The Acting Secretary of State to the Ambassador in Italy (Phillips)
156. Your 482, November 22, 11 a.m.26 We have, in spite of Italian discriminations against American commerce, continued to accord Italy [Page 354] our most favorable customs treatment which includes the many duty reductions which have resulted from the American trade agreement program. Numerous Italian products notably have been accorded these reduced rates without any corresponding quid pro quo from the Italians. In view of our expectation that a basis for further trade agreement discussions can be found it will of course be understood that we can not accept any proposal involving bargaining in respect of one American product. This is especially true when the Italians are building up new drastic restrictions for the removal of which we are expected to pay. We have constantly taken the position that new restrictions constitute padding and that we will not give reductions from our present rates in exchange for the removal of such new restrictions.
As you know we are anxious to go forward with a revision of the treaty of 1871 which is out of date and fails to meet present day commercial problems. We would like to arrive at an agreement by which both parties would mutually denounce the treaty. In such an event we could look forward to the negotiation of a new treaty and at the same time we would be prepared to resume discussions of the basic principles which will underlie a trade agreement between the two countries.
(For your own information, we feel that unless Italy is willing to agree to a mutual denunciation of the present treaty we must give early consideration to unilateral denunciation since, in the face of further expansion of our trade agreement program we can not continue to accord Italy the benefits which she is receiving as a result of that program. If you find it necessary or useful you may use this in your discussions with Italian authorities.)
We are not unmindful of Italy’s commercial problems. We are anxious to assist in a betterment of Italian-American trade. We have given evidence of this desire by continuing to accord Italian commerce our reduced rates and by not denouncing the existing inequitable treaty. We must however have cooperation from Italy and if Italy is prepared to go along with us in our efforts to bring about a reduction in barriers to trade she can expect and will receive from us generous cooperation and a sympathetic approach to her desires.
If any intimation comes to you without making any inquiry in that regard we would like to know what concessions the Italians might have in mind. This information would be useful in our studies of the trade agreement possibilities.