Foreign Relations of the United States, 1955–1957, American Republics: Multilateral; Mexico; Caribbean, Volume VI

167. Minutes of a Staff Meeting, Bureau of Economic Affairs, Department of State, Washington, September 11, 1957¹

Washington, September 11, 1957

Kalijarvi, Presiding

Kirlin, H

Hamilton, R

Hefner, E

Vass, TRC

Deimel, TRC

Hall, E

Nichols, OR

Birch, OT

Dixon, OT

Donahue, E

Cefaratti, E

Corbett, OFD

[Here follows discussion of item 1, “Staff Changes”.]

2. Buenos Aires Conference Leddy had been scheduled to make a report to the E Staff on the Buenos Aires Conference but he is ill so Kalijarvi asked Corbett, Nichols and Metzger to report on the various aspects.

Corbett said in general the atmosphere at the conference was good. The only discordant note was a speech by the President of IA–ECOSOC and his subsequent remarks to reporters which probably accounted for the adverse reports that appeared in the papers here about the conference.

Nothing specific was agreed of any consequence at the conference. Attention was focused on the proposal for a general agreement. It picked up many of the items that were studied in various committee operations. Corbett commented, and Metzger agreed, that these conferences require a great deal more study than has given them with regard to frequency, purpose, timeliness and the US attitude at the conferences. He pointed out that these countries have hobby horses they ride and things they want from us and we have nothing we want. It is hard to come to terms when we have nothing to bargain for. Corbett personally feels the US should avoid having these meetings except for the five-year ones which are required under the OAS and that, in the interim, we should try to get everything done through IA–ECOSOC or ECLA. A conference of the type just held, with the high level of representation, raises lots of hopes and expectations on the part of the governments and public in other countries.

The US delegation while large, was very good. Dillon was ill part of the time but he nevertheless was aware of what was transpiring and issued instructions. The people in ARA seemed to be content with the E area handling of their business. Kalijarvi said that both Waugh and Dillon were warm in their praise of the E people who went to the conference and, while he had not yet talked with Rubottom, he expected to have a similar report from him.

Corbett was on the Economic Development Committee and he was generally satisfied with the way things went in that committee. Its principal item was the proposal for an inter-American bank. In Rio a resolution² was approved 20 to 1 which recommended the establishment of an inter-American bank. The US voted against it but they went ahead with procedures and worked up a project which, without US concurrence, failed. They started this all over again at Buenos Aires. There were three resolutions, quite narrow in scope, all dealing with the organization. We took these and made a new one which bore little resemblance to any of the three original ones. In the “whereas” clauses we established that some countries do not favor a new financial institution and some do, that existing institutions are doing quite well, that private capital is flowing quite freely. Given the interest in financing economic development, it was resolved to study the matter under the terms of reference set up under the Committee of Presidential Representatives’ resolution on the same subject, including financing and including specific proposals for a new institution and the US position that none was needed. Therefore, Corbett said, it was clearly established that the US thinks a new institution is not necessary but will study financing of economic development. Some people interpreted this as an advance; others felt we hadn’t done any more than before and that we will just keep on talking for years. All countries were called on to take measures which would encourage private investment and appreciation was expressed for the increase in lending since the last conference. We are now faced with having a study by a committee of governmental experts but, Corbett added, we have done that before.

There were a number of other resolutions before this committee, only one of which Corbett considered worth mentioning at this meeting. It was a Mexican resolution calling for a change in policy of the IBRD respecting loans for economic development. We got this changed to an agreement to have a discussion of this subject in the IBRD, to which all the countries belong, and to have this brought to the attention of IBRD by IA–ECOSOC. We made clear we don’t know what the US position will be on this. The resolution in no way commits us to support a change in Bank policy. The Bank hasn’t found the circumstances right in Latin America for the kind of Bank action Mexico advocates although it has in Italy, Australia and in Iran.

The Technical Assistance Committee had only one problem, Corbett said, and that was an effort on the part of Brazil and a few other countries to include as a part of their contribution certain local expenditures they make as host countries. That would have reduced the budget but we were successful in knocking this down.

The Committee on Transport had some problems but Corbett said he didn’t know enough about them to report on them.

Metzger then spoke about the general agreement, which he termed a re-hash of the Bogota exercise. At Bogota, he recalled, an agreement was signed but it was so loaded with reservations that it never came into being. The positions of the countries at this conference were the same as they had been at Bogota. The Secretariat had, in Metzger’s opinion, rendered a real disservice by presenting a draft agreement as the basis for discussion which was hopeless as it was loaded against the US. It also contained some things that were not acceptable to other countries, particularly Mexico. The objective was to force the US out in the open and have it take the blame for an agreement not being reached. We got it on record, however, that Mexico and others wouldn’t accept a lot of the proposals either. A number of countries which wouldn’t have agreed to some of the proposals just said nothing because they knew nothing would come of it. There was no country there except Uruguay, which really thought an agreement was possible at Buenos Aires. The US thought that there should be a general declaration instead of a treaty. That came to pass but not before we had been forced through the paces of the arguments with regard to the agreement and not until the final week of the conference.

