635.4131/6–749
The Acting Secretary of State to the Secretary of Commerce ( Sawyer )
My Dear Mr. Secretary: This will acknowledge and thank you for your letter of June 7, 1949 relative to the recently announced agreement between the United Kingdom and Argentina.
This Department also has been and is seriously concerned over this agreement and its implications. We have made known our views to the British and Argentine Ambassadors and also to several other representatives of those two governments.
The Argentine Ambassador takes the position that his government did not desire such an agreement but that, because of the dollar shortage and pressure from the United Kingdom, Argentina was forced into the agreement. The Ambassador suggested that the only remedy was for the United States to intercede with the British or otherwise for some means to be devised to remedy the Argentine dollar shortage.
We emphasized to the Argentine Ambassador our concern lest the proposed agreement result in closing the Argentine market to American exporters if any means could be found to finance such trade. The Ambassador assured us that Argentina was fully as anxious as we were to increase trade between our two countries and certainly would not close their market to United States exports but that he did not know of anything more that his government could do on this score.
In our talks with the British Ambassador and other British representatives, all of the points mentioned in your letter have been emphasized. We are convinced that the British Ambassador fully appreciates the grounds for, and extent of, our concern over this agreement, and that the Ambassador has brought our views to the attention of his government in London. However, he has pointed out the extreme difficulty of the British situation, using the various arguments with which our two Departments are familiar.
As we see it, this agreement between the United Kingdom and Argentina is just one reflection of a very deep-rooted world problem. The breakdown of free convertibility between the dollar and pound, and other war-time trade distortions, make the traditional pattern of triangular trade impossible today. Consequently, the British, in their attempt to conserve dollars, are attempting to find new and expanding trade outlets. These objectives of the British are consistent with our more general ERP objectives, but the manner of their achievement is obviously inconsistent with our broad economic foreign policy and United States commercial interests. If the British could expand exports [Page 509] by the exercise of fair and competitive methods, it would be difficult for us to object—even though some American exporters might lose markets. But if the latter result is brought about by governmental agreement, regardless of normal trade patterns and competitive forces, it is a very different thing. We have made these points to the British, pointing out that there must be other means open to them which do not present such objectionable features. It is our hope that, in spite of the very complex and difficult situation, the British will find some means of ameliorating the ill effects of the agreement.
We expect within the next few days to hear further from the British Embassy as a result of our expressions of concern. We shall keep your Department advised of developments.1
Sincerely yours,
- On June 27, the Department of State issued a statement reflecting its position on the United Kingdom-Argentine Agreement; the statement incorporated certain assurances from the British Government resulting from the Department’s expressions of concern referred to above. The text of the statement is printed in Department of State Bulletin, July 11, 1949, p. 37.↩