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Latin American transport fleet is of US manu-
of military equipment and machinery from
facture. US exports of all types of transport
Europe. Furthermore, current production in
aircraft to Latin America totaled about $41.1
Europe of small aircraft particularly suitable
million for the three-year period 1947-9.*
for Latin American feeder-line operations,
This volume represented roughly 27 percent of
some of which have already been sold in the
the dollar value of all US exports in this cate-
area, and the probable introduction to the
gory during these three years, thus constitut-
Latin American market of Canadian or British
ing a significant portion of the overseas mar-
jet transports in advance of such US types will
ket for US transport aircraft, and it was appre-
increase the competition. Since Latin Ameri-
ciably supplemented by the sale of spare parts
can purchases of new aircraft in the near fu-
and equipment. Because of the vital need to
ture are not expected to be extensive, however,
maintain the US aircraft industry at the high-
any trend away from US equipment will de-
est possible peacetime level in order to mini-
velop gradually and its effects on the US air-
mize the required wartime expansion, any for-
craft industry may not be appreciable for sev-
eign markets for planes or for engines and
eral years.
parts are significant, particularly in view of
With respect to its economic significance as
the rapid downward trend in US civil trans-
an outlet for US investments, Latin American
port production since 1947.
civil aviation does not offer an attractive mar-
The bulk of recent sales to Latin America
ket for venture capital. The declining US
has been of US war surplus stocks, and the
financial stake in Latin American-flag airlines,
actual purchase of new planes during the
most of which are capitalized at comparatively
three-year period was not large (only about
low levels, is estimated now to be less than $20
8 percent of US civil transport output), but
million, on the basis of the nominal value of
the very fact that most of the planes were not
stock holdings. This situation is in part the
new is of some significance, because it prom-
result of the enactment and enforcement by
ises an accelerated demand for replacements.
many Latin American countries of legislation
The present US-made Latin American civil
requiring majority stock ownership and effec-
transport fleet (DC-3 and larger) is about 50
tive control of national-flag airlines to be held
percent of that now operated by all US sched-
by interests of the same nationality. The
uled airlines, indicating a replacement demand
policy of establishing national control over
at least half the size of that in the US. Con-
civil air activities is consistent with the efforts
sidering the need for new and modern planes
of the Latin American countries toward eco-
to replace obsolescent ones, thus increasing
nomic autarchy in other directions, as mani-
the average unit volume of the aircraft sold,
fested by their attempts to develop local in-
and the high replacement demand for new
dustry, their preference for government-to-
engines and parts, the Latin American mar-
government loans or grants, and their pro-
ket could, in coming years, have a considera-
nounced prejudice against admission of for-
ble effect on maintenance of the US industry,
eign capital except under restrictions unlikely
despite the fact that the rate of expansion of
to appeal to foreigners.
the area's air fleet is expected to be moderate.
The above estimate, however, is made with-
3.
Political Considerations.
out reference to the competition that US man-
Civil air relations between the US and Latin
ufacturers must meet. The prevalent Latin
America have also a subsidiary political impor-
American dollar shortage plus the competitive
tance in that Latin America's technical de-
advantage accruing to British and other Euro-
pendence upon the US in aviation matters
pean manufacturers through currency devalu-
during and after the war has resulted in a
ation create a strong temptation in Latin
marked US influence in civil air affairs. Al-
America to buy in other than US mar-
though there is evidence that this influence
kets. These factors have already tended
is declining as Latin American capabilities are
to favor increased Latin American purchases
developed, close cooperation between the two
areas in aviation matters has contributed to
See Table II, page 7.
SECRET
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"ocrText": "6\nSECRE\nLatin American transport fleet is of US manu-\nof military equipment and machinery from\nfacture. US exports of all types of transport\nEurope. Furthermore, current production in\naircraft to Latin America totaled about $41.1\nEurope of small aircraft particularly suitable\nmillion for the three-year period 1947-9.*\nfor Latin American feeder-line operations,\nThis volume represented roughly 27 percent of\nsome of which have already been sold in the\nthe dollar value of all US exports in this cate-\narea, and the probable introduction to the\ngory during these three years, thus constitut-\nLatin American market of Canadian or British\ning a significant portion of the overseas mar-\njet transports in advance of such US types will\nket for US transport aircraft, and it was appre-\nincrease the competition. Since Latin Ameri-\nciably supplemented by the sale of spare parts\ncan purchases of new aircraft in the near fu-\nand equipment. Because of the vital need to\nture are not expected to be extensive, however,\nmaintain the US aircraft industry at the high-\nany trend away from US equipment will de-\nest possible peacetime level in order to mini-\nvelop gradually and its effects on the US air-\nmize the required wartime expansion, any for-\ncraft industry may not be appreciable for sev-\neign markets for planes or for engines and\neral years.\nparts are significant, particularly in view of\nWith respect to its economic significance as\nthe rapid downward trend in US civil trans-\nan outlet for US investments, Latin American\nport production since 1947.\ncivil aviation does not offer an attractive mar-\nThe bulk of recent sales to Latin America\nket for venture capital. The declining US\nhas been of US war surplus stocks, and the\nfinancial stake in Latin American-flag airlines,\nactual purchase of new planes during the\nmost of which are capitalized at comparatively\nthree-year period was not large (only about\nlow levels, is estimated now to be less than $20\n8 percent of US civil transport output), but\nmillion, on the basis of the nominal value of\nthe very fact that most of the planes were not\nstock holdings. This situation is in part the\nnew is of some significance, because it prom-\nresult of the enactment and enforcement by\nises an accelerated demand for replacements.\nmany Latin American countries of legislation\nThe present US-made Latin American civil\nrequiring majority stock ownership and effec-\ntransport fleet (DC-3 and larger) is about 50\ntive control of national-flag airlines to be held\npercent of that now operated by all US sched-\nby interests of the same nationality. The\nuled airlines, indicating a replacement demand\npolicy of establishing national control over\nat least half the size of that in the US. Con-\ncivil air activities is consistent with the efforts\nsidering the need for new and modern planes\nof the Latin American countries toward eco-\nto replace obsolescent ones, thus increasing\nnomic autarchy in other directions, as mani-\nthe average unit volume of the aircraft sold,\nfested by their attempts to develop local in-\nand the high replacement demand for new\ndustry, their preference for government-to-\nengines and parts, the Latin American mar-\ngovernment loans or grants, and their pro-\nket could, in coming years, have a considera-\nnounced prejudice against admission of for-\nble effect on maintenance of the US industry,\neign capital except under restrictions unlikely\ndespite the fact that the rate of expansion of\nto appeal to foreigners.\nthe area's air fleet is expected to be moderate.\nThe above estimate, however, is made with-\n3.\nPolitical Considerations.\nout reference to the competition that US man-\nCivil air relations between the US and Latin\nufacturers must meet. The prevalent Latin\nAmerica have also a subsidiary political impor-\nAmerican dollar shortage plus the competitive\ntance in that Latin America's technical de-\nadvantage accruing to British and other Euro-\npendence upon the US in aviation matters\npean manufacturers through currency devalu-\nduring and after the war has resulted in a\nation create a strong temptation in Latin\nmarked US influence in civil air affairs. Al-\nAmerica to buy in other than US mar-\nthough there is evidence that this influence\nkets. These factors have already tended\nis declining as Latin American capabilities are\nto favor increased Latin American purchases\ndeveloped, close cooperation between the two\nareas in aviation matters has contributed to\nSee Table II, page 7.\nSECRET"
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