611.3531/565
The Ambassador in Argentina (Weddell) to the Secretary of State
[Received December 31.]
Sir: I have the honor to confirm to the Department that the matter of the discriminatory surtax on merchandise of American origin entering Argentina without prior permit is receiving the unremitting attention of the Embassy.
Furthermore, as the Department will have gathered from my telegram No. 245 of December 17, 1 PM16 and previous communications, an inter-ministerial commission of the Argentine Government is now engaged in studying material brought here by the Financial Attaché of the Argentine Embassy in Washington with a view to determining whether this government is desirous of taking steps looking to negotiating a trade agreement with the United States.
The Financial Attaché, Mr. Irigoyen, has called twice at the Embassy, and while guarded in his statements, gave the impression that the general subject is receiving primary and active consideration and that within a relatively brief period some conclusion will be reached. This information has been confirmed in its general lines by statements made to Mr. Wilson17 of the Embassy by the Chief of the Commercial Section of the Foreign Office, who also informed him that the matter of the exchange surtax is under close study by this inter-ministerial commission. He gave Mr. Wilson further to understand that this commission would in all probability reach a decision within the next few days as to the concessions in the matter of exchange which it may be possible for the Argentine Government to accord to imports from the United States. Although Mr. Torriani stated that the subject of exchange was extremely involved and complicated, he appeared to indicate that concessions would be granted and that the list of American merchandise now being granted official exchange will be extended.
The Department will recall (see my telegram No. 210 of November 3, 4 PM) that this subject of exchange was to have been discussed by [Page 230] a fact-finding commission made up of representatives of the Embassy and of the Argentine Ministry of Finance. However, in answer to a suggestion made by Mr. Wilson that it should be possible to discuss the exchange problem separately from the trade agreement the Under-Secretary of Finance, Dr. Saenz, clearly indicated that it is the desire of the Argentine Government to tie the exchange question and the trade agreement together (Since the foregoing was drafted the Under-Secretary of Finance has telephoned to the Embassy to the effect that inasmuch as the exchange situation is also being examined by the commission above referred to, which may solve the question promptly, it seems to the Minister inopportune for the representatives of this Embassy and his Ministry to confer just now).
To the foregoing should be added remarks made by Mr. Irigoyen in his last visit, when he said in reply to my reference to this discrimination, that the Argentine Government could not put an end to a system which had prevailed for four or five years in return for a vague hope of negotiating a trade agreement. I thought it appropriate to remark that I felt convinced that the American Government would never sign a trade agreement which would continue in effect a procedure which it had repeatedly declared in formal fashion we considered to be discriminatory. To this he replied that he assumed that under any agreement arrived at the American merchandise would be on a plane of entire equality with that of other foreign countries with which Argentina has trade agreements.
While, as will be gathered from the foregoing, the entire subject of exchange, as well as of matters relating to the possibility of initiating negotiations for a trade agreement, continues in a fluid state, the following extracts from a strictly confidential letter addressed to the Embassy by Consul Ravndal under date of December 15, reporting a conversation with the Chief of the Exchange Control Office, are thought to be pertinent:
“This memorandum (i. e., which the Department of State handed to the Argentine Embassy at Washington)18 was brought to Buenos Aires by Señor Irigoyen, Financial Secretary, and allegedly indicates, in a broad sense, what the United States would consider in the way of concessions and what it would expect in return, including abolition of the 20% surcharge upon the announcement by the United States of preliminary hearings.
“The committee’s instructions are to determine first whether it would be advantageous to enter into trade agreement negotiations with the United States and then, if the question should be decided in the affirmative, to draft appropriate instructions to the Argentine Embassy at Washington concerning what should be offered in exchange for specific concessions.
[Page 231]“Following the announcement by the United States of preliminary hearings, Argentina will, in the personal and unofficial opinion of the Chief of the Exchange Control Office, extend the list of United States products entitled to official exchange to include all electrical industry articles, hardware, plumbing fixtures, and other commodities which would gratify a large number of American exporters and build up support for a trade agreement without involving a big increase in the total grant of official exchange. (This last confirms the information submitted to the Ambassador in my letter of November 30, 1937).
“The reasons advanced as to why Argentina will not abolish the 20% surcharge on all United States products, when preliminary hearings are announced by the Department, are (1) Argentina’s balance of payments position with the United States, (2) the prospects of lesser exports in 1938 than in 1937, and (3) the fact that in the cases of Finland and Czechoslovakia, countries with which Argentina has trade agreements, the 20% surcharge is still operative.
“President-elect Ortiz will be consulted by the committee and it is thought that in no event will the trade agreement be concluded until he assumes office.”
Respectfully yours,