Memorandum by Mr. Richard Eldridge of the Division of Trade Agreements

Conversation: Mr. H. O. Chalkley, British Embassy;
Mr. Harry C. Hawkins;
Mr. W. Fowler;
Mr. Constant Southworth;
Mr. Richard Eldridge.

Mr. Chalkley recalled a statement made to him that 40 per cent of American export trade to the United Kingdom was affected by imperial preferences. He asked that the accuracy of this figure be [Page 670] ascertained and that he be given more detailed trade figures on the basis of American sources. Mr. Chalkley gave a tentative list of commodity groups for which some concessions would be requested. He prefaced his remarks with the reservation that his list was one year old, unofficial and subject to revision.

The commodity groups were:

Woolen products, including both finished goods and waists, tops, yarns, etc.
Linen goods.
Some cotton goods.
In connection with cotton goods Mr. Chalkley said that some special classification for high-priced cotton shirtings would be requested in order to secure relief from the recent increased duties directed towards Japanese goods but which had affected some British counts of cotton.
Leather and leather goods.
China Clay.
Salted Herrings.

(Mr. Chalkley transmitted the items which follow stating that they were requests which had been received by the British Government but which had not yet been studied.)

  • Glassware and glass products.
  • Edged Tools.
  • Golf Balls.

Mr. Chalkley requested a list of products entering the United Kingdom for which reductions or bindings of duty would be requested. He expressed the fear that there would be “very little indeed in the way of reductions in duties”. It was explained that such a list had not been prepared. For his personal information, however, it was said that probably on such a list would appear such items as wheat, flour, hams, apples, grapefruit, oranges, dried prunes, dried raisins, lumber, doors, safety razor parts, chemicals, oil and gasoline, hosiery and knitting machinery, other machinery, aluminum plates, various iron and steel products.

In the very general discussion which ensued Mr. Chalkley minimized the need for a reduction of the British import duty on wheat, which he stated amounts to only six cents per bushel, and especially in view of the fact that there was little prospect of the export of wheat from the United States at the present time. He also referred to the difference in the varieties of wheat grown in the United States and in other countries exporting wheat to the United Kingdom.

Mr. Chalkley’s conversation was to the effect that there was very little proof that imperial preferences are of themselves effective in diverting American trade. In the absence of definite proof, he indicated, [Page 671] furthermore, that there would be difficulty in securing deductions in import duties. With respect to imperial preferences, he was of the opinion that effective argument against them was difficult except in very exceptional circumstances.

He was also of the opinion that if the United States wished to secure some revision of imperial preferences granted to Canada, an effort by the American Government to reach an understanding with Canada regarding preferences of major importance to the United States should precede negotiations with the United Kingdom. He stressed the complete and favorable change in atmosphere and in policy which had been brought about by the present Canadian Government.

Mr. Chalkley was emphatic in suggesting that the words “abolition of preferences” be not used in negotiations. He also stressed the value to the United States of securing stability of the status quo both with respect to import duties and to preferences while pointing out the necessity for the increase in some of the existing import duties. He was of the opinion that the elimination of quotas which is under consideration may be followed by increases in import duties and that the British Government appears to be inclined to substitute, for import quotas, import levies upon certain competitive imports to be earmarked for subsidies to the domestic industry.