611.5831/136

Memorandum by the Chief of the Division of Western European Affairs (Moffat)

The Swedish Minister called on Mr. Sayre this afternoon with reference to the note he recently left with the Secretary of State indicating that in any trade negotiations Sweden was prepared to bind certain items but not to agree to any further reductions of duties.

Mr. Sayre said that unfortunately he had been so busy that he had not had time to study the Swedish note. He would do so at the earliest occasion, and asked the Minister to return for a further talk next week.

Meanwhile, however, he felt it only fair to tell the Minister that he was keenly disappointed in the general tenor of the note. The purpose of the United States in having these negotiations was to increase trade on both sides and not merely to hold it stationary. He could not see in what way the Swedish conception would result in any increase of American exports. We had envisaged the possibility in return for adequate concessions to make commitments which would be likely to result in a positive increase of Swedish imports, but we could not very well reduce our tariffs and let in imports which would compete with our own manufacturers, unless we were able to compensate this by increasing advantages to our exporters.

The Minister replied that Sweden had the lowest tariff system in Europe and had resisted many temptations to increase its rates. In fact, he was not sure that there was a single item on the Swedish tariff list that could be called prohibitive. The Swedish Government felt that it would be a very real concession to undertake not to increase those rates for a period of some years. He could not admit the possibility that the United States and Sweden, which together had stood out against trade barriers, should be unable to agree amongst themselves. He felt that the mere conclusion of a trade agreement, even if it did not result in any reduction of Swedish duty, would stimulate Swedish purchases of American goods.

The Minister offered to bring in a draft treaty which he was prepared to submit, but Mr. Sayre felt that we must study the Swedish note [Page 724]further before deciding whether or not it offered sufficient hopes for negotiations to be successful to justify their inception.

Pierrepont Moffat