611.626 Wines/23

Memorandum by the Economic Adviser (Feis)

In accordance with instruction of the Secretary and Under Secretary, I asked Mr. Meyer, Secretary of the German Embassy, to call in connection with the question raised by the German Government in regard to the treatment accorded German wines under our quota arrangements.

The German Government had inquired as to how, as a matter of policy, this Government would combine the unconditional most-favored-nation treaty with Germany and the application of a quota system (Ambassador Luther in his first talk with the Secretary on the subject put forward the idea that the German Government felt that it had a right under the treaty to receive without compensation as large a quota as was accorded any other country whether for compensation or otherwise; but when Mr. Livesey99 and myself entered into detailed discussion with Mr. Meyer we reached the conclusion this was the Ambassador’s own initiative and the Ambassador’s instructions had not been definite on that point).

In reference to this query I repeated what I had already informally told Mr. Meyer, to wit, that beginning with the situation created by the German action on the prune quota, and based on reiterated statement of German Government officials, this Government and American trade both felt great uncertainty as to what treatment they might expect from the German Government in the application of German quotas. The principle pursued in the prune quota had been decidedly unfavorable to us but we had been unable to secure any satisfaction from the German Government; then our Embassy in Berlin had been informed that the German Government reserves full liberty of action [Page 409] as to the principle to follow in determining any particular quota and in administering the Government monopoly arrangements. In view of these actions of the German Government, I explained that the American Government felt that the question raised by the German Government was one that could be treated only as a problem of mutual interest in regard to the definition of most-favored-nation rights in the application of quota arrangements. In view of the actions of the German Government, this problem could be handled only in joint discussion and only after such joint discussion could we indicate our policy. I reiterated the willingness of this Government to enter into such discussion and asked that this desire be conveyed to Berlin. Until and unless mutual agreement is reached, great uncertainty and the injury to American trade would continue to exist.

I continued that the American Government hoped the German Government would undertake this task. In the meanwhile, as a manifestation of our belief that most-favored-nation rights should be upheld, but entirely without any commitment on principle, this Government had decided to double the two months quota allotted to Germany. I emphasized that this action was wholly and solely for the two months period.

Mr. Meyer again raised the question of supplying the German Government with a full record of the quantities permitted to different countries under our quota arrangement. I explained that the negotiating committee was very reluctant to give that out, and we would not do so now, but that in the event the discussions above described were entered into I was almost certain the American Government would make the figures available for the confidential information of the German Government.

Mr. Meyer said the substance of the above would be cabled to Berlin.

  1. Frederick Livesey, Assistant Economic Adviser, Department of State.