653.116/168
Memorandum by the Assistant Chief of the Division of Western European Affairs (Culbertson)
It will be recalled that immediately prior to the announcement of the Belgian trade agreement, I was authorized to discuss with Mr. Bianchi the question of Portuguese flag discrimination against American ships, at which time I intimated to him that in view of this discrimination there was some question with regard to the extension by us to Portugal of the benefits accorded Belgium and other countries as a result of the Belgian agreement, and the extension of future benefits arising out of other agreements. I told him at that time that we had under consideration the question of denouncing the Modus Vivendi of 1910, but added that of course we did not wish to take such action if there were some way of arriving at a satisfactory arrangement with regard to this flag discrimination.
Since April I have had several conversations with Mr. Bianchi, who has been exploring the possibility of developing some sort of an exchange of notes which would be a face-saving device for his own Government. The Portuguese Government has required other governments which wanted to obtain the removal of this flag discrimination to accord exclusive recognition to the names of Portuguese wines. Mr. Bianchi himself is convinced that it would be in the interest of Portugal to accord us most-favored-nation treatment, but he recognizes that his Government has made such a to do about the protection of Portuguese wine names that it could not, from a policy standpoint, extend to us most-favored-nation treatment without some quid pro quo in exchange. He and Mr. Caldwell have discussed this matter several times during Mr. Caldwell’s leave of absence home.
Mr. Bianchi told me today that he had recommended to his Government that some formula should be found, and that it seemed best to accomplish the purpose which we seek by an exchange of notes which would merely reiterate the most-favored-nation principle, and would include some statement on our part to the effect that we would give study to the question of name protection for Portuguese wines. He asked also whether we might not be in a position to establish laws or regulations prohibiting the entry of wines labeled with Portuguese names coming from any source other than Portugal. The Portuguese are particularly concerned with Chilean, Australian and South African “port”. I had previously explained to him that the difficulty in taking such action would appear to be that we were denying national treatment to goods from those countries so long as we permitted our own producers to designate their wines by Portuguese names. I told Mr. Bianchi, however, that we would be glad to take [Page 668] up the question with Mr. Choate15 and the interested branches of this Government, with the purpose of exploring the possibilities of carrying out his suggestion.
Mr. Bianchi was leaving on an extended vacation to the West Coast, and probably will not be back much before the middle of September or the first of October. He was anxious to be assured that we would not take any action during his absence involving a denunciation of the existing Modus Vivendi. I told him that while I was not authorized to make any commitment, I felt personally that the matter could be held over until his return, at which time we might hope to accomplish an exchange of notes which would solve all of our difficulties.
- Joseph H. Choate, Jr., Chairman of the Federal Alcohol Control Administration.↩