611.3531/1436: Telegram
The Secretary of State to the Ambassador in Argentina (Armour)
291. Your telegram 317, December 30, 6 p.m. The Argentine position regarding the proposed trade agreement has been carefully and sympathetically considered.
The position in which the negotiations now stand seems to be as follows: The Argentine Government considers our offers in Schedule II inadequate in relation to Argentine needs. We have again carefully canvassed the situation with a view to seeing whether some improvement could be offered. No further improvements in the Schedule will be possible. We are sure that if the Argentine authorities will reexamine our offers they will find that an agreement on this basis would provide real protection and an opportunity for expansion of Argentine exports to this country. The Argentine Government doubtless will carefully weigh the position of Argentine exports to this country if an agreement along the lines of our present offers were concluded, against what their position would be in the unfortunate event that no agreement should be consummated. In the absence of an agreement [Page 289] domestic production is likely to continue to build up under the protection of the present rates and Argentina’s ability to share this market with our own producers will be greatly reduced. Moreover, there can be no assurance, in the absence of a trade agreement, that protectionist forces in this country will not succeed in bringing about the imposition of new restrictions.
With reference to the general provisions and in particular to the exchange and quota articles, note is taken of the statements in the Argentine Note under reference that these provisions are unduly rigid and unresponsive to the realities of the position in which Argentina finds itself. In this connection it should be pointed out that the provisions which we have indicated a willingness to accept fall very materially short of those which we would like and which we had expected to get at the time these negotiations were announced. Having in mind the problems confronting Argentina we have reluctantly departed from our initial position in certain important respects in order to meet the Argentine Government’s desire for greater elasticity. We refer to our recession in the exchange article from the provision requiring prompt provision of exchange to one permitting delays in the provision of exchange on a most-favored-nation like article basis. (Our telegram 286, December 26, 8 p.m.) and to our recession from the requirement of a single rate of exchange for all products to one for most-favored-nation treatment on a like article basis (Our telegram 231 [251] December 13, 5 p.m.42). We do not consider therefore that we have shown a disposition to be unduly rigid.
Nevertheless in an earnest effort to meet the Argentine viewpoint to the fullest possible extent, we are prepared to include as a second paragraph to Article IV, as amended by our 286, December 26, a provision substantially as follows:
“2. If, as a temporary and emergency measure, the government of either country finds it necessary to deviate from the provisions of this article, it shall, not less than 14 days prior to the date on which it proposes to take any action having such an effect, notify the government of the other country of its intention to take such action and afford the government of the other country full opportunity for consultation with respect thereto. If no agreement with respect to the proposed action is reached within the aforesaid period of 14 days, the government of either country shall be free thereafter to terminate this agreement in whole or in part on 30 days’ written notice.”
This proposal is contingent upon agreement by the Argentine Government to embodying a statement along the following lines in an exchange of notes or joint statement to be published with the agreement:
“The trade agreement is to be interpreted and applied in the light of and in harmony with the purposes and objectives of the resolutions [Page 290] of the Pan-American Conferences at Montevideo and Lima, recommending the promotion of international trade on the basis of equality of commercial treatment.”
The provision above-quoted for inclusion in Article IV would, it is believed, fully meet any reasonable Argentine requirement for flexibility.
With reference to Article III, if the Argentine Government will not agree to any two consecutive years, we are willing to agree that Argentina may use any single year during the period 1930 to 1937, inclusive, as a basis for allocating shares to the United States, subject to the inclusion in the final minutes of an undertaking by the Argentine Government to reconsider the base period in any case in which we make representations that the base period is manifestly unrepresentative. It should be understood that if no agreement were reached we would be free to terminate the agreement under Article XII. (See point 3 in the Department’s telegram No. 251 of December 13, 5 p.m.). Under this proposal, together with our other proposals, we see no necessity for any “special cases.” However, if the facts warranted, the Argentines could approach us under Article XII and terminate the agreement if we refused to consent.
With reference to Schedule I, you should ascertain and cable the best Argentine offers at the earliest possible moment, bearing in mind that we consider our amended request on lumber of vital importance.
Since our proposals as outlined above represent a last effort to bring these negotiations to a successful conclusion and the occasion is therefore one of unusual importance, we consider it advisable and appropriate for you to ask the foreign minister to go with you to the President in order that you may lay our position before both of them. In this way it is believed the appearance of going over Cantilo’s head could be avoided.
You should request a prompt decision by the Argentine Government in the premises as it is indispensable that an agreement be signed or public announcement of the termination of the negotiations be issued at the earliest possible moment. If the Argentine reply should be unfavorable you should proceed immediately to discuss the issuance of an explanatory public statement along the lines indicated to you on the telephone Saturday.
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