611.6531/236b
Memorandum by the Assistant Chief of the Trade Agreements Section (Hawkins)
Mr. Sayre received the Italian Ambassador today and, with reference to the question of proceeding with the trade agreement negotiations, advised him as follows:
We are anxious to conclude a mutually advantageous agreement with Italy. On the other hand, the burden imposed on the trade agreements organization by the negotiations now in progress with other countries makes it imperative to conserve insofar as possible the efforts of the personnel engaged in this work. For this reason, we are reluctant to proceed with negotiations which do not offer reasonable prospect of success.
Recent developments in Italy have given rise to considerable doubt whether it will be possible to reconcile the policies of the two countries sufficiently to allow a mutually satisfactory trade agreement to be concluded. In order to facilitate consideration of this question, it seems desirable to draw attention to the commercial policy of the United States as outlined in general terms in the Department’s press release of April 1, and to indicate the position which we would be compelled to take in connection with trade agreement negotiations with Italy.
[Page 532]In the first place, it will be evident to the Italian Government, in view of the provisions of the Act of Congress under which trade agreements are concluded by this Government,22 that we could not sign any agreement which would not result in increased exports from the United States to Italy. We would be inclined not to insist that this increase be as great as the increase in imports from Italy, since Italy’s pressing need for adjusting its trade balance is well understood. But a positive increase in trade in both directions is regarded as indispensable.
Second, we could not acquiesce, tacitly or otherwise, in the application to American trade of any system whereby the amount of American exports to Italy would depend upon the amount of Italy’s exports to the United States or upon the amount of exchange directly created by such exports. This does not necessarily mean that the United States would insist on the complete abolition of quantitative restrictions or exchange control as applied to the commerce of the United States. It means that in the allotment of quotas or exchange, the allotments to the United States would be based on some criteria such as the share enjoyed during a previous representative period, rather than upon the amount of American purchases of Italian goods or upon the amount of exchange created directly by Italian exports to the United States.
If, after giving further consideration to this matter, the Italian Government has serious doubts regarding the possibility of reconciling the policies of the two countries, we would suggest a further exchange of views in order to determine what course of action to pursue. If, on the other hand, the Italian Government is prepared to go forward with negotiations upon the understandings above set forth, we shall be happy to proceed to the negotiations forthwith, as soon as the preparatory work is completed.
- Trade Agreements Act, approved June 12, 1934; 48 Stat. 943.↩