The Ambassador in Colombia (Beaulac) to the Secretary of State

No. 143

Sir: I have the honor to refer to the Departments Restricted Instruction No. 38 of November 11, 1947, in which concern is expressed over the establishment of quotas by the Colombian Office of Exchange Control in licensing the importation of certain articles which fall within Schedule I of the 1936 [1935] Trade Agreement with Colombia.

. . . . . . .

With respect to the Department’s statement that it “recognizes the serious difficulties in Colombia which have resulted from an increasingly unfavorable balance of payments,” the Embassy believes that the existing restrictions on imports are directly related to Colombian exchange difficulties and can be defended on that ground. As of the end of October 1947 Colombia’s unfavorable balance of exchange totaled over $71,000,000.00 for the calendar year, and represented an unfavorable balance in each of the ten months. It should be noted that the restrictions have served to put an effective brake on the earlier alarming outflow. In October, the unfavorable dollar movement was less than $7,000,000.00, and there are indications that for the month of November, a small favorable balance will be reported.

There are reasons to believe that as Colombia’s exchange situation improves, the Office of Exchange Control will lessen some of the restrictions and permit an increased volume of imports. For instance, it has already been announced that for the first quarter of 1948, holders of import quotas covering the second, third and fourth priority groups will be permitted to use 7 percent of their quotas, as compared with 5 percent during the current quarter, and 3 percent in the previous quarter. Also, this month the Office of Exchange Control called for applications for, and approved, quota increases governing agricultural industrial and mining equipment and machinery, and other essential [Page 568] items. The Embassy had been informed that approximately $20,000,000.00 in additional quotas were thus approved. As far as the Embassy has been able to determine, the various restrictions on imports have resulted from a sincere attempt on the part of the Colombian Government to accommodate the volume of imports into Colombia to the realities of a dwindling supply of dollars.

The Embassy, therefore, believes the moment is not opportune to invoke Article V of the Trade Agreement. Consequently, it will not approach the Colombian Government on the matter in the absence of further instructions.

Respectfully yours,

For the Ambassador:
J. A. Silberstein

Third Secretary of Embassy