611.60F8/1: Telegram

The Secretary of State to the Chargé in Czechoslovakia ( Chapin )

10. The Treasury has official information that the Government of Czechoslovakia may pay or bestow bounties or grants on exports from that country as follows: barley 30 crowns; malt 40 crowns; rye 38 crowns; oats 36 crowns per 100 kilograms. The information shows that exporters of malt now receive certificates from the Czechoslovak Government which entitle them to the remission of customs duties on the importation into Czechoslovakia of certain designated articles, and it appears likely that exporters of the other commodities may receive such certificates in the future. It is considered that the remission of customs duties upon imports in consideration of the exportation of the commodities mentioned involves a payment of a bounty or bestowal of a grant upon exportation within the purview of Section 303 of the Tariff Act of 1930,25 and a declaration of bounty pursuant to that Section is in contemplation.

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You are requested to inform the Czechoslovak authorities that while we are extremely anxious to make it possible to avoid the publication of a declaration of bounty, such a declaration is mandatory under our law. Hence in order to avoid a declaration of bounty and imposition of additional duty it is necessary that the practice described above be discontinued so far as exports to the United States are concerned. You should emphasize the mandatory nature of our law on export bounties and grants and make it clear that no trade agreement or other negotiation can relieve the Secretary of the Treasury from the obligation of imposing countervailing duties.

Our imports from Czechoslovakia of the products in question other than malt are negligible. Our imports from Czechoslovakia of malt, though significant, are not large. Hence it is hoped that Czechoslovakia may be able, without material loss to its agricultural interests, to discontinue the issuance of certificates on exports to the United States.

We learn informally from Treasury that they will refrain from making a declaration of bounty for a few weeks pending the outcome of your conversations with the Czech authorities.

Hull
  1. 46 Stat 590, 687.