121.5741/2b: Telegram
The Acting Secretary of State to the Ambassador in Great Britain ( Houghton )
199. The Department has received information from several reliable sources indicating that British Government is likely to refuse diplomatic status to customs attachés, that it will raise no objection to market-value and export-value investigations and, while as matter of principle it will not admit right of this Government to make cost-of-production investigations, it will permit such investigations in practise if individual firm concerned does not voice objections to British Government.
The Department deems it most important that no absolute prohibition be raised against cost-of-production investigations by customs attachés. For this reason Department suggests that you point out to Chamberlain either formally or informally, as you think expedient, the following specific considerations which the British commercial counselor here believes may influence the Foreign Office to waive objections as practical matter for time being:
In the past, cost-of-production investigations have been very few; Treasury will seek to minimize necessity for them in the future; no request for cost-of-production investigations will be sent to London until they are reviewed by responsible officials of the Treasury in Washington and until these officials are convinced that cost of production is absolutely necessary for legal valuation of goods for customs purposes. Cost-of-production investigations will, when ordered, be made in England only by the principal customs attaché and not by his assistants.
Department understands informally that British objection to allowing cost-of-production investigations rests partly on fear that such permission would be admission as matter of principle of right of foreign government to make detailed investigations and that an admission of that sort would be embarrassing were Russian or German Governments to make similar requests. At your discretion you may point out that Government of the United States does not request permission desired as matter of right, and that if permission is accorded it can be withdrawn at any time by British Government at its discretion; no embarrassing precedent, therefore, need be feared.