711.652/101: Telegram

The Secretary of State to the Ambassador in Italy (Phillips)

125. Your 31818 and 320 of July 7 and 10, 1937. We are very much gratified that the Italians have indicated a disposition to accept our text of Article 8 including the exchange provision. However, we do not consider that an agreement has been reached in respect of that Article in the absence of a definite understanding on the important related question of the exceptions proposed by Italy in Article 19 (preferences to Danubian countries) concerning which certain information was requested of the Embassy last March (Instruction No. 56 of March 17, 1937) and again in the Department’s telegram No. 111 of June 23, 1937. Until such information is received we are not in position to give final consideration to this question, since if this were left open to arbitrary interpretation the exceptions which the Italians might invoke thereunder could conceivably nullify the effect of the provisions of the article.

As the Embassy is doubtless aware, it was decided some months ago that in these cases in which negotiations have been inactive for a considerable time formal public announcement of the intention to resume negotiations would be made, in the event negotiations are resumed, in order that interested persons might have an opportunity again to present their views. Also, the country committee will require [Page 449] considerable time to bring up to date the statistical information prepared in 1935 and to prepare appropriate desiderata and examine thoroughly the Italian proposals.

Considering the large amount of work which these activities would involve, we hesitate to place the necessary machinery in operation until an agreement has been reached in respect of Article 8 and the vitally related question of the exceptions proposed by Italy in respect of Danubian countries. Once such an agreement has been reached, we would be ready to proceed at once to take all the necessary steps to enter into trade agreement negotiations and to give consideration to all important products entering into the trade between the two countries.

It will be readily seen that any expression of our views with respect to the Italian trade agreement proposals which would be of practical value would involve a statement of our possible objections thereto and a presentation of counter proposals. The presentation of such a statement to the Italians, obviously, would amount to entering into negotiations at a time when a final agreement has not been reached in respect of Article 8.

Although it is not at all our intention to delay trade agreement discussions, we would not like to have such discussions slow up negotiations for the commercial treaty which we are particularly anxious to expedite and, if possible, to complete in time to present to the Senate at the present session of Congress.

Instructions with respect to all of the remaining articles of the proposed treaty of commerce and navigation are being circulated for initial.

  1. Not printed.