We believe that the leading topics of the Conference will be the same as,
or very similar to, those that persistently recur at inter-American
meetings on economic subjects.
The United States policies on major issues in inter-American economic
relations have become well established and widely known. The recommended
United States positions for the Buenos Aires Conference follow the
familiar lines.
The attached memorandum by no means contains a complete list of topics,
but only those that we believe will be the principal and possibly the
most controversial ones. Also, the indicated United States positions are
no more than the essence, for in the preparation of position papers
careful attention is being given to an elaboration explaining our
policies and describing accomplishments to date.
The Subcommittee has not had an opportunity to read the attached
memorandum, but the statements of United States positions
[Page 514]
do, I believe, faithfully
reflect the substance of the Subcommittee’s opinion.
[Attachment]
SELECTED TOPICS AND US POSITIONS, ECONOMIC CONFERENCE OF THE
ORGANIZATION OF AMERICAN STATES5
Proposed General Inter-American Economic Agreement
Draft Agreement: At the 10th Inter-American
Conference (Caracas, March 1954) and at the Meeting of Ministers of
Finance or Economy (Rio de Janeiro, Nov.–Dec 1954) resolutions were
passed (the US approved) to provide for the preparation of a draft
Economic Agreement, and the Rio Resolution specified that this draft
would be considered at the Buenos Aires Economic Conference. A draft
has been written in the Secretariat of the Inter-American Economic
and Social Council, and, as might be expected, it contains much
which is advocated by the consensus of Latin American states but
which the US does not accept. Some of the differences are on the
choice of language or relatively minor topics. Some of the
differences, however, are on subjects of major importance, such as
price stabilization for Latin America’s primary exports; price
parities between Latin America’s exports to and its imports from the
US; for surplus disposal international agreements administered by
intergovernmental agencies; the complete subjection of private
foreign investment to local laws and constitutions (Calvo Doctrine);
taxation of income
[Page 515]
only in
the country in which it is earned; lengthy, detailed stipulations on
economic relations during emergencies.
US Position: In view of the Caracas and Rio
Resolutions and because of the importance many of the Latin
Americans attach to an Economic Agreement, we plan to discuss the
draft earnestly at Buenos Aires. In preparation for such discussions
we have already conveyed our tentative views on the entire text to
the other American Governments. It is hoped that at the Conference
US-Latin American divergencies may be alleviated and general harmony
maintained by accord on a shorter, more general document, possibly
in the form of a resolution or declaration. We are drafting such a
document.
Economic Development
Financing: Many Latin American officials have
long and vigorously demanded a larger share of US public capital
going to foreign countries, and at Buenos Aires they will, no doubt,
reiterate past proposals for some kind of inter-American fund or
credit institution.
US Position: Private capital, domestic and
foreign, should be the primary source of development financing;
the Latin American countries should strive to improve their
investment climate by such means as curbing inflation, achieving
monetary stability, mobilizing domestic savings, encouraging
private enterprise; the US strongly supports bilateral tax
agreements to eliminate tax obstacles to the formation and flow
of capital. The US has a broad and positive policy toward public
investment in Latin American economic development. A new
institution is not necessary; the Export-Import Bank, the IBRD, and the IFC can meet all demands for
ordinary, conventional dollar loans. The Smathers’ Fund, PL–480 lending,6 and the new Development Loan Fund are
additional sources of public financing. Because of the limited
resources of the Fund, however, it will be generally necessary
to relate its loans to the relative priority needs on a
world-wide basis.
Foreign Trade
Regional Market: The Latin Americans are
expected to suggest, and to ask for US concurrence in, regional
markets, free trade areas, or regional trade agreements as ways of
promoting economic development.
US Position: When specific proposals are made,
the US will examine each on its merits.
Prices and Parities: The Latin Americans will
probably renew requests for US cooperation in schemes (for example,
commodity agreements) (a) to “stabilize” prices for primary Latin
American
[Page 516]
exports and (b)
to insure a “fair and equitable” relationship between the prices of
Latin America’s exports and imports.
US Position: The US is opposed to such
schemes. The US does not, in general, favor international
commodity agreements (wheat and sugar are exceptions) but will
consider with other governments commodity problems on an ad hoc
basis and will continue to participate in international study
groups (such as the existing groups for cotton and rubber) for
which there is an established and continuing need. Means to
moderate price instability are diversification of Latin American
economies, for which the US provides technical and financial
assistance, and the maintenance of a high and rising level of
economic activity in the US which is US policy and which
facilitates a profitable market for Latin American exports.
Trade Policy: A large number of Latin
Americans are painfully aware of US actions adversely affecting
their export sales, and a troublesome issue will be actual or
potential US restrictions on imports (such as wool tops, tung
oil, lead and zinc, petroleum).
US Position: Despite aberrations emphasis
can be given to (a) the continued basic liberal trade policy of
the US (reciprocal, gradual, selective reduction of tariffs and
other barriers) and (b) low or non-existent US duties on major
Latin American exports.
Surplus Disposal: Latin American countries
have complained of US surplus disposal practices and policies,
and this question may arise.
US Position: The US continues to seek
orderly disposals that do not disrupt normal markets. Encourage
delegations of countries that have benefitted from PL–480 transactions to make
statements offsetting adverse comments. Point out the good US
record on PL–480 consultations to
safeguard usual marketing of other countries, and cite the
economic development benefits of PL–480 loans.
Technical Assistance
OAS Program:
The Secretariat of the Organization of American States (OAS) has prepared a number of
recommendations, perhaps the most important of which call for making
the OAS technical assistance program
“permanent” and with “compulsory” contributions (the US contributes
70 percent).
US Position: The US cannot agree to a
“permanent” program (we consider it a “continuing” activity) or to
compulsory contributions, although we believe the Secretariat’s
recommendations require further study.
