Memorandum by the Chief of the Division of Trade Agreements (Hawkins)

Conversation: Mr. H. O. Chalkley, Commercial Counselor, British Embassy;
Mr. Francis B. Sayre;
Mr. Harry C. Hawkins.

Mr. Chalkley called by appointment to discuss matters relating to the proposed trade agreement with the United Kingdom. After some general discussion as to the manner in which the situation is developing at the Imperial Conference in London, Mr. Sayre referred to the British inquiry some time ago regarding the extent of the concessions which the United States on its side might be prepared to make in a trade agreement and to the tentative estimates which we gave to Mr. Chalkley on that occasion. Mr. Sayre said that since then we have continued our studies and now find, on the basis of more complete data, that our first estimates rather materially understate the extent of the concessions that it might be possible to make; that we think it desirable to advise Mr. Chalkley to this effect so that he will be under no misapprehension as to what it might be possible for us to do.

Mr. Sayre had before him a copy of the tabulations prepared by the Trade Agreements Committee on the basis of its later and more complete studies and said that he would be glad to show them to Mr. Chalkley for his confidential information. Mr. Chalkley looked them over and began taking notes on them. After examining them and asking questions, he finally remarked that this material is extremely important and interesting and inquired whether he might not have a copy for confidential transmittal to London.

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Mr. Sayre replied that he thought there would be no harm in this, and gave copies to Mr. Chalkley.50 However, in doing so Mr. Sayre stressed the tentative nature of this material, pointing out especially that concessions to the extent indicated could be granted only if there were a complete quid pro quo. Mr. Chalkley said he understood this to mean full compliance by the United Kingdom with the requests that we had submitted. Mr. Sayre emphasized that it meant more than this; that the requests submitted are minimum and relate only to products on which the United Kingdom has commitments under the Ottawa agreements; that additional requests covering the whole range of our exports to the United Kingdom would later be submitted and that concessions by the United States to the extent indicated could only be granted if the requests to be made, as well as those already made, were satisfactorily met.

Mr. Sayre also stated that the indicated concessions by the United States are tentative in the further respect that they must be subject to modification in the light of further study and in the light of evidence that will be submitted by private interests after the regular public announcements.

Mr. Chalkley stated that he fully understood our position on the above points, and that in transmitting the material to London he would stress them.

Mr. Chalkley then referred to our list of requests already submitted, and said that almost certainly the Dominions would insist upon modifications on some points. For example, he said that he doubted very much whether Canada would acquiesce in the granting by the United Kingdom of free entry on American lumber. He thought discussions between Canada and the United States might be necessary; that it might be desirable to work out some agreement or arrangement between the lumber producers in this country and in British Columbia. He also referred to the difficulty from the standpoint of the British most-favored-nation policy of a breakdown between the different species of lumber whereby American Douglas fir would be granted better treatment than the Baltic softwoods. He inquired whether we would be prepared to discuss modifications in our requests in case it turned out that the position of the Dominions should make this necessary.

In reply, Mr. Sayre reminded Mr. Chalkley that in preparing our list of requests, we had conscientiously sought to whittle them down to the bare minimum compatible with our objective of concluding a comprehensive agreement and with satisfying the political and other pressures in this country. In view of these considerations, it is difficult, he said, to envisage the possibility of modifying our requests.

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Mr. Chalkley indicated that he understood our position, and said that we might as well postpone attempting to discuss the aspects of the matter to which he had referred until we have further information from London. He took occasion to make clear his own personal attitude in regard to the proposed agreement and his desire conscientiously to do everything within his power to work out a really satisfactory solution. Mr. Sayre replied that we know what he is doing and deeply appreciate his contribution toward realizing the important object which we all have in view.

  1. Only the covering memorandum is printed, infra.