The Ambassador in Mexico (Thurston) to the Secretary of State

No. 906

Sir: I have the honor to inform the Department that recent developments in the commercial policy field have caused considerable worry to the Embassy. The Department may wish to review the situation and consider the advisability of expressing its concern to the Mexican Ambassador in Washington before the opening of the Mexican Congress on September 1. Developments include:

The establishment of a formal Foreign Commerce Control Commission and specialized import and export control committees (see Report 657 of August 1, 1946);
The probabilities that the import license system will be extended. A study of the report referred to in the preceding paragraph indicates that the import control mechanism is to be used not only for the protection of industry, but also as an indirect method of exchange control;
The generally held belief in commercial circles that numerous tariff increases will be requested of Congress during the coming sessions. The Embassy gives considerable weight to these reports;
The deliberate delaying tactics with respect to the trade agreement negotiations, requested in the first instance by the Mexican Government, give substance to reports that action on the part of the Minister of Finance, the one personally responsible for the delays, is explained by his desire “to place Mexico in a better trading position”.25

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As the Department is aware, the Embassy considered the conversations held with the Ministry of Finance during February and March as preliminary to the formal discussions which were to be held in Washington. While the Embassy did all in its power to convince the Mexican authorities of the wisdom of eliminating the import control system, it realized, from the start, that the attainment of this major objective would have to await the conversations in Washington. Hence, the Embassy secured the deletion of as many products as possible from the Treasury circulars and did as much as it could to simplify the procedures required in the case of products remaining under control.

The successive postponements of the Washington conversations have also been of concern with respect to the Trade Agreement itself. It is one thing for the Department and for the Embassy to have shown understanding and even leniency in the interpretation of the Agreement during the war and immediate post-war periods and quite another to permit the Agreement to degenerate into a “scrap of paper” through a policy of attrition carried out by the Minister of Finance.26 Fortunately, the Embassy has so far succeeded to a very considerable degree in maintaining compliance with the terms of the Agreement, but feels that the time is rapidly approaching when a very definite understanding will be necessary if the whole spirit of the Agreement is not to be [Page 1048] destroyed. Mexico is following a policy, unnecessary in the estimation of the Embassy, which is departing further and further from the liberal trade principles which we hold to be so important if international commerce is to play its deserved part in world recovery and prosperity.

Respectfully yours,

For the Ambassador:
Merwin L. Bohan

Counselor for Economic Affairs
  1. Commenting on Mexico’s attitude toward the Agreement, in despatch 920, August 26, Ambassador Thurston noted that many Mexicans had become convinced that somehow the Agreement had become disadvantageous to Mexico, and, by corollary, over-advantageous to the United States, and continued:

    “… They are frightened at the inundation of American goods that they see as about to swamp Mexico. If the Agreement is the instrument which will hold the flood gates open, it will have to be changed or circumvented. It will also have to be revised so that Mexico is no longer at a disadvantage.

    “As the Department is aware, the Embassy believes that changes in circumstances since 1942 justify a reconsideration of some of the Agreement concessions. In discussions that may be held between the two Governments, it is thought that Mexico will consider itself in a better bargaining position than the United States for two principal reasons: the first is that Mexico is aware of the great weight attached to the Trade Agreement program and to liberal trade principles by the United States Government. The Mexicans believe, which is undoubtedly true, that the United States wants the Agreement more than Mexico does. They have been fortified in their belief by the number of infringements, either in the letter or the spirit of the Agreement, that our Government has tolerated. The second reason held by Mexico is that the Mexican concessions of Schedule I are of vital importance to the United States. It is natural that this belief should be held since, in the Mexican view, the center of gravity of the Agreement is Schedule I. The Embassy therefore believes that Mexico will be on the offensive in discussing the Agreement and will expect the United States to be on the defensive.” (612.0031/8–2646)

  2. In the closing months of 1946 this Government’s interdepartmental trade-agreements organization was fully preoccupied with matters relating to the establishment of an International Trade Organization and the negotiation of a General Trade Agreement; pending the conclusion of these activities, and the determination of procedures for negotiating trade agreements within the framework of the ITO Charter, the United States was not ready to enter into new trade-agreement negotiations with Mexico or any other country (611.1231/10–847). For documentation on the first session of the Preparatory Committee of the United Nations Conference on Trade and Employment at London, October 15–November 26, 1946, to which Mexico sent observers, see vol. i.