710 Conference W and PW/1–845

Memorandum by the Assistant Chief, Division of Commercial Policy (Smith) and Mr. Wayne G. Jackson, Office of Wartime Economic Affairs4

There are set forth below the economic questions on which ECA and WEA believe that this Government might take the initiative at the proposed Conference in Mexico City. These would fit within the broad scope of item III of the agenda included in the circular [Page 48] telegram which was sent on January 55 to certain of our missions in the other American republics.*

III. Consideration of the economic and social problems of the Americas.

A. War and transitional economic cooperation.

1. The need for continued Hemisphere cooperation in the winning of the war. (This would presumably result in a resolution reaffirming, strengthening and where necessary modifying the ideas set forth in certain of the resolutions of the Rio Meeting and as a general consideration would emphasize that the war is far from won. Specific questions under this would include those mentioned in the subheads below.)

The procurement of materials to win the war. At the Rio Meeting this Government made certain commitments and statements with regard to our procurement program which were primarily designed to encourage production and increase the amount of needed materials. We have already cut back certain procurement programs and with the end of the war in Europe will cut back others. This is a matter of concern to various American republics already. A statement of our future intentions is therefore needed, particularly to make it clear that the end of the war will bring further procurement cut-backs. There must be cooperation in curtailment, just as there was in increased production; in other words, while we will in making our decisions keep seriously in mind the effects of cut-backs, the producing countries must be prepared to play their part in cushioning the shock.
Supply of goods remaining in short supply. The United States, since before the Rio Conference, has been committed to a supply policy for Latin America based on what is commonly called the “parity principle”. Since that time the liberated areas have come in as substantial claimants on United States supplies and we have made commitments to fill these requirements. Furthermore, when the European war is finished there will presumably be a substantial adjustment in our whole allocation system and we are also moving toward a dimunition of export controls. Accordingly, the Rio commitments (Resolution III) should be restated so as to take care of changed circumstances both present and future. Otherwise, we shall find ourselves in the position of still having commitments made in January 1942 which are properly no longer applicable.
The settlement of problems arising from the severance of economic relations with aggressor nations. This question should result in the adoption of a resolution calling for relaxation or modification of the financial and economic controls established in accordance with Resolution V of the Rio Conference, so far as the liberated areas and such ex-enemy areas as liberated Italy are [Page 49] concerned; for consultation on technical aspects of such relaxation or modification; and for use of these controls to prevent flight of Axis capital, realization on loot, and concealment of Axis investment. It should also include a request that the Ministers approve various United Nations Declarations—the one on property transfers under Axis compulsion, of January 5, 1943; the gold declaration of February 22, 1944; and Bretton Woods Resolution VI.
The elimination of wartime trade controls. At the same time that this Government, in line with its established policy of reducing barriers to trade and keeping trade to the greatest possible extent in the hands of private enterprise, has been eliminating wartime trade controls, a marked trend has been developing in a number of important Latin American countries to make wartime trade controls a permanent thing or to institute new controls at the present time when, as far as war purposes are concerned, the trend should be in the opposite direction. It is believed that this Government should take advantage of its bargaining position with respect to procurement and supply questions to obtain some commitment from the other American republics for as rapid as possible a relaxation of war trade controls, and against the imposition of new controls pending opportunity for a full discussion on both an inter-American and international basis of long-range trade policies.

B. Consideration of methods of further cooperation for the improvement of economic and social conditions of the peoples of the Americas, with the end of raising the general standards of living. (If ECA–WEA are to be requested to prepare material or draft resolutions on this part of the agenda, it would be helpful to have rather definite ideas as to the approach which the Department believes should be taken.

In addition to the foregoing questions, there are a number of topics which various Latin American governments will undoubtedly wish to have discussed at the Conference. These include such matters as the United States cotton and wheat subsidy programs; synthetic versus natural products; ceiling prices on coffee, et cetera; and increased shipping services. The United States clearly would not wish to take the initiative on such questions. However, extensive policy background material has been prepared on these questions and others, as well as upon the topics mentioned at the beginning of this memorandum, which will provide the basis on one hand for a defensive position on those questions which the Latin American governments may bring up, and on the other the essential background for the drafting of resolutions on those topics on which this Government may wish to take the initiative.

As to the actual drafting of resolutions, the Departmental group from ECA–WEA–ARA–TRC which has been working thus far, or [Page 50] individuals therefrom, can be utilized. There should also be inter-Departmental clearance through a Committee already established under the Executive Committee on Economic Foreign Policy.

  1. Addressed to the Assistant Secretaries of State Clayton and Rockefeller.
  2. Ante, p. 1.
  3. The question of international economic organization, not mentioned in this memorandum, would presumably be discussed under the Economic and Social Council part of the Dumbarton Oaks proposals. [Footnote in the original.]