740.00112A European War, 1939/34254
The Ambassador in Ecuador (Scotten) to the Secretary of State
[Received July 28.]
Sir: I have the honor to refer to the confidential circular instruction of March 15, 1943 (file 740.00112A European War, 1939/27156a)3 and to various memoranda prepared in the Board of Economic Warfare concerning consignee control in the Export Decentralization Plan “A”.
Several specific questions of policy in regard to consignee control have arisen in recent weeks concerning which the Embassy would appreciate the instructions or comments of the Department:
1. Confidential List.
The American Consulate General in Guayaquil has made the following suggestion: In the Consulate General’s opinion, there does not appear to be any obvious need for further recommendations to the Department for Confidential List action. Consignees, who in the past would have merited a recommendation for the Confidential List, now can be automatically denied all their Import Recommendations by the Commercial Intelligence section of the mission. It is, therefore, suggested that all such cases now be assigned an “A” rating locally, and that such a rating will mean an unquestioned denial at the Embassy of each and every Import Recommendation submitted by the subjects as importers or ultimate consignees.
The Embassy is aware of the merits of this suggestion. It would obviate the present delay and correspondence concerning Confidential List recommendations, and at the same time achieve the most important purpose of the Confidential List—that of preventing American goods from reaching undesirable firms. However, the Embassy is loath to agree to the suggestion without the Department’s consent, in view of the last paragraph of the circular instruction on March 15, 1943.4
[Page 209]2. Undertakings in relation to consignee control.
Under the rating plan for consignee control evolved by the Embassy and Consulate General, a rating of “CA” has been assigned to cases which were under strong suspicion for various reasons, mostly relating to cloaking. In some of these cases investigation has gone forward to the point where the Consulate General and the Embassy are convinced that there is insufficient evidence to warrant Proclaimed or Confidential List action and that the persons or firms involved can be prevented from further violations of economic controls by securing a standard undertaking. (Reference is made to the circular instruction of April 11, 1942, entitled “Use of Undertakings in Proclaimed List Matters”, to instruction No. 1657, January 27, 1943, and to the Department’s confidential circular airgram of April 21, 1943.5) It is planned to make more extensive use of undertakings in such cases in the future.
After such undertakings are secured, naturally a careful watch of the firms’ activities will be maintained. But the Embassy and the Consulate General feel that once an undertaking is given in good faith, the firm should be regarded as on probation but should suffer no further restrictions on its imports except those dictated by priority considerations or, of course, further indications of cloaking. In the latter case they would be immediately recommended for the Proclaimed List.
3. General policy of discrimination in suspicious cases.
The problem involved in the above discussion of undertakings is in reality part of a larger question. Since the establishment of the Export Decentralization Plan in Ecuador, the commercial intelligence units of the Embassy and of the Consulate General have evolved a rather complete system of political ratings. Reference is made to the Embassy’s despatch No. 4412 of April 15, 1943,6 for an explanation of the rating plan. In practice the procedure has been as follows:
If a firm is rated “CA”, the commercial intelligence unit gives limited approval to the Import Recommendation which indicates to the priority officers of the Embassy that the order should be reduced to the firm’s minimum essential requirements or denied entirely in accordance with general considerations of the supply situation in the country, or that, if several importers are competing for the same product, the “CA” firm should not be given preference. Limited approval has not indicated, however, that the Import Recommendation must be denied or that it is intended to drive the firm out of business for lack of imports. The basic idea has been to limit supplies to immediate requirements and thus prevent the building up of stocks. Thus, if listing is later necessary, the effect will be almost immediately felt.
[Page 210]Naturally, every effort is made to reduce the number of “CA” cases, either by recommending them for the Proclaimed List or by securing an undertaking in appropriate cases. However, it is evident that in a few cases it will be difficult to take either action immediately.
The Embassy would be interested in the Department’s comments on the desirability of continuing to discriminate against “CA” firms in the fashion described above.
Respectfully yours,
Commercial Attaché