Office of the Historian

711.652/131b: Telegram

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

Washington, December 2, 1937—7 p.m.

187. Your telegram No. 492, November 29, 6 p.m.43 The Department is prepared to accept the exemption from the provisions of article VIII of the preferences to Austria set forth in list A,44 but it is unwilling to accept exemption of those set forth in list B.45

Hence you are requested to make the following counter proposal: Add the following sub-paragraph to the last paragraph of Article 19.

“(4) Tariff advantages now accorded by Italy to Austria, and until December 31, 1937, advantages now accorded by Italy to Albania, Bulgaria, Hungary, and Yugoslavia”.

You are requested to seek from the Italian Government a confirmation that their understanding of the meaning of the word “now” is the same as ours, namely, that it limits the preferences to those set forth in list A. In the event that the treaty should not be signed before [Page 478] the end of the year, everything following the word “Austria” should of course be deleted, and the words “accorded by Italy to Austria on January 1, 1938” substituted for “now accorded by Italy to Austria.”

Since the quotas set forth in list A are customs quotas and not absolute quotas, it is our understanding that the proposed treaty provision would render the provisions of the third paragraph of article VIII inapplicable to these customs quotas, but would not affect their application to absolute quotas or to additional customs quotas. Hence the United States would not be entitled to claim any share of the amount of any article enumerated in list A which is admitted from Austria at the preferential rate of duty. But if there is also an absolute limitation on the total amount of imports of such an article, then the United States would be entitled to a share, determined in accordance with article VIII, of the total permitted amount of such imports, including all imports from Austria. On the other hand, if, in addition to the limited amount of such an article which may be imported at the preferential rate, an unlimited amount should be permitted to be imported from Austria at the general rate, then imports of such article from the United States would likewise be exempt from quantitative limitation. In order to avoid any possible misunderstanding on this matter, the word “tariff” has been inserted. You are requested to make this clear to the Italian authorities.

Hull
  1. Not printed.↩
  2. List A sets forth the preferences granted to Austria by Italy to be continued in effect after January 1, 1938, listed according to description of merchandise, percentage of reduction in duty, and customs quotas in quintals.↩
  3. List B sets forth the preferences which the Italian Government reserved the right to grant Austria after July 1, 1938.↩