611.3531/1404a: Telegram
The Secretary of State to the Ambassador in Argentina (Armour)
262. Personal for the Ambassador from the Secretary. I am cabling you today the best offers we can make on flaxseed and canned beef. I have given the questions presented most careful personal attention and I want you to have the background of the situation as it now exists here in order to assist you in interpreting convincingly our position to the Argentine authorities. I want you to know that I have carefully considered the views you have expressed in recent oral and telegraphic communications, and that the only reason we cannot go as far as you suggest is the really emergency character of the situation which confronts us here.
In regard to flaxseed, I fully understand the Argentine interest in improving the concession on this product and the matter has been gone into carefully with Secretary Wallace with a view to making as much of an improvement in our offer as circumstances will permit. I am fully satisfied, however, that to go further than we have indicated in today’s telegram36 would endanger everything we are trying to do. It is as much in Argentina’s interest as our own that our concession on this product, which is now as good as we can safely offer, be kept within safe and defensible limits.
With reference to canned beef our telegram of today maintains our original offer without a customs quota. I had in mind prior to the recent discussions with you a reduction in the duty to 3 cents and 20 percent and a customs [quota?] of one percent of Federally inspected domestic production of fresh meats. On this basis, the average global customs quota over the 10-year period 1929 to 1938, inclusive, would have figured out at about 129 million pounds in contrast with imports in the peak year of that period of 88 million pounds and a low of 19½ million pounds. With production of fresh meats at 12 billion 404 million pounds in 1938, the quota for 1939 would have been 124 million pounds. Since the quota would not be an absolute quota, but merely a customs quota, it would not only permit imports to come in at the reduced duty to an amount nearly 50 percent greater than those [Page 276] in the peak year, but would permit an expansion even beyond this level since there have been large imports even at the present rate. On the basis of the Argentine negotiators’ own appraisal of the situation, as we understand it, of the prospects for developing their exports to this market, the concession in the form just outlined would be entirely adequate. A quota of the size indicated in conjunction with the improvement in the duty, would I believe, represent an actual improvement over our present offer. In view of this and since I am satisfied it would help us materially in defending the agreement here, this solution seems to me to be the best one from the standpoint of both countries. If you can get this quota proposal before the proper authorities without insisting on it or impairing your negotiating position, it is just possible that such a proposal would be voluntarily accepted.
I want you to know that I fully appreciate the difficulties of your situation in these important negotiations, and I am entirely confident that if they can be brought to a successful conclusion, you will find the way to do it. It may help you on a suitable occasion to explain to the proper Argentine authorities the situation in which we find ourselves here and its relation to these negotiations. You might remind them that the Trade Agreements Act comes up for renewal in Congress at its next session; that in my opinion the opposition which is developing against the continuation of this program and of these agreements is assuming serious proportions; that our ability to carry forward our whole program of improving international commercial relations is, therefore, at stake; and that any agreement with Argentina which goes beyond the limits of safety—and we believe we have reached those limits—can only defeat itself.
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