810.24/330b: Circular airgram
The Acting Secretary of State to Diplomatic Representatives in the American Republics Except Argentina, Cuba, and Mexico
The Department and the Office of Economic Warfare24 have been discussing export controls in the light of the present situation. Since the inauguration of the Decentralization Plan there has been a marked change in certain factors which makes necessary a study of possible modifications in its operation. Whereas in January of this year, for example, available cargo far exceeded available shipping, currently the converse is generally the case. Shipping has improved and adequate cargo is not available.
[Page 123]In the light of these and other considerations the Department and the Office of Economic Warfare have been studying the technique of export control with a view of achieving simplification insofar as such controls affect goods which do not require priority assistance, i.e. materials in free supply.
You are requested urgently to report by telegram your comment regarding the following alternative procedures and, if in your considered judgment none is practicable, to make your recommendation.25
In considering these alternative proposals you are requested to keep the three primary objectives of decentralized export control in mind. These objectives are (1) to enable the foreign government to participate in the determination of what goods shall be provided by this country, (2) the order of priority of the goods which shall be shipped from this country, and (3) the prevention of benefit to cloaks and potential cloaks for Axis and pro-Axis firms.
Alternative I
The Import Recommendation form to be simplified and contain only name and address of the consignee, name and address of the prospective supplier, and description of the goods involved. “Import Recommendations for goods in free supply would be screened only for consignee and would not be considered in relation to available shipping. The Import Recommendation bearing the Embassy recommendations would be forwarded to the Office of Exports through the diplomatic pouch. Those Import Recommendations which are approved by the Embassy would be placed in one packet and those which for political or other valid reasons the Embassy does not wish to reject in the field but desires rejected in Washington will be placed in another packet.
The goods will be placed on general license. Upon receipt of the Import Recommendations from the Embassy, OEW would forward the approved recommendations to the prospective suppliers. Those which the Embassy desires rejected will be so stamped and returned to the Embassy. The supplier will not be required to obtain an individual export license, but upon receipt of the Import Recommendation from the OEW will be required only to file an application for freight space.
Alternative II
The goods would be placed on general license. The Embassy would arrange with the local government to be notified of all applications for permission to import (or related documents) in order that the [Page 124] Embassy could exercise consignee control. (If the country to which you are accredited does not require either an exchange permit or an import permit, your comment should include discussion of whether consignee control could be exercised in the field in any other way without requiring the prospective importer to file an application for an Import Recommendation.) No Import Recommendation would be forwarded to this country. The Embassy would only report on the consignee when it was desired that shipping space should be denied and arrangements would be made in Washington to effectuate this desire. Consequently, all shipping space permits would represent shipments to consignees considered satisfactory by the Embassy.
Alternative III
U.S. exporters have advanced a third alternative, namely, that for materials in free supply they file with the appropriate agency of the United States Government a shipping space application, thereby submitting the proposed transaction to consignee control here. No Import Recommendation would be issued in the country of destination. Under this alternative, the goods would also be placed under general license and the shipping permit application would be the vehicle of control.
All three alternative plans contemplate the abolition of the target tonnage limitation insofar as it relates to goods in free supply. However, the designated agency of this government would take steps to insure that the most essential materials would be shipped in preference to less essential goods whether or not they were under allocation or quota.
Please consider fully all alternatives with OEW representatives but for the time being the matter should not be discussed with the country agency or the authorities of the country to which you are accredited.
The Department and OEW are desirous of removing controls which while necessary at the inception of the Decentralization Plan are no longer so considered and which at present, constitute a deterrent insofar as the flow of materials in free supply is concerned. The following comments are transmitted at the request of the OEW as they reflect upon the experiences of the past months and point up the practical defects in the existing procedure, and the desirability of some modification in the Decentralization Plan in order to take advantage of improvements in the availability of shipping and the supply of certain, materials. OEW comments follow:
“Notwithstanding requests for the issuance of a greater number of Import Recommendations, materials licensed and resulting cargo backlog are still far below the level necessary to maintain full shipping potentials. It seems apparent that the Import Recommendations system precludes flexibility in making cargo swiftly available to meet unexpected [Page 125] increases in available shipping. Coupled with this situation is the repeated complaint by U.S. exporters that the burdens incident to obtaining Import Recommendations have discouraged importers in Latin America from placing orders in this country and have thus caused U.S. exporters to lose their markets.
“It is recognized that while the Import Recommendation has served a useful purpose and is still necessary in connection with the commodities requiring supply assistance, there is less occasion to exercise the same strict controls when dealing with commodities that do not; require such supply assistance. The requirement of Import Recommendations for commodities in free supply has greatly burdened the staffs in the countries of importation and in the United States, and has prevented them from concentrating their efforts in the generally more important materials in short supply.”