824.24/853: Telegram
The Ambassador in Bolivia (Boal) to the Secretary of State
[Received 4:15 p.m.]
1471. Department’s circular telegram August 31, 4 p.m.45 proposing abolition of Decentralization Plan A and resort to Alternative III as outlined in Department’s circular airgram of August 23, 7 p.m.46 While the Embassy appreciates the desire of the Government agencies concerned with export control to satisfy the wishes of American exporters and to return to a business as usual policy insofar as may be feasible it cannot endorse any proposal to abandon a decentralized [Page 139] system which is working effectively in this country after 5 months’ trial in favor of system which will be subject to controls even less adequate than those employed under the successful system which in effect prior to April 1. The reasons for the Embassy’s sponsorship of either the current Decentralization Plan or Alternative I are enumerated in this Embassy’s 1460, August 31, 3 p.m., the substance of the telegram espousing Alternative III has been presented to a special session of the Country Agency and to the Chief of the Priorities Section. They unanimously reject the proposal to invoke Alternative III and urge the retention of the present plan or a slightly modified version of it such as Alternative I. They start [state] that Bolivia is receiving the required commodities in the proper proportion and in adequate quantity as a result of the introduction of the Decentralized Plan. They believe that Bolivia’s import trade with the United States has been rationalized for the first time under this plan and they will insist upon an emphatic protest by the Bolivian Government in the event that decentralized control should be abandoned in favor of Alternative III. The Country Agency has also pointed out that under Alternative III constant confusion will result from the difficulty of keeping current the constantly changing lists of goods in free supply and in critical supply.
Pre-April 1 experience has amply demonstrated that export control cannot be successfully operated from a point remote from Bolivia. Telegraphic consultation with the Embassy on shipping permit policy and practice would be costly and cumbersome. On the basis of past experience it is feared that the Embassy’s recommendations in effect would be largely disregarded. The Embassy’s recommendations on monthly shipping programs under centralized control were never carried out due to causes apparently beyond the control of the Department and OEW. Goods urgently required to maintain Bolivia’s production of tin, tungsten, rubber and quinine remained unshipped; luxury goods which could readily have been dispensed with found shipping space.
Consignee control can better be operated from La Paz since the responsible officers personally know the full record of each consignee in this small country and are in a better position to check cloaking on behalf of Proclaimed List firms. All consignee control material has recently been shipped to La Paz by air at great expense and sacrifice of airplane space. It would seem indefensible to return all this material to Washington at equal cost when the system of localized control has incontestably succeeded. A change of export control practice after only 5 months’ trial and that successful, would seem unjustifiable when we are already vulnerable to frequent charges of unnecessary about-faces in our economic control policies.
[Page 140]The Decentralized Plan has shown considerable flexibility in this country and it is not believed that available shipping space for needed goods for Bolivia has gone or will go unused owing to any lack of Import Recommendations. There is a limit to the amount of luxury consumer’s merchandise which Bolivia is able to import and in the absence of close import or foreign exchange control in Bolivia, there is a real danger that importers will overpurchase unless some such system as the Decentralization Plan is employed. Already importers are encountering difficulties in financing goods ordered for Bolivia which have been landed at Arica. This trend can be checked under Plan A or Alternative I but not under Alternative III.
Clearly a uniform system of export control for all Latin American countries is desirable in the interest of consistency and convenience to exporters. However, if the Decentralized Plan or a simplification thereof as embodied in Alternative I cannot be retained for all Latin America, the Embassy and the Country Agency must insist that one or the other be applied to Bolivia.
Kazen and Acton of OEW concur.