriage on vessels engaged in the French North African-Iberian trade of materials of Spanish/Portuguese origin required by the British/American military authorities in French North Africa (which materials required for military purposes may, on occasion, have to take precedence over other supplies). These military goods will, of course, be bought and financed by British/American Governments out of their own resources.
As soon as Spanish/Portuguese Governments signify their desire to commence exchanges on the above basis, they will be required to inform the Allied authorities of the shipping program they have in mind sufficiently far in advance (1) to permit voyages to be cleared with appropriate naval and military authorities and (2) to enable French authorities to indicate what Iberian produce they will require to export during the same period.
It is recognized that owing to the relative bulk of phosphate shipments (which will constitute the larger part of shipments to be made from French North Africa) a high proportion of vessels sailing from the Iberian Peninsula will necessarily proceed in ballast.
Owing to the complexity of the economic operations being conducted in the Peninsula by the Allies, it is essential that all economic activities should be closely coordinated. It is agreed, therefore, that the considerable resources of the U.S. and U.K. Corporations should for this purpose be placed at the disposal of the French authorities for the purpose of acquiring and contracting for goods in the Peninsula and to act in appropriate cases as consignees and consignors of the goods to be exchanged.
The French authorities are considering the formation of a Bureau Commerciale to coordinate any orders that French North Africa importers wish to place in the Peninsula and for acquiring and moving to accessible ports goods to be exported to the Peninsula from French North Africa. The Bureau, or other official purchasing agent of the French authorities, will negotiate, in full collaboration with USCC and UKCC, the necessary contracts and will employ the UKCC as its agent to sign the final contracts in the same way as the UKCC at present acts for the USCC.
Imports from the Peninsula to French North Africa shall be coordinated with the over-all arrangements existing from time to time for distribution of imports from other sources. Distribution will be the subject of recommendation by the Franco-British-American subcommittee of the Joint Economic Commission. It is contemplated that Spanish and Portuguese goods should be consigned to the Bureau Commerciale if and when such an organization is set up by the French North African authorities, and in the meantime that shipments be consigned to UKCC as agent for the French authorities.
It is important that the above arrangements should be brought into operation as soon as possible and it is therefore agreed that the allied authorities will take all possible measures on their part to the end that the arrangements described above shall be operative as from June 15.
In the meantime, it is recognized that the immediate resumption of phosphate shipments to the Iberian Peninsula is a matter of allied concern from two standpoints—
to maintain the allied economic position in the Peninsula which depends upon the flow into those countries of essential supplies from allied sources and
in order to create an atmosphere favorable to the successful negotiation of the arrangements set out above.

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It is therefore agreed that, subject to the concurrence of the Commander in Chief, Spanish/Portuguese authorities be informed that they may forthwith nominate vessels to load phosphates up to a total of 10,000 tons for each country. As an interim measure, pending settlement of the arrangements to be operative from June 15, it is agreed that phosphates should be offered by UKCC as agent for Comptoir des Phosphates at prices to be determined later.