612.116/45
The Ambassador in Mexico (Messersmith) to the Secretary of State
[Received June 16.]
Sir: I have the honor to refer to the Department’s Instruction No. 5745, dated May 29, 1944, and to previous correspondence concerning the Mexican Executive Decree published May 12, 1944, which enables Mexico to limit or prohibit importations upon publication by the Ministry of Finance of lists of restricted commodities. The Embassy is requested to obtain further information concerning the measure and is authorized to enter into informal discussions with appropriate Mexican officials for this purpose. It is understood that an additional instruction is being prepared by the Department and, therefore, the following material is being submitted as an interim report.
While no listing of restricted commodities has so far been published by the Ministry of Finance, the Decree makes possible the inclusion [Page 1225] by the Ministry of Finance of any article in the lists that may be promulgated. It makes no exceptions nor does it make any reference to commodities listed in Schedule I of our Trade Agreement. The failure to inform the United States Government of the intention to publish this decree would seem to contravene the spirit of the Trade Agreement, if it is not in fact a violation of paragraph 2, Article X, whereby proposals by one party to the agreement to impose any quantitative regulation shall be presented in writing to the other party for purposes of consultation. It might, however, be maintained by the Mexican Government that, since no actual limitations have been imposed (no lists having been published), no violation has taken place.
The Decree has no preamble, or “exposition of motives” which usually forms part of such decrees for the purpose of explaining reasons for the enactment. This unusual omission may have been deliberate, in order not to reveal the Mexican Government’s motives, or in order to retain freedom of choice for ascribing those motives at a later date to one or another of the excepting clauses of the Trade Agreement, such as those set forth in paragraph 2, Article VI, or in Article XVII.
The Department’s instruction under reference states that: “The Decree appears to initiate a system of import control based on wartime emergency considerations …” This observation would seem to be justified by the Decree itself as Article I specifies that the importation of goods shall be subject to restriction “during the state of emergency.”
The instruction also points out that the Mexican Government might claim that the Decree was justified under the meaning of Article XVII of the Trade Agreement, section (h) of which provides that “Nothing in the Agreement shall be construed to prevent the adoption of measures relating to public security or imposed for the protection of the country’s essential interests in time of war or other national emergency.” While the Embassy shares the opinion of the Department, it would seem that in case of such a claim the burden of proof of the necessity for the measure would fall upon the Mexican Government. In raising the question of burden of proof, the Mexican Government may claim, however, that the United States in effect accomplishes the same ends in the employment of General Imports Order M–63. It might maintain that the purpose of M–63 (the conservation and effective use of shipping space) has at times been overshadowed by other considerations in utilizing this order. Certain Mexican exporters have, in fact, regarded the application of M–63 as an instrument for attaining commercial ends. At the same time M–63 might be justified under paragraph (h) of Article XVII.
[Page 1226]The Department’s instruction observes that the Decree does not stem from any of the specifications mentioned in paragraph 2, Article X, of the Trade Agreement. The Embassy’s Despatch No. 17,701 of May 23, 194479 reported the remarks of the Minister of Finance to the Counselor of Embassy for Economic Affairs regarding the possible uses of the Decree. In the case of the Cadillac automobiles and other luxury items mentioned by the Minister, it would seem that the provisions of paragraph 2 would not apply, with the possible exception of the last specification, “the maintenance of the exchange value of currency.”
The Department points out in paragraph numbered 6, that Article VI, paragraph 2, of the Trade Agreement may prove pertinent in the case of the Decree. The said Article VI provides that “No Administrative ruling by either country imposing any requirements with respect to importations shall become effective before the expiration of 30 days after the date of official publication.” This particular point would seem merely to defer the effective date rather than to present grounds for objection to the enactment of the Decree.
A fact that does not seem to be unrelated to the Decree is the abrogation, in February, under pressure from the United States Government, of the wide upward revision of the Mexican import duties. One of the reasons for these proposed tariff increases was the creation of protection for certain newly established industries (Cf. the Embassy’s Confidential Despatch No. 15,954 of February 17, 194479). The reaction of our Government to this measure and the subsequent abrogation of the large-scale increases revealed differences of economic thinking on tariff questions that exist between our Government and certain high officials of the Mexican Government. It is believed that to some degree the Decree under consideration is a sequel to the failure to realize the tariff revisions which had been unsuccessfully attempted. From this point of view, both measures have aspects of an economic philosophy that may run counter to the fundamental purposes underlying the policy of trade agreements.
The Embassy shares the Department’s concern over the possible consequences of the Decree, but awaits the arrival of the Department’s additional instruction80 before going further into the matter.
Respectfully yours,
Counselor of Embassy for
Economic Affairs