The Acting Secretary of State to the Embassy in Colombia

No. 60

The Acting Secretary of State refers to the Embassy’s despatch No. 143, dated November 25, 1947, concerning the establishment of quotas by the Colombian Office of Exchange Control in licensing the importation of certain articles included in Schedule I of the 1936 [1935] trade agreement with Colombia.

It was not the intention of the Department, as the Embassy will note in referring again to the Department’s instruction No. 38 of November 11, 1947, that Article V of the trade agreement be invoked at this time. On the contrary it was the Department’s intent that the Colombian Government be informed of this Government’s willingness temporarily to waive the provisions of Article V with respect to the contemplated quotas, in view of Colombia’s precarious foreign exchange position, and in recognition of the fact that the Government of that country might find full compliance with all the provisions of the trade agreement difficult or impossible under present circumstances. In return, the Department wished it to be clearly understood by the Colombian authorities that this Government’s willingness to refrain from protesting such a contravention of the agreement was based upon the assumption that Colombia would continue to respect the agreement as fully and completely as possible, and that in those instances where deviation from its provisions was necessitated, the remedial measures adopted would be instituted and administered in accordance with the broader principles and provisions of Articles 20, 21, and 22 of the [Page 569] draft Charter for an International Trade Organization. The principles and provisions in question were outlined in the Department’s instruction under reference.

The Department is gratified to note that additional exchange control measures which have been adopted in Colombia to correct the current balance of payments problem are in general in harmony with Articles 20, 21, and 22 of the Charter. The provisions of Colombian Resolution No. 169 of April 30, 1947, envisaging quotas for the importation only of tires of sizes “not manufactured in the country” would appear to constitute an exception, by which protection of the local industry rather than simple control remedial of the balance of payments would seem to be the object. The Department is somewhat relieved to note that in actual practice tires of all sizes, including those manufactured in the country, continue to be licensed at least for the present, and is hopeful that the protective aspect of the exchange allocation for tires may be eliminated.

In summary, the Department concurs with the Embassy that the various restrictions adopted by Colombia, which are discussed in the Embassy’s despatch No. 143, represent a sincere attempt on the part of the Colombian Government to meet its current exchange problems, and that the remedial measures undertaken satisfy the requirements of the ITO Charter in general, with exception as noted. Under these circumstances the Department continues to feel that a discussion of these questions with the Colombian authorities in the sense of the foregoing would be helpful, lest otherwise these authorities be led to believe that this Government is unaware of or indifferent to both the present exchange difficulties confronting the Government of Colombia and the contravention of the trade agreement in the remedial measures which the Colombian Government has felt itself required to take, and to make clear the sympathetic understanding and cooperative spirit with which these problems are viewed in the Department.

The Embassy is therefore again requested, unless substantial objection is perceived, to approach the appropriate Colombian authorities at an early opportunity to broach a discussion of these questions along the lines indicated above, reporting any developments to the Department promptly.