611.3531/1422: Telegram
The Ambassador in Argentina (Armour) to the Secretary of State
[Received 10:30 p.m.]
310. Embassy’s telegram No. 309, December 23, 3 p.m. As the Argentine reply reported in the Embassy’s telegram under reference indicates, the present impasse concerns mainly our Schedule II offers. If we could offer them a Schedule II which they would accept it is believed that they might agree to a Schedule I and general provisions which although not all we want would be acceptable to us.
In regard to the general provisions, we believe that they Would agree first to accept article III on the understanding that any special cases, which we would not accept in principle, would come within the provisions of new article XII; second, to give us a commitment in article IV to make exchange available for all permitted imports from the United States and to make such exchange available as promptly for such imports as for imports from any third country; and third, that in practice, under the provisions in article XI similar to those included in the Swiss or Netherlands Agreement, they would give us an opportunity for consultation before imposing quotas on Schedule I products.
In regard to Schedule II we are inclined to believe, although we cannot know definitely, that they would agree to sign the agreement if we offered them unlimited entry on flaxseed at 45 cents and accepted general provisions as indicated above. We are doubtful whether they would with a customs quota on flaxseed even if it were raised to 15,000,000 bushels at 40 cents however they might reluctantly accept this if we offered them other improvements in Schedule II, with reference to the products mentioned in the Embassy’s telegram under reference.
It has occurred to us that there may be an alternative way in which to deal with the present crisis in the negotiations and the difficult situation at home, namely, to make use of the escape clause in article XII rather than customs quotas in quieting the apprehension of those who fear that imports of a particular product may increase to such an extent or at such prices as to seriously affect domestic producers. Pointing to this clause as a means of taking care of any eventuality might be even more effective than pointing to the specified limits of customs quotas since the latter seem to imply that nothing will be done until imports pass those limits, which are certain to be regarded as high by domestic producers.
[Page 282]In order to make it clear that article XII is intended to cover the possible effects of concessions, the words “threatens serious injury to producers or the commerce” would be substituted for “of prejudicing the industries or commerce”. Furthermore, article XI could be made more flexible, so as to permit quotas on schedule products at any time deemed necessary, subject to the right of the other country to terminate the agreement, as in article VI of our trade agreement with Venezuela, without the last sentence thereof.
Under the circumstances we believe that it would be greatly preferable to have an agreement with more than ordinary flexibility than to have the negotiations fail as they may if we continue to insist upon customs quotas. We therefore hope that consideration will be given to the possibility of adopting the alternative course suggested above, although the Argentines probably would not be altogether pleased with it we believe that they would sign an agreement on such a flexible basis and that it should be possible to defend such an agreement.