711.652/74: Telegram

The Ambassador in Italy ( Phillips ) to the Secretary of State

481. The Director General of Commercial Affairs of the Foreign Office Giannini today summoned a meeting to open discussions of the draft of the new treaty of commerce and friendship. Representatives of the interested Ministries were present. Livengood23 and Reber24 attended on behalf of the Embassy.

It was early manifested during the course of the discussions that she Italian Government was willing and ready to go ahead with the negotiation of a new treaty. Giannini stated that his Government was sympathetic with the idea and in general accepted the underlying principles of the draft. He wished to know, however, whether the treaty could be considered as establishing a general framework of the principles which would govern commercial exchange between the two countries and as paving the way, as in the case of the Belgian agreement,25 for further and subsequent negotiations with respect to a trade agreement or movements of commodities.

[Page 353]

This preliminary meeting was for the purpose of permitting the Italian experts to ask certain questions resulting from their study of the draft. These questions were limited largely to points which required clarification and did not reveal any particular points of difference which might later arise except insofar as article VIII of the draft was concerned. With respect to this article it was pointed out that difficulties might arise in establishing the “representative period” for the determination of quotas because of the present Italian method of handling such quotas which were no longer determined upon the basis of former trade periods but upon the basis of actual needs. Similar difficulties were foreseen by the Italians in the application of the present clause relating to the control of foreign exchange as it was explained that foreign exchange was likewise allocated upon the basis of current needs without the possibility of reference to any previous period. It was also considered, with respect to this article, that any general formula intending to preserve the principle of equality of treatment must take into account export as well as import quotas.

The general impression gained from this discussion of article VIII was that the Italian Government is prepared to grant full equality of treatment to the United States although it is of the opinion that the mechanical application of the present draft may be of too rigid a nature and will require attention to adapt it to present Italian administrative methods. It is also their opinion that without some such changes it may give rise to difficulties of practical application.

At the close of the meeting it was agreed that in view of the acceptance by Italy of the fundamental principles underlying the proposed treaty the Italian experts would prepare a counter-draft of the provisions which they considered would require modification.

Under these circumstances I propose to address a note to the Foreign Minister stating that I consider that the time is now appropriate for the two Governments to agree upon a joint denunciation of the old treaty.

Phillips
  1. Charles A. Livengood, Commercial Attaché.
  2. Samuel Reber, Second Secretary of Embassy.
  3. Reciprocal Trade Agreement between the United States and the Belgo-Luxemburg Economic Union, signed February 27, 1935. For text of agreement, see 49 Stat. 3680, or Executive Agreement Series No. 75; for correspondence, see Foreign Relations, 1935, vol. ii, pp. 102 ff.