800.8820/959
The Ambassador in Chile (Bowers) to the Secretary of State
[Received January 25.]
Sir: I have the honor to refer to the Department’s triple-priority telegram dated January 9, 1943, informing the Embassy of the very substantial quantities of licensed materials now awaiting shipment at seaboard, and stating that in order to alleviate present cargo conditions by the movement of such goods, a very stringent licensing program is to be effectuated by the Office of Exports.
Pursuant to the Department’s request that the Missions review the present cargo problem with the appropriate authorities of the local government, I am pleased to inform you that, in conference with the Director of the National Foreign Trade Council (Consejo Nacional de Comercio Exterior) the existing cargo situation was outlined, as well as the method to be pursued by the Office of Exports in the movement of these goods already licensed. It was very carefully stressed that the licensing program to be adopted by the Office of Exports would in no way prejudice the licensing and movement of urgently needed goods. The response by the Chilean authorities to this plan for liquidating the backlog of goods awaiting shipment was excellent. The officials of the Council were very sympathetic to the problem presented, and were in complete agreement that the course outlined for dealing with present conditions was a realistic and necessary one.
The Economic Division of the Embassy and myself look forward to the pending visit of Mr. Horton Henry of the Department and Dr. H. A. Wilkinson of the Board of Economic Warfare on or about February 15 to present a modified plan of decentralized export control. For some time there has been in the process of formulation a complete plan for such modified decentralization, designed to meet local conditions, which it was proposed to present for the consideration of the Department. In view of the pending visit of Mr. Henry and Dr. Wilkinson, I hasten to submit this plan in order that it may be reviewed and considered prior to the presentation of a specific plan by the Export Control authorities in Washington. I do so with the thought in mind that any plan of decentralization must be designed to meet local conditions, and must be formulated in the light of actual operating experience over an extended period of time.
At the present time, strict domestic control over exportations from the United States extends only to allocated commodities. As a result, it has been a frequent observation by Chilean Government officials [Page 162] that cargo space is being utilized, to a large extent, in transporting cargo which, while considered commercially desirable, has no real significance to the economic well being of the country. The present cargo situation, as outlined in the Department’s telegram, serves to reveal more clearly the validity of these observations. The natural consequence of such observations has been a complete willingness on the part of the Chilean Government to render every assistance to a plan designed to further domestic control over exports from the United States to Chile.
Discussions of the practical aspects of decentralized export control have resulted in a common agreement to the extension of the “Certificate of Recommendation” procedure whereby the National Foreign Trade Council would issue such a Certificate to every importer desiring to import essential material from the United States, with the exception of allocated commodities which would continue to be controlled, as in the past, by Certificates of Necessity. The issuance of such Certificates of Recommendation would, of course, be based on and limited to the periodic shipping tonnage estimates after taking into consideration the tonnage consumed in the movement of allocated goods and, if necessary, materiel consigned to those projects engaged in the production of war materials which have been singled out for special treatment by the authorities in Washington. An integral part of any plan for domestic control over exports is Embassy approval of all Certificates of Recommendation in much the same fashion as Certificates of Necessity, in the case of allocated commodities, are now approved. It is anticipated that this proposal will not be effectuated until about the time present port congestion will be relieved by the modified licensing policy to be adopted by the Office of Exports. Such a time lag will be necessary to enable importers in Chile and suppliers in the United States to adjust themselves to the new requirements.
In my Despatch No. 5322 dated December 30, 1942,82 entitled “Monthly Freight Space Allocations”, and in the previous despatches referred to therein, there was outlined, in some detail, the basis upon which the Council issued Certificates of Recommendation. By way of summary, it was indicated that the Council had formally agreed to limit the issuance of Certificates of Necessity and Certificates of Recommendation to the estimated amount of shipping space available per quarter. In addition, the Council has also been approached concerning the feasibility of using the issuance of Exchange Control Permits as an even stricter instrument of control than has previously been the case. Under this system dollar exchange to cover orders placed for any commodities proposed for importation would be [Page 163] granted only in those cases authorized by appropriate Certificates. Such measures will constitute dual protection against the issuance of governmental endorsements of exports from the United States to Chile in excess of estimated shipping tonnages. Furthermore, by subjecting these documents to the approval of the Embassy, such export proposals would be in harmony with existing restrictions on strategic materials now effective in the United States.
I have no hesitancy, from a practical point of view, in offering this proposal for domestic control over United States exportations owing to the completely successful operation of the allocation program so far as concerns relations between the Embassy and the Chilean Government authorities. To the knowledge of the Embassy, no Certificate of Necessity has been issued in the past six months without its endorsement. While there has not been complete unanimity of feeling on every Certificate which has been presented for approval, from the standpoints of essentiality, consignee status, etc., it has been the rigid policy of the Council to accept the Embassy’s recommendation as final, with the only recourse being an appeal back through the Embassy.
Briefly, the Embassy’s plan for a modified form of decentralization contemplates that on and after a given date all proposed exportations from the United States to Chile shall be subject to the issuance, by the appropriate authorities of the Chilean Government, of a Certificate of Necessity in the case of allocated commodities or a Certificate of Recommendation in the case of all other commodities and that, as a correlative measure of control, no proposed exportations from the United States to Chile shall be authorized by the Export Control authorities in Washington without the prior presentation of either a corresponding Certificate of Necessity or Certificate of Recommendation as the case may be, except as otherwise hereinafter specified.
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