740.34112A/8–2644

The Chargé in Paraguay (Reed) to the Secretary of State

No. 2390

Sir: I have the honor to refer to the Department’s Secret Airgram 216 of August 3, 1944, 4 p.m., advising that the Foreign Economic Administration has decided that in the future it will withhold approval of license applications on intelligence grounds only in cases where the consignee is included in the Proclaimed or Confidential Lists, and will discontinue the policy of reference of names of unknown consignees to this mission with the request that a report be forwarded in each case on political desirability as consignee.

The same airgram also advises that the Department will forward periodic lists prepared by the Foreign Economic Administration containing the names and addresses of persons named as unknown consignees in Paraguay.

The Embassy realizes the impossibility of following different procedures for each country. It further realizes that the Department appreciates the ineffectiveness of the Proclaimed List in this country. It fears, therefore, particularly in view of the small volume of this total market, that there will be no way to prevent the arrival of merchandise ordered by cloaks for some of the principal firms of the Proclaimed List. The alternative suggested by the Department could only be effective if the periodic lists were complete and if they were received in sufficient time to allow the Embassy an opportunity to request cancellation of the shipments before they leave the United States, in those cases where cloaking operations are involved….

Paraguay’s economic dependence and geographical position with respect to the Argentine are such as to encourage cloaking operations between the two countries. Unless shipping documents are handled through local banks so as to ensure delivery in Paraguay of materials despatched here from the United States, there is no guarantee that they may not be retained in Argentina rather than be transshipped there. This is particularly true because most shipments from the United States are against payment and delivery of documents in the United States. Recognizing the distinct advantage of removing all controls as rapidly as possible, the Embassy still feels that to allow free shipment at this time to unknown consignees will result in a return to [Page 1463] the same situation which existed prior to the establishment of the rule which withheld export licenses pending the approval of the missions in the countries concerned. It is presumed that the entire question of the Proclaimed List has been discussed in detail with Ambassador Beaulac.20

Respectfully yours,

Leslie E. Reed
  1. Ambassador Willard L. Beaulac did not assume his duties in Paraguay until September.