157. Summary Notes of a Meeting of the Delegation’s Steering Committee, Buenos Aires, August 30, 19571

Foreign Trade

Mr. Nichols reported that yesterday in Committee III the US agreed to a resolution on basic products (establishing a “permanent” IA–ECOSOC committee to study the subject) but abstained from a second resolution regarding basic products (providing for automatic credit and implying a commitment on commodity agreements). Mr. Nichols pointed out that we should be prepared to make a statement in the Plenary concerning our abstention.

Committee III also approved an acceptable resolution on surplus disposal.

There are two items remaining. On document 100 about terms of trade the US proposal for amendment failed yesterday by a vote of 7 to 9. A Costa Rican resolution on IA–ECOSOC’s collecting information about government agencies that have statistics on seasonal shortages will be dealt with today.

Mr. Pappano reported that in Committee IV there were approved a resolution on Latin American regional markets and a resolution on the promotion of inter-Latin American trade both acceptable to the US. The common market resolution represents a merging of six proposals and calls for studies by the IA–ECOSOC and the ECLA. While this resolution was approved unanimously, the Central American states entered the interpretation that they are not [Page 544] bound by the word “competitive” because this would conflict with their industrialization plans under their own regional arrangements.

Three problems remain in Committee IV:

Land locked countries.
A Chilean proposal on special preferential arrangements for building materials.
A Peruvian proposal for the establishment of an inter-American immigration commission.

General Economic Agreement

There was a lengthy discussion on negotiations for a resolution. Mr. Rubottom described our efforts to get an understanding with the Brazilians and Mexicans. The most difficult paragraphs of the Brazilian-Mexican draft, which we revised, are paragraphs 5, 6, and 7, especially 7. The plan has been to reach agreement with Brazil, Mexico, Colombia, and Argentina, with a view to asking Kreiger Vasena to call an informal meeting of heads of delegation.

The Mexicans and Brazilians concurred in the US revision of their draft except for minor changes. Subsequently, however, Hernandez Delgado (Mexico), on advice of Garcia Robles, reversed himself and objected to the phrase “fair and equitable” in paragraph 7 and asked that reference to private investment in paragraph 6 be removed. We offered tentatively to delete the latter part of paragraph 7 but insisted that private investment remain in paragraph 6. Last night the US Delegation cabled our Embassy in Mexico City requesting that the matter be taken up with the government there.

Paragraph 7 states: “The adoption of measures by both capital exporting and importing countries to encourage private investment, including measures for the reduction of tax obstacles and for the extension of fair and equitable treatment for such investments.” Mr. Leddy pointed out that the word “equitable” carried very specific connotations for the Mexicans as indicated by the fact that this word was defined at the economic treaty of Bogotá (1948), and the Mexicans at that time entered a specific reservation.2

Considerable doubt was expressed in the US Delegation about the desirability of taking out the words “fair and equitable”. It was pointed out, among other things, that the US retreat on this point will be headlined by the newspapers and Latins as a major US concession or change in US policy.

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There was also discussion of the use of the word “expand” in article 6 concerning public capital. The consensus seemed to be, however, that this is in accord with general US policy. (The Department has suggested the word “provide” instead of “expand”)

Considerable sentiment was expressed in favor of our coming out openly at the Conference, stating that a treaty is impossible and advocating a resolution, especially if we do not get an understanding with the Mexicans promptly. It was pointed out that the majority of the Latin American countries would not support the Mexicans on the issue of equitable treatment to foreign investment. It was also cited that our continuing to debate in the four working groups of Committee I is accomplishing no useful purpose and is simply serving as an irritant.

Meanwhile the working groups are continuing today with their article by article discussions of the Secretariat’s draft.

  1. Source: Department of State, OAS Files: Lot 60 D 665, USDel Meetings. Official Use Only. Drafted by Sanders.
  2. For text of the Economic Agreement of Bogotá, signed at the Ninth International Conference of American States, see Ninth International Conference of American States, Bogotá, Colombia, March 30–May 2, 1948: Report of the Delegation of the United States of America With Related Documents (Department of State Publication 3263, Washington, 1948), pp. 201–214. For text of the Mexican reservation to Articles 22, 24, and 25 of the Agreement, see ibid., p. 214.