821.006/11–1147
The Secretary of State to the Embassy in Colombia
No. 38
The Secretary of State refers to the Embassy’s report No. 163 dated May 6, 1947, to the Embassy’s airgram A–275 dated May 29, 1947, to the Embassy’s report No. 254 dated July 10, 1947, and to subsequent reports14 which have indicated an early intention of the Colombian Office of Exchange Control to establish quotas in licensing the importation of certain articles, including cigarettes, automobiles, trucks, tires, liquors, radios and refrigerators.
The Department is concerned over these developments, since establishment of the quotas contemplated and their application to articles of United States origin listed in Schedule I of the 1936 [1935] trade agreement with Colombia15 would clearly be in contravention of that [Page 563] agreement. Article V of the trade agreement with Colombia provides that no prohibition or restriction shall be imposed by the United States or by the Republic of Colombia upon importation of products included in Schedules II and I respectively, with certain exceptions enumerated in paragraph 2 of Article V, none of which would appear to be applicable in the present case. The establishment of the system of quotas contemplated by the Colombian Office of Exchange Control for importation of these Schedule I products from the United States would therefore in the Department’s opinion be precluded by the terms of the trade agreement.
For the Embassy’s information, however, the Department recognizes the serious difficulties in Colombia which have resulted from an increasingly unfavorable balance of payments and the continuing decline in the exchange reserves of that country. The Department is additionally inclined to agree not to invoke provisions of the existing trade agreements with respect to measures adopted by other Governments which conflict with provisions of the agreements in question but which are nevertheless in harmony with the relevant provisions of the Geneva draft Charter for the International Trade Organization. This inclination is of course qualified in the sense that this Government reserves all of its established rights in such matters in the interim period pending installation of the International Trade Organization, and the adherence of other Governments to the Organization, and by the expectation that the terms of existing agreements will be respected as fully and completely as possible until formally superseded.
The Embassy will note in referring to the copy of the Geneva draft of the Charter for an International Trade Organization in its hands that Article 21 [12] allows for restriction of the quantity or value of merchandise permitted to be imported into any country to the extent necessary to halt a serious decline in its monetary reserves, or, if they are very low, to increase them reasonably. A country so restricting Imports may also classify products so as to give priority to the importation of those products more essential to its economy. However, these provisions are qualified in several important respects, permitting their maintenance only to the extent that unchanged exchange conditions continue to justify their application, requiring that they do not unnecessarily damage the commercial interests of other countries, providing for their progressive relaxation as far as possible, and requiring their administration in a non-discriminatory manner. The Embassy will note these and other requirements outlined in Articles 20, 21 and 22 of the Charter.
The Embassy is requested to approach the appropriate Colombian authority at an opportune moment to inquire what the intention of the Colombian Government may be with regard to the application of the [Page 564] quotas to imports of United States origin listed in Schedule I of the trade agreement.
The Embassy should attempt to dissuade the Colombian Government from the institution or extension of such a system of quotas insofar as possible. The Department is fully aware of the current balance of payments problem in Colombia and recognizes that the Government of that country may find full compliance with all provisions of the trade agreement difficult at this time. The Embassy therefore is authorized to indicate that this Government would be willing to agree to refrain for the time being from invoking Article V of the trade agreement, in return for an agreement by the Government of Colombia to establish and administer such temporary quota arrangements in accordance with the principles outlined in Articles 20, 21 and 22 of the Geneva draft of the International Trade Organization Charter. This waiver would apply only pending the decision of the Government of Colombia at an early date following the Habana conference to adhere to or reject the Charter. In the event of a negative Colombian decision with respect to membership in the International Trade Organization the United States would be free to claim its rights under the agreement. Of course this Government continues to expect that the Government of Colombia will afford the opportunity for consultation prior to imposition of such restriction, as implicitly provided in Article V of the agreement, even though no disposition may exist to invoke its provisions.
The Department would appreciate prompt and full report of the progress of any discussion which the Embassy may undertake, as well as being informed of the details of any concrete system of import quotas which may be elaborated by the Colombian Government. Any indication of the attitude of the Colombian Government towards the International Trade Organization which may appear in the course of these discussions would be of great interest to the Department in view of the forthcoming Habana conference.