711.652/136: Telegram
The Secretary of State to the Ambassador in Italy (Phillips)
197. Your 510, December 11. Italian oral explanation of wheat arrangement with Hungary states “an additional amount over world market price is paid by the importer, who receives facilities from the Italian Government to that end.” These “facilities” would appear to involve Government supported bonusing of wheat imports from Hungary and therefore to be preferential in effect.
Unless you perceive some objection, you should communicate the following to the Italian authorities in writing.
“My Government is of the opinion that the treatment which Italy accords in connection with the importation of Hungarian wheat constitutes a preference, is similar in its economic effects to a tariff preference, and hence is contrary to the purposes and intent of Italy’s obligation under the temporary arrangement. Nevertheless the Government of the United States will not seek to have the provisions of the temporary arrangement applied in respect of the particular arrangement [Page 496] in reference but reserves the right to object if Italy should accord a similar preference in respect of any other product imported from Hungary or in respect of any product imported from any other country.”