Foreign Relations of the United States Diplomatic Papers, 1937, The British Commonwealth, Europe, Near East and Africa, Volume II

611.4181/287a

The Department of State to the British Embassy

Memorandum

1. The proposals submitted by the Government of the United States on March 2, 1937, with respect to the treatment which it would request for certain products affected by the Ottawa agreements have been carefully reexamined in the light of the considerations advanced by the United Kingdom Government in its memorandum of April 13, 1937. The results of these further studies are set forth in the attached supplementary statement⁴⁵ which indicates such modifications as the Government of the United States finds it possible to make in its previous proposals, and supplies the further information or explanation requested by the United Kingdom Government on certain points.

2. In reexamining its proposals of March 2, the Government of the United States has taken into account the considerations advanced by the United Kingdom Government in its memorandum under reference. However, for reasons set forth in the paragraphs which follow, it has not found it possible to make any extensive modifications in the requests previously made.

3. In formulating its memorandum of March 2 and its reply to the questionnaire submitted on March 17 by the Commercial Counsellor of the British Embassy in Washington, the Government of the United States had in view the finding of a basis for a comprehensive trade agreement. Were the Government of the United States to accept as the basis for an agreement the proposals made in the United Kingdom Government’s memorandum of April 13, it would find itself compelled to restrict correspondingly the concessions which it would be prepared to accord the United Kingdom. The Government of the United States frankly does not believe that the negotiation of a narrow and limited trade agreement of this type would be worth while in view of the opportunities now presented, or constitute adequate leadership in the field of a general liberalization of trade relations on the part of the Governments of the two largest commercial nations of the world.

4. The United Kingdom Government will readily appreciate the fact that the nature of the concessions which the Government of the United States deems essential to a comprehensive trade agreement grows out of the fundamental requirements of the policy pursued by it in the field of international trade relations. The Government of the United States desires to conclude trade agreements with as many countries as possible in order that the beneficial effects of reciprocal relaxation of trade barriers be given the widest application. But the carrying out of such a program requires that the interests of the various classes of American producers be taken into account. Hence the Government of the United States may easily find itself forced to contemplate the abandonment of all efforts to enter into trade agreements with countries whose exports to the United States consist predominantly of primary products, unless improved opportunities for the exportation of American agricultural and other primary products, of the kind involved in the requests for concessions made in the memorandum of March 2, be obtained.

5. The considerations set forth above have a special applicability in the case of the United Kingdom and the British Dominions. With reference to the third paragraph of the United Kingdom Government’s memorandum of April 13, it may be pointed out that whatever direct compensations the United Kingdom Government may or may not be in a position to offer the Dominions, the Dominions cannot fail to benefit from a policy of cooperation in this matter. A satisfactory agreement between the United States and the United Kingdom would pave the way for similar agreements between the United States and the Dominions, negotiations with which must necessarily remain in abeyance until it is ascertained whether a basis for a comprehensive trade agreement between the United States and the United Kingdom can be found. Moreover, in so far as economic relationships among the countries of the British Empire can be harmonized with the possibilities of expanding world trade, the movement for a constructive economic world program, from which all countries would enjoy immeasurable benefit, will, to a vital extent, be strengthened and assured of success. Above all, success in this field of effort will serve the supreme end of promoting world peace.

6. With reference to the fifth paragraph of the United Kingdom Government’s memorandum under reference, in which it is stated that in general the Government of the United Kingdom would be unable to entertain proposals involving the binding of existing “revenue” duties, it would be appreciated if the Government of the United Kingdom would explain the sense in which the term “revenue” duties is used in this connection.

7. The United Kingdom Government, in its memorandum of April 13, points out that concessions which it would be necessary for the United Kingdom Government to make in a comprehensive trade agreement with the United States might be regarded as undesirable not only by certain producers in the Dominions, but also by some producers in the United Kingdom. The United States Government must also envisage the possibility that the concessions which the United States would be called upon to make in such an agreement might likewise be regarded as undesirable by many producers in this country. Difficulties of this nature are not to be avoided if any progress is to be made in reducing the barriers which are impeding international trade. It may be safely anticipated, however, that such immediate effects as the mutual concessions may have upon certain producers in each country will be more than compensated for by the benefits derived by all producers through improvement in both domestic and foreign markets, which inevitably will flow from the restoration of healthy international trade relations.

Washington , May 18, 1937.

45. Not printed.