711.652/117: Telegram

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

471. Department’s 168, October 19, 5 p.m. The Foreign Office has now replied in respect of the question of preferences granted to Albania and the Danubian countries stating

“The Italian Government confirms that it must reserve the right to make exception in principle to the application of the most-favored-nation clause as regards the Danubian countries and Albania just as the United States makes similar exception with respect to Cuba and the Panama Canal Zone.

The Italian Government, however, states that in fact almost all of the preferential treatments, now granted only to Albania, Austria, Bulgaria, Yugoslavia and Hungary will cease to be in force on December 31, 1937. The Italian Government will, within 30 days after that date, communicate such of the preferences as remain in force, their extent and the period of their validity.

In any event the Italian Government is prepared to postpone to the trade agreement negotiations a reciprocal settlement of the question and the final determination of its concrete terms upon the understanding that until that time neither of the two Governments will advance any objections with respect to the present preferential concessions.”

In view of the present Italian negotiations both with Austria and Hungary for a reduction in the amount of preferential treatment granted them by Italy it might appear reasonable to await the conclusion of these negotiations before requiring full information regarding the extent of the preferences which in any event will be modified by the negotiations now under way.

Therefore, I believe that the commitment assumed by the Italian authorities to communicate the full extent of all preferences in force after December 31, 1937, might afford the basis for inclusion of temporary provisions in the commercial treaty in order that it may be signed and its other provisions brought into operation at the earliest [Page 462] possible date. The final settlement of the Danubian and Albanian preferences could then be left for subsequent negotiations next year presumably in connection with the trade agreement discussions.

The Foreign Office is anxious to conclude the present negotiations as soon as practicable and in any case before December 15 and thus would appreciate an early reply to this as well as to the other questions pending in connection with the draft treaty, see Embassy’s telegrams 425, September 23, 6 p.m.; and 329 July 14, 6 p.m.; and despatch No. 579, September 24, 1937.31

  1. Despatch No. 579 not printed.