The Ambassador in Argentina ( Messersmith ) to the Secretary of State

No. 2264

Sir: I have the honor to refer to the correspondence which I have had with the Department concerning the sale of merchant vessels to Argentine interests. This Embassy has consistently recommended that the sale of merchant vessels which responsible Argentine interests desire to purchase in the United States should be approved, and this attitude of the Embassy has been based on what it believes to be a full consideration of all the factors involved in the matter and on what is our near-range and long-range national interest.

A number of vessels of various types have been sold by our Government [Page 256] to Argentine interests and a number of applications for further purchases by Argentine interests are before our competent authorities, and there is reason to believe they may be disapproved. The Department’s telegram No. 215 of March 25, 1947, 7:00 P.M., in reply to this Embassy’s telegram No. 274 of March 14, 1947,63 states that the Department views with apprehension the program of the Argentine of commercial agreements such as those entered into with Chile and Spain, and probably some other countries, looking forward to division by Government action of traffic between the ships of the countries concerned. The Department feels that there may be difficulty in explaining ship sales to a country which is following a policy contrary to the shipping policy of our Government and which if carried to a logical conclusion would prevent United States participation in certain trade. The telegram states that further detailed information will be forwarded by mail, and I assume that in this connection reference is made to Mr. Saugstad’s letter to me of April 1, 1947 to which is attached a drafted instruction which the Department is considering sending to establishments abroad requesting information on possible discrimination against American shipping.

This Embassy is fully understanding of the considerations set forth in the Department’s telegram No. 215 of March 25, 7:00 P.M., and is of the opinion that if the Argentine Government were to persist in the inclusion of a clause in commercial agreements providing for division of traffic and if the Argentine Government were to carry through a practice of discriminating in favor of its own flag in Argentine ports and in the carrying of cargo, it would lead to a discriminatory situation which we could not disregard and it would undoubtedly influence public opinion with respect to ship sales.

This Embassy, however, remains of the opinion that in spite of certain present Argentine practices, it would be unwise not to approve further ship sales to responsible Argentine purchasers, and while it is not possible before the departure of the pouch to go into all the many factors involved in this problem, I wish at this time to transmit the following considerations which I think are of basic interest and bear on this problem.

It is correct that in the commercial agreement recently entered into with Chile and with a number of other countries, as set forth in a memorandum hereto attached (enclosure 1),64 the Argentine Government has included a clause providing for division of traffic between the ships of the two countries, or at least preferential treatment for the flags of the two countries. This provision is opposed to long standing [Page 257] maritime practice and is a new provision so far as the Argentine procedure is concerned. In this connection it may be stated that the present Argentine Government contains certain highly nationalistic elements. It also contains in the Congress a considerable number of elements who, while they may not be considered as belonging to the extreme nationalist group in the country, are extremely Argentine and who have no understanding of international practice and of maritime rules of long standing. As a rule in the Argentine treaties of commerce and navigation and commercial agreements have been made primarily through the Ministry of Foreign Relations, but since the present administration has come into office, a very considerable amount of authority and initiative in the commercial field has been shifted to the Central Bank. During the last ten months the commercial agreements entered into by the Argentine have increasingly been prepared in the Central Bank under the direction of Mr. Miranda, the President thereof,65 and his staff and the Ministry of Foreign Affairs has had less part than before in the making of such agreements. The consequence has been that a group of inexperienced persons in international relationships, otherwise in many respects competent, have been drafting these commercial agreements and this accounts in a large measure for the presence in these agreements of this shipping clause providing for division of traffic, or at least discrimination in favor of the flags of the countries covered by the agreement.

. . . . . . .

It is the considered opinion of this Embassy that the Argentine Government can best be brought into line with liberal economic policies which we advocate in an atmosphere of friendly collaboration instead of one of discrimination. I think we must view the problem from the long-rang point of view rather than from the immediate situation which has every indication of being temporary so far as certain economic policies are concerned. On the other hand, in certain countries of Europe some of these economic policies which are directly opposed to those for which we stand and; which must prevail if there is to be peace and security, are much more likely to persist longer.

While this temporary aspect of the Argentine situation could be expanded on to advantage, time does not permit me at this writing to go further into the matter.

In this same connection we have taken note of certain discrimination which is allegedly being shown in the port of Buenos Aires in favor of Argentine flag vessels. There have undoubtedly been cases of such discrimination by the port authorities in favor of Argentine vessels, and there is an official order of an agency of the Argentine [Page 258] Government which would extend such privileges to Argentine flag vessels. In practice, however, examination shows that the cases of discrimination so far have been few and that our vessels have not suffered. I think in this connection we must bear in mind the whole problem before we think of taking any discriminatory action or retaliatory action. There are more United States flag vessels coming to Argentine ports today than those of any other country. This is an entirely new development so far as Argentine trade is concerned. We have to bear this preponderance which we have in mind when other countries ask us to take discriminatory or retaliatory measures. There is no doubt that such discrimination in favor of the national flag by the Argentine is contrary to the treaty which we have with the Argentine as well as against accepted international practice, but for the present the most important factor is whether we are being hurt by such discrimination and whether it is going to be permanent. A careful examination of the facts shows that American vessels have not seriously suffered by any discrimination in Argentine ports as yet, and any full examination of the situation in all its aspects brings out clearly the probability that such discrimination will soon be recognized to be unwise by the Argentine Government and be abandoned. It is not believed that any discriminatory or retaliatory measures are necessary to bring about a correction of the situation, and to even talk of them is unwise.

. . . . . . .

In Mr. Saugstad’s letter he refers to decrees of the Argentine Government with respect to taxation, and these too are unquestionably unwise, but the shipping companies, American and others, are not particularly concerned about these taxation measures as they feel they can pass the cost on to the freights. Even though this may be so, the measures of the Argentine Government in this respect for that reason are not more sound, and there is reason to believe that these taxation measures also are the result of excess of zeal and inexperience and are of a temporary character.

I will not in this despatch endeavor to go fully into some of the considerations raised in Mr. Saugstad’s letter of April 1 as time does not permit and I wish this despatch to go forward by the courier pouch which leaves today. I believe that supplementing this despatch the memorandum66 hereto appended will be found of interest.

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Respectfully yours,

George S. Messersmith
  1. Neither printed.
  2. Not printed.
  3. Miguel Miranda was also President of the Economic Council.
  4. Not printed.