Foreign Relations of the United States, 1948, Western Europe, Volume III

840.50 Recovery/10–2848: Circular airgram

The Acting Secretary of State to All Diplomatic Offices in the American Republics, Except Argentina

confidential

Washington, October 28, 1948—12:50 p. m.

There have been discussions within the Department and between the Department and ECA regarding the policy of ECA with respect to offshore procurement by the OEEC countries. The discussions have centered principally around offshore procurement in Argentina in view of the special conditions and problems connected with procurement in that country.

As a result of these discussions, the following telegram was sent jointly by State and ECA on Oct 22 to US Special Representative in Europe and is repeated for your confidential information as representing basic considerations for offshore procurement not only in Argentina but in Western Hemisphere and other dollar areas.

“Dept and ECA desire that all supplying countries (a) sell all products at US or if lower world market prices (b) accept maximum quantities of European Products (c) extend maximum credits to OEEC countries (d) allow transfer duly earned financial remittances. In attempting achieve these objectives, foreign policy considerations in supplying countries must be taken fully into account (Deptel 4045, Oct 15).¹

“Dept and ECA consider following points should serve as basis of ECA policy in offshore procurement:

• “1. In accordance Sec 202 PL 793 ECA may not finance purchases at prices higher than US market price adjusted for difference in cost of transportation, quality and terms of payment. There are of course other legislative limitations on offshore procurement.
• “2. In all dollar sales ECA will accept only US prices or, if lower, prices prevailing in major supply areas with adjustment similar para. 1.
• “3. Non-dollar transactions to be arranged to mutual satisfaction of buying and selling countries provided that such transactions are not used as means of circumventing ECA’s objective of minimizing its dollar costs.
• “4. ECA desires that, within capacity each supplying country, there be maximum acceptance European products, maximum extension credits to OEEC countries, and transfer of duly earned financial remittances. ECA will periodically review achievement of these objectives in order determine whether further offshore procurement in supplying country is consistent with objective of maximizing effectiveness ECA appropriations.
• “5. ECA will encourage OEEC countries to export essential goods at prices acceptable to buying and selling countries and to accept maximum quantity exports from supplying countries.”

Lovett

1. In telegram 4055 to Paris, October 15, 1948, not printed, the Department noted that “in order to avoid any possible charge of discrimination it has been agreed by State and ECA to formulate general policy statement on off-shore procurement applicable to all countries where substantial expenditure ECA funds contemplated.” (840.50 Recovery/10–1548)