Foreign Relations of the United States Diplomatic Papers, 1935, The British Commonwealth; Europe, Volume II

611.6331/137

Memorandum by Mr. Rudolf E. Schoenfeld of the Division of Western European Affairs

[Washington,] June 24, 1935.

Mr. Prochnik called this afternoon at 3:30 regarding possible reciprocal trade negotiations.

Mr. Sayre handed him a copy of the attached memorandum and gave him the gist of it orally. After reading the memorandum, Mr. Prochnik said that the position taken was entirely satisfactory. He indicated that Austria’s main interest was the avoidance of any danger of being deprived of generalized tariff reductions. He expressed the hope that if there were any danger of withholding such generalizations from Austria, his government would have an opportunity to discuss the matter before action were taken. Mr. Sayre assured him that if such action were contemplated, he would be glad to discuss the matter with the Minister beforehand.

Mr. Prochnik mentioned that the manufacturers of foudrenier wires might consider filing a petition under Paragraph 336 of the Tariff Act,⁵ looking toward the reduction of duties on that product. He had felt, however, that it was undesirable to do so as long as there were prospects of obtaining duty reductions through reciprocal trade agreement negotiations. It was his impression, however, that action on such a petition would require a fairly long time. If there were any chance of negotiations before too long, it might be advisable not to file such a petition.

Mr. Sayre said that he would be glad again to discuss the possibility of negotiations in the autumn; it might be possible to undertake negotiations sometime next year. Meanwhile Austrian interests were, of course, at liberty to file a petition under Paragraph 336 with the Tariff Commission for reduced duties. There was, however, danger that this would consolidate opposition, not only against the reduction of such duties by the Tariff Commission, but possibly against such reductions in eventual reciprocal tariff negotiations.

[Annex]

Memorandum Handed to the Austrian Minister (Prochnik) by the Assistant Secretary of State (Sayre), June 24, 1935

With reference to the informal discussions which on several occasions have taken place between the Minister of Austria and officers of the Department of State regarding commercial relations between the United States and Austria, Assistant Secretary Sayre today explained to the Minister of Austria the tentative conclusions reached as a result of the consideration which has been given to these questions.

1. In regard to the question of entering into trade agreement negotiations with Austria, Mr. Sayre indicated that this government is inclined to suggest, without precluding the possibility of further consideration of the matter, that negotiations be deferred. He stated that the results to be obtained from negotiations with Austria probably would not be commensurate with the effort involved owing to the limited number of products on which tariff reductions could be made by the United States. He explained that under the policy of the United States of giving the fullest possible effect to the most-favored-nation principle duty reductions under an agreement with one country on selected products of that country will be generalized to other countries. This requires that concessions made by the United States under each agreement must be confined to products of particular importance to the country concerned in order that the generalization of these reductions will not impair the basis for negotiating with other countries. To this end the general procedure which is being followed is to confine concessions under each agreement to products of which the country concerned is the chief or a high-ranking source of importations into the United States. Although numerous articles are imported into the United States from Austria, which in the aggregate represent a substantial volume of trade, in all but one or two instances some country other than Austria is the chief source of such importations. The number of products on which reductions in duty could be made by the United States under a trade agreement with Austria would therefore be very limited.

2. Mr. Sayre pointed out, however, that even though the negotiation of a trade agreement is deferred, Austrian commerce should meanwhile obtain greater benefits under our policy of most-favored-nation treatment than could result from such negotiations. He referred to the fact that on April 1, 1934 [1935], the President instructed the Secretary of the Treasury⁶ to extend to Austrian commerce the benefit of tariff reductions made under the trade agreement with Belgium. It is contemplated that similar instructions will be given with respect to the trade agreement recently signed with Sweden⁷ which is expected to come into force in the near future. These agreements provide for tariff concessions by the United States on several products which have been imported in appreciable quantities from Austria. Although the benefits obtained by Austria from agreements thus far concluded are not extensive, it is to be borne in mind that these agreements are only the first fruits of a comprehensive trade agreements program, the execution of which is only in its early stages. At the present time negotiations are in progress with thirteen countries, including France, Canada, Switzerland, the Netherlands, Italy and Spain. Many of the products which are of interest to countries with which the United States is now negotiating are also of interest to Austria. As the trade agreements program develops, the generalization of concessions to Austrian commerce should result in substantial benefits to that country.

3. These benefits are being extended to Austria in accordance with the announced policy of generalizing concessions to all countries which do not discriminate with respect to customs duties or other forms of trade control against the commerce of the United States. Their extension to Austrian commerce does not, of course, imply that the treatment of American commerce by Austria as compared with that of third countries is in all respects satisfactory to the United States. On the contrary, Mr. Sayre explained that although it is not intended on this occasion to raise any further questions concerning Austria’s present treatment of American products, this government later intends to do so, particularly with respect to quotas on products in which the United States has an interest. Mr. Sayre hoped that any representations which might be made would receive sympathetic consideration by the Austrian government. In conclusion, Mr. Sayre expressed the hope that any future developments in Austrian commercial policy will not involve discriminations against American commerce.

5. Approved June 17, 1930; 46 Stat. 590.
6. See Department of State, Press Releases, April 6, 1935, p. 216.
7. See pp. 739 ff. For text of the agreement with Sweden, signed May 25, 1935, see Executive Agreement Series No. 79 or 49 Stat. 3755.