611.60F31/533: Telegram

The Minister in Czechoslovakia ( Carr ) to the Secretary of State

74. My No. 73, December 14, 4 p.m. At his request I discussed with Minister Friedmann yesterday report just received from Czechoslovak delegation. He confirmed surprise of delegation at changes which they claim United States has injected into negotiations amounting to cancellation of part of original demands and substitution of others. He said this Government had assumed that only matters to be considered were Czechoslovakia’s original list and that of the United States with memorandum of August 9, 1937,24 in which commodities were divided into three groups according to treatment to be requested. This view was further strengthened by refusal of the Department to include for negotiation new demands of Czechoslovak industrialists submitted in September by Legation in Washington. He feels now that if change in the American demands prove to be substantial, Czechoslovakia will find it necessary to review her entire position and possibly enlarge her original demands. The report of the delegation is not sufficiently lucid to enable him to decide upon course to be followed and further report has been requested.

[Page 254]

Minister Friedmann reiterated his statement that a general suppression of import permit and quantitative restrictions (which he regards as together constituting a single method of quantitative limitation) is impossible since 67 percent of Czechoslovakia’s export trade goes to countries which regulate their foreign trade through that control system. Nevertheless, and subsequently adhering to this principle, Czechoslovakia is in sympathy with your policy and anxious to do all in its power to moderate and remove trade barriers and hence it would be willing to inspect and study the problem of suppressing import permit requirements and quantitative restrictions on individual items in the light of three important and inter-related factors:

The degree to which removal of such restrictions would affect the “life interests” of Czechoslovakia.
The amount of pressure which the United States would exert on Czechoslovakia to obtain duty concessions on those specific items which might also come into consideration in connection with the removal of import permit requirements and the suppression of quantitative restrictions and,
The degree to which Czechoslovakia’s demands of the United States are complied with particularly concessions which might be made in connection with the problem of Danubian preference.

This seems to indicate slight favorable change in position though the conditions mentioned may make it of little value. It is of utmost importance in my opinion to convince the delegation that they are not engaged in horse trading such as is practiced in Europe.

Specific mention of Swiss and Netherlands agreements without suppression of quantitative restrictions implies that the Minister believes that Czechoslovakia is being requested to make a concession not exacted of other European governments. Suggest delegation’s minds be fully disabused of this idea.

Friedmann voluntarily made a long exposition of central European policy and necessity of promoting economic welfare of central European and Danubian area. I pointed out that we recognized that situation in according limited Danubian preferences in modus Vivendi and considering them in present negotiations. He expressed appreciation and said inclusion of certain Danubian preferences in the new agreement would set an admirable example to other powers and that benefits would be not only economic but pacific. Belief is that this question is regarded here as politically important.

Throughout my conversations I have made it clear that all negotiations are conducted in Washington and that my function is merely to help to maintain clear understanding between the Department and the authorities here.

  1. Memorandum not found in Department files.