Argentine Trade Agreement

Press, Volume LXXXV, Issue 25936, 17 October 1949, Page 6

Argentine Trade Agreement

The future of the British-Argentine trade agreement reached several months ago after long and very hard bargaining now appears uncertain. As reported on Saturday, Argentina’s failure to issue import licences for the entry of British goods as agreed on has caused the British Commercial Minister in Buenos Aires to warn that Britain may refuse to take delivery of Argentine meat. This warning is timely, for Argentina has attempted to obtain increased benefits from the agreement at Britain’s expense. She has delayed issuing import licences for purchases from Britain so that she can maintain her sterling balances at a high level. The delay, which was noted before Britain devalued sterling, is explained, according to the “ Economist ”, by the fact that the value of the Argentine sterling balances is safeguarded by exchange guarantees in the trade agreement. A financial clause provides that, in the event of the devaluation of the £ against the dollar, the British Government will make up the difference between the old and new rates on any sterling accumulated by Argentina or received by her during the ensuing four months. Argentina has also adjusted the peso exchange rates with the purpose, among others, of securing a higher price for her meat. In the world currency re-alignment that followed devaluation of sterling Lsaid the "Financial Times"! some ' countries have considered it desirable to retain their previous rates with the United States dollar. Many others have chosen to go all the way with sterling, while a few have taken a middle course, devaluing their currencies against the dollar to a smaller extent than Britain. It has been left to Argentina to find a way of doing all these things at once. The new export and import rates for the peso, announced after two weeks of intensive scheming in /Buenos Aires, provide that for some purposes the peso retains its previous value in terms of the United States dollar; for others it is devalued to the same extent as the pound sterling; for a third set of purposes it is devalued ggainst the dollar to a smaller extent than our own currency. Britain’s post-war trade relations with Argentina could scarcely have been less happy. The cheap meat which she should have received under the Andes Pact was- not delivered in the quantities promised. ■ Under the present agreement, it j seems, she may obtain plenty meat but at a high price. Britain will need to act firmly to prevent the agreement, concluded .at the/cost of very strained relations with the . United Stales, becoming a- very bad bargain indeed.