611.6531/185
Memorandum by the Chief of the Trade Agreements Section (Grady)
Ambassador Rosso called this morning at my request, and I handed to him an Aide-Mémoire, copy of which is attached.17 After discussing with him the contents of the Aide-Mémoire, I went on to explain to him the policy which we are formulating in regard to the generalization to third countries of the concessions made in trade agreements. I said that, in pursuing the liberal commercial policy which we are doing, we are naturally most anxious to extend to all countries the benefits of tariff reductions made to any.
However, the unconditional most-favored-nation principle which is basic in our trade agreements program would lack vitality if we were to generalize concessions to countries discriminating against our commerce, whether in regard to tariff rates, quotas, exchange control, or any other device to regulate imports.
[Page 526]I said that if it developed that we were impelled to discontinue negotiations for a trade agreement with Italy because of discriminations against our trade under Italy’s new system of import control, we could not consistently extend the generalization of the rate reductions we have made or will make in trade agreements with other countries. This would be particularly important to Italy in connection with our trade agreement with Spain,18 which we anticipate will soon be consummated.
The Ambassador said he understood fully our position in the matter and would communicate the substance of what I had said regarding generalization along with that of the Aide-Mémoire which I had handed him. He said he had received no word from his Government regarding the new decree or its effect on American trade but would communicate with the Department the moment he received an answer from the cable he would at once send.