The Ambassador in Chile ( Bowers ) to the Secretary of State

No. 11,422

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The Decentralization Plan of Export Control79 was adopted with some enthusiasm by the National Foreign Trade Council80 when that plan was first announced and when it encompassed all commodities imported into Chile from the United States. As articles and materials were removed from the Plan, however, the Council lost some of its enthusiasm and evidenced a growing impatience for the entire removal of the requirement of Import Recommendations. The Embassy feels that this attitude was justified, at least in part, by valid considerations. It has never been clear to the Council, for example, why the requirement of Import Recommendations should be removed in respect to the importation of important commodities such as chemicals and pharmaceuticals, machinery, and various industrial machinery known to be in short supply, but still had to be maintained in respect to iron and steel and textiles which are the principal items [Page 825] now remaining under the Decentralization Plan. The failure of the National Foreign Trade Council to understand the distinction between these two groups has only been emphasized by the enormous amount of iron and steel which has been licensed for export from the United States to Chile without regard to established quotas or estimates of supply. Many of these licenses, moreover, have been issued without prior consultation with the National Foreign Trade Council. The possible repercussions of the latter were suggested in the Embassy’s airgrams nos. A-660 of September 9, 194481 and no. A–675 of September 21, 1944,81 in which reference was made to threatened opposition on the part of the Chilean Country Agency respecting the importation of excess iron and steel stocks which it was felt might glut the market and serve as a basis for undesirable speculative activities which the Chilean Government has been trying to eradicate over a considerable period of time. The approval of these exportations from the United States has also been suggested as a basis for renewed requests for the approval of exports to Argentina of materials which have been imported into Chile beyond the actual needs of this country.

The National Foreign Trade Council has had to maintain on its staff several officers and clerks who concern themselves primarily with the administration of the Decentralization Plan in Chile. The Embassy is convinced that the Council would welcome an opportunity to divert the efforts of this personnel to more effective and more essential work by the elimination of the functions and responsibilities concerned with the processing of applications for Import Recommendations. Recent conversations between officials of the Council and members of the staff of the Embassy indicate that Exchange Permits are now being issued for textiles and iron and steel on a pro-rata basis in accordance with past imports or consumption of importers and consumers and within established quotas or estimates of supply so that there would seem to be some merit in the contention of the Council that the issuance of import Recommendations for these same commodities is merely an unnecessary and overlapping function.

From the point of view of importers of American merchandise in Chile, the complete removal of the requirement of Import Recommendations would be received as a welcome relief. To many of these importers this requirement has seemed an unnecessary irritant which embarrassed them in their efforts to compete with British traders from whom it has always been possible to make purchases without the procedural requirements which have heretofore characterized purchases of American merchandise under the controls imposed by the Decentralization Plan. British traders in Chile have lost no opportunity [Page 826] to impress this difference upon prospective purchasers of commodities which are obtainable in both the United States and Great Britain.

So far as concerns the attitude of the Embassy in respect to the foregoing, it is believed that, considering the difficulties of the National Foreign Trade Council in administering satisfactorily the Decentralization Plan in its present modified and simplified form, and when viewed in the light of the Council’s understandable desire to simplify its procedures in every way possible by the elimination of unnecessary functions, the requirement of Import Recommendations in respect to the few remaining items which now appear on the positive list would seem to serve only as a source of irritation without accompanying benefits commensurate with the difficulties involved.

For its part the Embassy could likewise effect a realignment of its personnel in such a way as to give greater emphasis to work of an increasingly important nature such as the preparation of reports and replies to independent inquiries received from the Foreign Economic Administration, the Department of Commerce, and other agencies in Washington, if Decentralization were eliminated in its entirety in Chile. It is felt that should the control of exports from the United States to Chile be again centralized in Washington the gain would more than offset the loss inasmuch as the few items which now remain under control would remain so far as concerns the individual export license to be issued by the Foreign Economic Administration in Washington. It is felt, moreover, that the Chilean authorities have grasped the spirit and significance of the Decentralization Plan and to that extent the Plan has had a salutary effect in this country. Its objectives are now being accomplished by the National Foreign Trade Council in the issuance of foreign exchange permits on a fair and proportionate basis within the limitations imposed by supply considerations, which is the principal reason underlying the belief that the imposition of the present additional controls on the few items now subject to the requirement of Import Recommendations is no longer necessary.

The foregoing is set forth herein to serve as a basis for the recommendation of the Embassy that, if at all consistent with the war program of the Foreign Economic Administration, consideration be given at the earliest opportunity to the advisability of eliminating the Decentralization Plan of Export Control completely so far as concerns Chile. The considerations outlined above have been discussed thoroughly with the Special Representative of the Foreign Economic Administration in Santiago82 and with the Assistant to the [Page 827] Special Representative in Charge of Exports, and these officials concur in the views of the Embassy as expressed herein.

The Embassy would appreciate being informed respecting the decision of the Foreign Economic Administration in this matter.

C. G. B[owers]
  1. A plan of the Foreign Economic Administration which provided that virtually no materials could be imported from the United States without a “preference request” issued by the country of destination.
  2. A term used by the Foreign Economic Administration to designate the Chilean “country agency”.
  3. Not printed.
  4. Not printed.
  5. Sam D. W. Low.