Metzger felt that progress had been made in some respects. At Bogota we reserved our position on some articles and not on other articles that we should have because we didn’t want to have too many reservations. At Buenos Aires we opposed everything with which we couldn’t go along and made short speeches saying why we opposed. That was helpful as it left the resolution a study and nothing more by IA–ECOSOC and had a good deal to do with the “burial nature” of the final resolution. Metzger doubts if a real effort will be made to schedule this at the Quito conference in 1959, which is the regular conference provided for under the OAS. In the process, Metzger said, we tried to minimize the difficulties we had with such things as the Calvo Doctrine. (Mexico holds that if it expropriates the oil industry in Mexico and decides to pay Mexicans zero that is all it would have to pay US owners and that there is no recourse.) The Mexicans knew what we would say and we knew what they would say.

Nichols then reported on the trade committees which he attended. Before the conference we had expected that foreign trade would be one item but it was decided to have two trade committees and each of them had before it lots of resolutions. One committee dealt with commodity problems and the other on inter-American trade, focusing on a common market or regional trading arrangement.

In the commodity field one of the principal subjects was surplus disposal (which really concerned the US PL–480 program, particularly Title I). Both Argentina and Mexico had in mind a resolution referring specifically to PL–480 which would have involved some criticism and set up some things hard for us to meet, such as prior consultation. Unless prior consultation is well defined, Nichols pointed out, we wouldn’t know if we were meeting the requirements. Nichols was pleased with the way this came out. Certain parts of the Mexican and Argentine resolutions were used which said that the US was already handling the matter in these ways and this was unanimously approved without discussion. Argentina really went out of the way to be helpful.

On other commodities, the conference started out with several delegations being very exercised about lead and zinc and possible US action on imports. Chile brought up copper as prices are sliding and now we are near the point where the two cent export tax may come on again. This is the first time there has been a possibility of that tax coming back on and it has to be taken seriously. There were some other resolutions designed to aid other metals and others not confined to metals but which would include cocoa, coffee and the whole range of agricultural commodities. In the effort to consolidate these resolutions it became clear that the Latin American countries want to have a standing body devoted to commodity problems. They felt there should be a regional approach to this, and there was no possibility of talking them out of it. Insofar as a standing committee under IA–ECOSOC to study consumption, production, market situation and arranging for discussions of governmental exports, the US was prepared to go along. However, it was not prepared to give consideration to international price stabilization measures. Finally all material was put into two resolutions. There will be a committee of IA–ECOSOC to study the basic products but not to include price stabilization. Any member of OAS may be on it. The US supported this resolution. The other resolution gives to the same committee the function of considering commodity agreements, promoting them when it considers it desirable. The preamble mentions the type of plan Chile is interested in—some sort of an international credit from which countries can draw when receiving below normal prices for exports and to which they should make repayments when prices are above normal. We insisted that this was less practical than almost any plan that had been mentioned and we did not want to see it mentioned in the resolution. However, this is the only plan that the resolution spelled out in detail, although it made mention of other proposals. The US voted against this resolution and made a statement in the plenary. All other countries voted in favor of it. Those two resolutions mean that a committee will be established under IA–ECOSOC and fairly soon the US will have to decide if it will participate in the committee. We stated that we assumed any Government that came into the committee was free to leave it at any time or free to participate in only those functions which it could support. The US could go into the Committee, Nichols said, but be free to have nothing to do with its functions which involve commodity agreements.

In the other trade committee the most interesting subject was the common market and a resolution was approved which encourages further study. It doesn’t specifically give ECLA the lend by comparison with IA–ECOSOC but that is the intention. Latin American countries want coordination between the two but think they are more likely to have advantages through ECLA. The resolution is in general terms, encouraging studied looking toward multilateral competitive arrangements through gradual integration steps. Nichols said that the US attached great importance to getting the word “selective” out of the resolution and was successful but that he wasn’t familiar enough with this to explain the importance.

[Here follows discussion of items 3–13, “Aviation”, “GATT”, “Canada”, “Japan”, “Trade Agreements Legislation”, “Trade Restrictions”, “FCN Treaties”, “Lead and Zinc”, “PL–480”, “French Aircraft Loan”, and “SUNFED”.]

1. Source: Department of State, OAS Files: 60 D 665, BAEC—Reference Papers. Secret. Prepared by Ruth S. Donahue, Chief of Policy Reporting Staff.
2. Reference is to Rio Economic Conference Resolution ES–Res. 62/54, “Study of a Plan for an Inter-American Financial Organization”, approved December 2, 1954; for text, see Report of the United States Delegation to the Meeting of Ministers of Finance or Economy, pp. 58–59.