662.116/163: Telegram

The Secretary of State to the Ambassador in Germany (Dodd)

122. Your 153, September 30, noon. Please present the following note to the Foreign Office:

“I am instructed by my Government to lay before you a formal protest against the disproportionate allocation by the German Government of quotas adversely affecting the importation into Germany of American prunes. My Government has, in principle, found serious objection to the restriction and arbitrary curtailment of trade through the adoption of quota systems. It considers that such restrictions are open to objection as being inherently discriminatory and hence as being inconsistent with the spirit of the most-favored-nation principle. It is recognized, however, that in view of the maladjustment of economic conditions throughout the world the adoption of such a system may, in the interest of national economy and as a temporary measure, in some circumstances be found to have reasonable justification. Nevertheless, my Government is strongly of the view that it is incumbent upon any country which finds it necessary for reasons of domestic economy to adopt such a system scrupulously to avoid the allocation of quotas in such a manner as to restrict the trade of one country in a degree greater than the restriction imposed upon the trade of another country. Failure to allot quotas on a proportionate basis results in the giving to one country of an advantage not equally enjoyed by another.

[Page 483]

The quota régime now regulating the importation of prunes into Germany is considered by my Government as a deliberate method of extending to the trade of a third country advantages which that country has not heretofore enjoyed under open competitive conditions, or would in the circumstances enjoy under a system of proportionate quota restriction. By reason of the action of the German Government it is now possible for a third country to double its imports of prunes into Germany. If average imports for the past 4 years are considered, it is now possible, upon a basis of such imports, for that country to quadruple its prune trade with Germany. This opportunity for the expansion of the prune trade of another country cannot be possible except at the expense of American trade. The advantages thus extended to the trade of another country, but denied American trade, cannot be interpreted as other than a contravention and violation of paragraphs 2 and 4 of Article VII of the German- American Treaty of Commerce.

I am further instructed to state that my Government has difficulty in understanding the attitude which the German Government has adopted in this matter. It is an attitude which appears to have left no door open for friendly discussions between the two Governments of a problem which involves principles of such vital importance to the continuance of their cordial and friendly commercial relations.”

Submit at the same time, but as a separate note, the following:

“I refer to my note of today’s date with regard to the German quota on American prunes. While my Government cannot accept as satisfactory the prune quota at present allocated to American exporters, I am authorized to inform you that the American prune imports covered by this quota will be cleared through the ports of Hamburg and Bremen.”

Hull