611.4131/215
Memorandum by the Chief of the Division of Trade Agreements (Hawkins)
| Conversation: | Mr. H. O. Chalkley, Commercial Counselor, British Embassy; |
| Mr. Hawkins; | |
| Mr. Hickerson.66 |
At Mr. Chalkley’s invitation, we called at his residence Saturday evening, December 26, to discuss instructions he had received regarding the basis for a trade agreement.
Mr. Chalkley said that our tentative proposals which had been given to him informally on November 16 had been transmitted to the United Kingdom and had been carefully studied by various officials there including members of the Cabinet. He indicated, therefore, that what he had to say represented not only his own personal views, but the attitude of the British Government. He said that his Government definitely wanted to negotiate a trade agreement with the United States. It is anxious, however, that a mutually acceptable [Page 705] basis be found before negotiations are undertaken in order to insure that such negotiations would not fail. In the opinion of his Government any such failure would be seriously harmful and should be avoided at all costs. We replied that this Government is also anxious to conclude a trade agreement and shares fully the view of the British Government as to the desirability of finding a basis which would insure the successful outcome of negotiations once they are instituted.
In the course of the general discussion, Mr. Chalkley referred to the extent to which Empire relations are involved in connection with our so-called “must” list. He stressed the importance of such relations at this time when the political situation in Europe is so uncertain. He said, among other things, that in the event of war, the United Kingdom might be denied access to supplies in the United States by our neutrality policy; that British policy must be influenced by the fact that the United Kingdom itself and the Dominions represent the only assured sources of supply in time of war and that the fostering of such sources must be promoted in time of peace.
Turning specifically to our “must” list, Mr. Chalkley stated that very little could be done to meet our requests as the consent of the Dominions would, in most cases, be necessary before these duties could be reduced. He thought that something might be done in the case of some products such as lumber, but indicated that this would have to be effected by a tri-partite arrangement by the United States, the United Kingdom and Canada. The possibility of doing something on lumber apparently arises from the fact that the United Kingdom duty is bound only to Canada, whereas the rates on most of the other products are bound to several Dominions. Mr. Chalkley also indicated that some reduction in the duty on leather might be possible. On lard, he pointed out that, while the rate on this product is not bound to any dominion, the duty is so low (10 percent) that we could hardly expect a reduction.
In general, Mr. Chalkley made it clear that the difficulty of meeting our requests lies in the commitments by the United Kingdom to the Dominions and the fact that the consent of the latter would have to be obtained. He indicated that the only means of getting what we want on our “must” list would be for us to negotiate with the Dominions and in return for such concessions as we might be able to offer, obtain the relinquishment by them of a part of their preferences in the United Kingdom. He said that the United Kingdom might agree to include in an agreement with the United States a provision whereby the preferences would be modified whenever and to the extent that the consent of the Dominions was obtained.
[Page 706]Mr. Chalkley kept repeating that the difficulty of our “must” list lies in the fact that we ask for “improved” treatment. He implied that the binding of present rates would create no serious difficulty. In this connection, he referred to our large agricultural exports to the United Kingdom and asked whether our Department of Agriculture did not attach a great deal of importance to preserving our present trade. His inference was, of course, that we could protect this trade by an agreement under which present treatment would be bound, but that if no agreement were concluded we might, as a result of increases in British trade barriers, lose a large part of the trade we now have. Mr. Chalkley said that our Department of Agriculture should be asked to consider this question very carefully.
We stated that inasmuch as Mr. Chalkley had indicated that there are some respects in which the British could meet our requests on the “must” list, the next step in our exploratory work would seem to be for him to indicate specifically and in detail exactly how far the British could go. Mr. Chalkley agreed to submit such a statement in writing in a few days.67