144. Memorandum From the Secretary of State and the Secretary of the
Treasury (Anderson) to the President1
Washington, August 5,
1957.
SUBJECT
- Buenos Aires Economic Conference
The United States Delegation will shortly leave to represent us at the
Economic Conference of the Organization of American States, which will
convene at Buenos Aires, Argentina, on August 15, 1957. The Conference
may last from two to three weeks.
Secretary Anderson will be the head of the
Delegation. Deputy Under Secretary of State Dillon will be his alternate. The Departments of
Commerce and Agriculture will be represented on the Delegation.2
The subjects to be discussed at the Conference will include trade,
finance, technical assistance, economic development, public and private
investment, transportation and related matters. The
[Page 518]
Council on Foreign Economic Policy has
reviewed the most important positions to be taken by the United States
at the Conference and an interdepartmental subcommittee has prepared
basic policy guidance for the Delegation on all of these topics.
One of the most significant and controversial items on the agenda will be
discussion of the text of a General Inter-American Economic Agreement,
in the form of a treaty. We plan to negotiate for a treaty in good
faith, since we are committed to do so by earlier inter-American
resolutions. However, because of basic differences between our policy
and that of several other Latin American countries on key economic
issues, there is serious doubt that agreement on a treaty at Buenos
Aires will be possible. In this case, further negotiation might be
scheduled for the next suitable inter-American conference, or agreement
might be reached on a non-binding Declaration as a substitute for the
treaty. Either result would be satisfactory to the United States, since
an economic treaty is not necessary to further our objectives in Latin
America.
Also, the Latin American delegations may press us very strongly to
endorse the establishment of a new financial institution in the Western
Hemisphere in which the United States would participate. Our Delegation
would have to oppose any such effort and abstain from any resolution
along this line.
With respect to trade, the Delegation will support principles looking
toward greater freedom of international trade. However, we must
recognize that our announcements regarding restrictions on petroleum and
tung oil and our proposals to raise the tariff on lead and zinc will be
factors adverse to us on this issue at the Conference.
A brief summary of the most significant subjects to be discussed at the
Conference and of the related policies of the United States is enclosed
for your information.
John Foster
Dulles
Robert B.
Anderson
[Page 519]
[Enclosure]
SUMMARY OF MAIN SUBJECTS FOR DISCUSSION AT BUENOS AIRES ECONOMIC
CONFERENCE AND OF RELATED UNITED STATES POLICIES
Washington, August 2,
1957.
A. General Inter-American Economic
Agreement
In accordance with the request of the Conference of Ministers of
Finance or Economy, held at Quitandinha, Brazil, in 1954, the
Secretariat of the Inter-American Economic and Social Council has
prepared a draft economic treaty for consideration at Buenos Aires.
The draft contains much which is advocated by the consensus of Latin
American States but which the United States does not accept. The key
matters on which the United States is likely to find itself in
disagreement with Latin American countries are:
- 1.
- Regional trade. The Latin American
countries may ask our support for new discriminatory trade
arrangements among Latin American areas which do not meet
the standards of the “common market” arrangements we have
supported in Western Europe. Our position will be that we
cannot endorse new blanket exceptions from our established
most-favored-nation policies but will consider on their
economic merits, as we have in the past, any concrete
proposals which may be put forward in the future.
- 2.
- Protection of private investment.
Many Latin American countries assert the “Calvo Doctrine”
that national constitutions and laws override any and all
rights of foreign investors. We hold to the principle that
foreign capital is entitled to equitable treatment,
including adequate compensation in the event of
expropriation for a public purpose.
- 3.
- Commodity stabilization. Almost all
Latin American countries will want the United States to
endorse international commodity control agreements (for
example on coffee). As at previous conferences, the United
States Delegation will make it clear that the United States
opposes such policies.
- 4.
- Surplus disposal of agricultural
products. Latin American countries, concerned about
the effect of our P.L. 480 exports on their own export
trade, may press for commitments from the United States to
enter into a much more thorough-going process of
consultation with respect to such sales than we now employ.
The United States may have to enter into some kind of
undertaking in this field, but could not agree to procedures
which would hamper the carrying out of the P.L. 480 and
other programs.
[Page 520]
B. Other Important Issues
- 1.
-
Financing economic development.
Latin American officials have long argued for a larger share
of United States public capital for Latin America; and will
probably revive past proposals for an inter-American credit
institution. The position of the United States will be that
private capital should be the primary source of development
financing; that the Export-Import Bank, the IBRD and the IFC can meet all appropriate
demands for public loans.
The U.S. will adhere to the view expressed at the Quitandinha
Conference that it will not participate in a new
inter-American financial institution and will not take an
active role in any study group which may be formed to draft
a charter for such an institution. This position may
require, as in 1954, a formal U.S. abstention from a Latin
American resolution (a) proposing the actual inauguration of
an Inter-American Bank with U.S. participation, or (b)
creation of a study group charged with drawing up plans and
charters for regional banks or funds of the SUNFED
type.
- 2.
- Double taxation. Latin American
officials have often asked for the elimination of “double
taxation,” meaning by this that the United States should not tax
income earned in Latin America by U.S. companies. The United
States cannot agree to this proposal but it has a sound and
active treaty program to reduce tax burdens on private
investment abroad and plans to propose the general endorsement
of the principle that tax obstacles to international investment
should be reduced.
- 3.
- Compulsory technical assistance.
Several Latin American officials have proposed that
contributions to the technical cooperation program of the
Organization of American States should be made “permanent” and
“compulsory”. Since our financial contributions depend, of
course, on Congressional appropriations, our position is that
while we support the idea that the program should continue on an
indefinite basis, we cannot agree that it should be permanent
and compulsory.
