503. Telegram From the Counselor of the Embassy in Paraguay (Hilton) to the Department of State1

53. Department for Snow from Rubottom; Rio de Janeiro for Doctor Gabriel Hauge care of Secretary Anderson2 from Rubottom. Plumbed depth tung oil problem with Foreign Minister and Deputy Foreign Minister in presence four other cabinet ministers and leading exporter who is American. They recognize US problem but insist grave political consequences would result if GOP assumed onus for reduced exports before own people.

To be acceptable GOP would expect plan to contain separate Paraguayan quota. Their strong feelings about being included in global quota with Argentina understandable even if unrealistic. Believe GOP’s point valid that suggested export figures should have been calculated on last two years shipments instead of five since contraband to Argentina largely stopped two years ago.

If unilateral action our part can be further delayed until I can consult with Hauge Buenos Aires it is conceivable some agreement with Paraguay still could be reached. On basis 25,000,000 pounds [Page 1014] annual imports GOP would insist on 15 to 20 as Paraguay’s separate quota.

  1. Source: Department of State, Central Files, 411.006/8–1157. Confidential; Niact. Repeated to Rio de Janeiro.
  2. Hauge and Secretary of the Treasury Anderson stopped in Rio de Janeiro en route to the Buenos Aires Economic Conference.