711.652/119: Telegram

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

177. Department’s 176 of November 20, 2 p.m. There is quoted below a memorandum of Mr. Sayre’s conversation with the Italian Ambassador on November 22, 1937, concerning the commercial treaty negotiations now in progress between the United States and Italy.

“The Italian Ambassador came in to see me this morning to say that he had received a cable from his Government asking whether anything could be done to hasten our reply to Rome with regard to the commercial treaty now under negotiation. The Ambassador pointed out that the date of expiration of the present treaty is nearing and that the Italian Government is very anxious to have the new treaty signed before the old treaty expires.

“In reply, I said that I quite realized the time element. I said that we were having difficulty in framing our reply because of the fact that the Italian Government has not yet been able to define the extent of the preferences which Italy is now extending to the Danubian countries. I went on to say that it would put us in an extraordinarily difficult position if we submitted to the Senate for ratification a treaty exempting from its most-favored-nation provisions relations with the Danubian countries and were unable to define to the Senate how great those exemptions were or exactly what is their nature. I said that we could not very well sign a treaty with so much in the dark and hope to secure its ratification.

“In view of the shortness of time until December 15th, when the old treaty expires, I suggested to the Ambassador that perhaps the Italian Government could best be protected by entering into some kind of an arrangement with the United States whereby the Italian Government would assure the United States that it would cease discriminations and extend to the United States most-favored-nation treatment as defined in Article VIII of the proposed new treaty. I said that the United States could then say to the Italian Government in return that, in view of its assurances to accord most-favored-nation treatment to the United States and as long as it continues in fact to do so, the United States will be glad to give to Italy the benefit of all concessions made in existing or future trade agreements to other countries.

“The Ambassador said that he understood our situation and was apparently favorably impressed with the suggested arrangement.”

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The foregoing is sent to you for your information. It constitutes rather a tentative suggestion than a definitive offer. Department is now studying the suggestion as to details of procedure and the precise substance of the arrangement. We will cable you further with respect to proposed arrangement within the next few days. It may be that Italian Government after Suvich’s conversation with Sayre will itself make proposals.

Does this not answer your telegram No. 484 of November 22, 4 p.m.

Hull