The Acting Secretary of State to the Ambassador in Argentina ( Braden )
1228. In order to bring export controls into line with the domestic reconversion program FEA proposes to issue very shortly an export bulletin containing sweeping revision of the existing system. All countries will be reclassified into two groups, Group K containing the large majority including Spain and other neutrals, and Group E comprising Argentina, Austria, Caroline Islands, Italy, Marcus Islands, Marianas Islands, Marshall Islands, Bulgaria, Rumania, and Hungary. All commodities except a limited list of commodities in short supply will be placed under general license without value limitations [Page 549] to country Group K destinations. Existing export controls are to be retained without modification as respects Group E countries.
Dept proposes to recommend to FEA that Spain be included in Group E in order that the two leading fascist dictatorships may be designated for equal treatment. It is our feeling that it would be inadvisable either to remove Argentina from Group E or to single it out for apparently more severe treatment than that accorded Spain. The foregoing proposal has the advantage of maintaining for both countries such administrative flexibility in our controls as developments may require, and should elicit favorable comment here. The British will be informed of intended action.
To meet urgent publication schedule please telegraph your recommendation immediately as to inclusion of Argentina in Group E on this basis.