835.24/4–1345: Telegram

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

732. Your 379, April 12, 4 p.m. Reaction Argentine authorities is in principle favorable to abandonment certificate necessity. This matter has been under discussion with Central Bank authorities for past week who express desire retain certificate procedure temporarily for following reasons: (1) inadequate shipping facilities necessitate some method allocation shipping space from United States to Argentina; (2) necessity control distribution merchandise in Argentina. They desire information regarding solution these problems in other countries and consider possibility issuing shipping space certificate in lieu certificate necessity. Details not yet complete but would enable control shipping space and distribution for essential goods.

Argentine shipping authorities request no announcement change be made in Washington for several days in order that they may make necessary arrangements regarding Argentine ships. Central Bank also requests no immediate announcement regarding certificates in Washington, stating that they wish to have at least 3 days for consideration.

Foreign Office expresses assent in principle to abolition certificates.

Argentine authorities apparently fear flood of nonessential products from the United States which would upset economy and cause speculation necessitating drastic import control measures. Central Bank authorities state, and Embassy is in complete agreement, that first and absolutely essential problem to be solved is matter of additional shipping space. This obviously must be supplied by the United States and arrangement should be made for this prior to any announcement by the FEA or any other Government agency. Both FEA and WSA are undoubtedly fully aware of backlog accumulation cargo in United States ports awaiting shipment which cannot be carried by Argentine vessels.

In considering lifting restrictions on trade with Argentina it is presumed that the Department, FEA, and other interested Government agencies are aware that the Argentine Government has not eliminated Axis firms and individuals from business, and at least two Proclaimed List Germans retain advisorships to the Government. It has not effectively implemented its decrees and regulations for the control and elimination of Axis firms but instead of taking effective steps in this direction proposes the lifting of our Proclaimed List controls. It seems certain that without these controls American merchandise coming to Argentina will fall into the hands of proscribed firms and individuals [Page 533] since Axis firms and individuals are in intimate contact with the Government, which controls allocation all merchandise.

It is felt that any announcement regarding relaxation of restrictions on trade with Argentina would be meaningless without provision adequate shipping facilities and ill advised in absence Government control of Axis entities by Argentina.