Five-Year Trade Pact Agreed On Between Great Britain And Argentine

Wanganui Chronicle, 2 June 1949, Page 5

Five-Year Trade Pact Agreed On Between Great Britain And Argentine

Quantity And Price Of Meat Expected To Be Satisfactory

BUENOS AIRES, May 31 (Rec. 7.10 pm).—Britain and Argentine today agreed in principle to a five-year trade pact under w'hich Britain expects to receive about 250,000 tons of meat in the first year at about 10|d a pound.

Under the Andes Agreement, which expired on March 31, Britain paid 7Jd, but she also made Argentina a grant of £10,000,000. Of this grant, Argentina allocated £6,800,000 to meat purchases, thus bringing the effective price paid by Britain to about 9<l per lb The quantity of the meat to be shipped to Britain under the new agreement is still indefinite but Dr. Roberto Ares, Argentine Minister for Economy, said it was hoped to send at least 250,000 tons in the first year. Britain had asked for between 400,000 and 000,000 tons. The Andes agreement provided for the shipment of 410,000 tons a year. The new agreement provides that the price wiii be negotiated annually but that no adjustment up or down shall exceed 121 per cent, of the base price of the first year. A joint committee in Buenos Aires will make periodic examinations of trade between Britain and Argentina in an endeavour to keep it balanced. This means that there will be no question of Argentina again accumulating sterling balances, as in the past, nor of receiving dollars. On the otheF hand- however, Argentina was reported to have received some form of guarantee against a possible devaluation of sterling during the first year of the agreement. Trade will be balanced on the basis of an exchange rate cf 13.5? pesos to the pound sterling Dr. Ares said tonight that this rate will not be changed, although the current free rate is more in favour of Argentina The agreement contemplated that in the first year Britain will supply Argentina with 5,790,000 tons of liquid fuels and 1,500,000 tons of coal. Argentina has been importing about 5 000,000 tons of liquid fuels a year, for which it has been paying 115,000,000 dollars to the United States and £1,000,000 to Britain. In addition to liquid fuels. Britain will supply Argentina with machinery. textiles,

whisky and other goods. Britain’s purchases from Argentina will include forage, linseed oils and grains. Reuter’s financial correspondent says the agreement between Argentine and Britain will no doubt be welcomed in both countries will be less welcome in the United States and Canada, where there is growing opposition to these bilateral pacts. Britain’s meat ration will no dou.it be inreased within two months. Il has never been explained why the deficit of 100,000 ions from Argentina required Britain to cut the ration. Britain can look forward to larger supplies of meat and of feed grain from which to produce more meat locally. Although meat gets all the- limelight a much more important aspect of the agreement is the supply oi British goods to Argentina. Given the right internal policies these should start Argentina on the road to reversing internal inflation and restoring prompt production and exports. Internal inflation has caused Argentine exports to slump. For whatever meal and other goods Argentina sends to Britain she will ' receive goods from Britain or from I the sterling area instead of unspendable railways .or sterling balances. | Britain has not conceded convertibility or gold backing for any sterling 1 that Argentina may hav e accumulated. She may have conceded a dollar guarantee whereby, if sterling falls against the dollar, the amount of any Argentine sterling balance would be written up correspondingly. Appari cntly Argentina wanted but did not i get a gold guarantee. This should not ! make any difference, sinc e Sir Stafford Cripps has said that sterling is not going to fall. Britain’s great advantage in trading with Argentina is that Argentina dovetails with Britain bu> competes with the United States. Britain is Argentina’s major market, but she is not the only possible supplier of goods that Argentina needs. However, she is the supplier that Argentina can pay.