611.3331/170
The Department of State to the Uruguayan Legation
Memorandum
The Government of the United States, as stated in its memorandum of January 24, 1938, is happy to join with the Government of Uruguay in exploring the possibility of entering into negotiations for a trade agreement, and is gratified to learn that the Government of Uruguay would be prepared to negotiate on the basis of the unconditional most-favored-nation principle.
The commercial policy of the United States is based upon the unconditional most-favored-nation principle, applied to all forms of control of trade and of payments therefor. Before the United States Government would be prepared to contemplate entering into trade-agreement negotiations, it would expect to receive definite assurance that the Uruguayan Government would apply this principle to its [Page 909] commercial relations with the United States in a similarly unrestricted manner.
The application of the unconditional most-favored-nation principle to commercial payments, in the opinion of the United States, means that if either Government establishes or maintains directly or indirectly any form of control of the means of international payment it will not use this control in any manner, direct or indirect, to regulate or influence the source of its imports to the detriment of the trade of the other country. It also means that the complete freedom from discrimination thus envisaged will not be subject to any condition or requirement such, for example, as the requirement that the treatment accorded by one country to imports from the other in respect of foreign exchange shall depend upon the amount of exchange created by the latter country through its merchandise imports from the former or otherwise.
Thus, in a trade agreement, the Governments of both countries would agree in detailed terms that each country would accord to the other treatment no less favorable than that accorded to any third country in respect of the allotments and the rates of the exchange made available for the payment of merchandise imports as well as in respect of all taxes and charges imposed in connection with such transactions.
The Government of the United States would welcome an expression of the views of the Uruguayan Government in this matter.