611.623/121: Telegram
The Ambassador in Germany ( Dodd ) to the Secretary of State
[Received 4:09 p.m.]
91. My 87, March 20, 1 p.m. Foreign Minister’s reply delivered Saturday evening consists of covering note with appended statement and two printed annexes.18 Statement being translated and will be cabled after note which reads in translation as follows:
“In reply to your esteemed note of January 28, 1936, No. 712, I have the honor to transmit to Your Excellency the information requested by the Secretary of the Treasury from the German Government concerning the German measures for the promotion of exports to the United States of America in the attached statement with annexes of the competent inner German offices.
The German Government feels it may assume that when the Secretary of the Treasury has examined the enclosures he will arrive at the conclusion that the prerequisites for applying the regulations of the American customs law governing the levying of special additional duties do not apply to goods imported from Germany. Therefore, in the opinion of the German Government the necessity of further considerations [Page 216] of this question by the Treasury agents and also the reasons for demanding special single entry bonds of American importers of German goods as prescribed in section 623 of the customs law19 would be obviated. The competent offices have, however, put themselves at the disposal of the Secretary of the Treasury in case he desires supplements to, or explanations of the information contained in the annex.
The German Government would be grateful to Your Excellency if you would draw the attention of your Government to the following cardinal points in this connection:
So far as the German Government is informed the intention is not that the protective tariff stipulated in the customs law is to be increased by the above-mentioned special regulation of the American customs law (section 201/202—of the Emergency Tariff Act 192120 concerning anti-dumping duties and section 303 of the Tariff Act 1930 concerning countervailing duties). The idea is rather to counteract measures whose aim it is to attenuate or render ineffectual the customs protection provided for in the case of individual import transactions or in the case of imports of certain goods or groups of goods. Far be it from the German Government to apply measures whose aim it is to attenuate or worse yet to render ineffectual the customs protection provided for in the customs law in order to promote German exports to the United States. On the contrary the special measures which the German Government has adopted in order to promote German exports must be looked at from different points of view. They are the inevitable result of international currency conditions on the shaping of which Germany is unable to exercise decisive influence. The devaluation of the dollar and the currencies of other important countries in international trade in conjunction with the adherence to the gold parity of the Reichsmark currency have resulted in the dislocation of the purchasing power parity of the various currencies and consequently have necessarily also resulted in a dislocation of the level of the prices of goods expressed in German currency as compared with the level of the prices of the same goods expressed in American currency. The German measures for promoting foreign currency only aim to adjust these dislocations at least in part and partially to remove the effects of the present abnormal international currency conditions. They are limited to this aim. They are not intended to influence the legal and natural economic factors which are decisive for competition. If the German Government properly understands the history of the American customs legislation and the text of the afore-mentioned American regulations relative to the imposition of special duties, the German measures for promoting exports to the United States both as regards their purpose and their practical application are not measures that the American legislature intended to strike at with the above-mentioned regulations at a time when international economic conditions were totally different than they are today. In fact the conditions on which the foreign exchange adjustment procedure is to be applied as discussed in detail in the enclosure already show that if only in the interest of the German foreign exchange situation the German authorities assure themselves in the case of each export transaction to the United States carried out with the aid of that procedure that the competitive [Page 217] situation brought about by the American customs law is not changed by the approval of that transaction.
If despite that fact special additional duties should be imposed on exports to the United States which at best are only partially released by the foreign exchange adjustment procedure during obstacles arising from the currency conditions the result would be that Germany would be practically excluded from imports to the United States. It would be unavoidable that such a development would react upon the gradual satisfaction of the American creditors to whose initiative the use of their frozen balances in Germany for purposes of German exports is attributable and upon German purchases of goods from the United States which have already shrunk to a regrettable degree. Furthermore, such a development would also destroy the hope—perhaps for a long time to come—of placing mutual trade relations on a new treaty basis on the principle of most-favored-nation treatment and in this way improving the volume of German-American trade by removing avoidable trade barriers. The German Government believes it is of one opinion with the American Government in this aim. In order to attain this aim the German Government is now examining the possibility of submitting to the American Government concrete proposals of a similar nature as the agreements which the United States has made with other particular European countries on the basis of the Trade Agreements Act of June 12, 1934.21
(Closing salutation and signature omitted).[”]