Mr. Secretary: With reference to your
letter of December 17, 1936, I have the honor to transmit to Your
Excellency, by the order of my Government, two alternative proposals
for the regulation of our commercial relations.
The Royal Government has given detailed consideration to the view
expressed in the abovementioned letter and by its present proposal,
desires to meet, to the utmost, the proposals made for the
regulation of that part of American exports into Yugoslavia which is
limited by the recent regulations regarding the control of imports
and which my Government had to adopt reluctantly, owing to the
general economic situation in Central Europe. The Royal Government
is making this proposal, (in spite of the fact that for the national
economy it represents a great effort) in order to maintain the
application of the most favored nation clause in our mutual
relations, which corresponds also to the policy of the United States
and is the basis on which the economic relations could be developed
and improved.
[Enclosure]
Yugoslav Proposals for the Regulation of
Commercial Relations Between the United States and
Yugoslavia
1) The importation of controlled articles from the United States
would have to be adjusted in relation to a percentage
established in the year 1935, that being the last year before
the control of importation was put into effect and in which year
the entire importation of controlled articles from the United
States into Yugoslavia amounted to 30,920,000 dinars. We are
willing to accord also to the United States the same treatment
as we did to England (with whom our situation was more
favorable), that is to say 50% of the importation of the
controlled articles in 1935, which means that we would import in
this year the above mentioned articles to the amount of 15.5
million dinars. The system which was accorded to England could
be retained in this instance, i. e. to permit to every importer
of the controlled articles from the United States an importation
to the extent of 50% of his importation of the same article in
1935.
This system excludes compensations, i. e. the necessity that the
importers of American articles should find exporters of our
products. According to this plan, this system is very much
simplified. It has, however, the drawback for us that it might,
in case of a disadvantageous
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development of our exports to the United
States in relation to the year 1935 lead to a situation in which
we would allow a larger importation of controlled articles from
America than that which existed in the year 1935. We can,
therefore, only propose this system with the reservation that
the ratio of our export to our import (in our relations with the
United States of America) in the year 1937 and thereafter will
be the same as that existing in 1935 or in any case not worse.
In such a case we would have to ask for a revision of the import
percentage from the year 1935.
2) The import of controlled articles from the United States is
established on the ratio of our export to the United States. In
other words, the amount of our importation of controlled
articles would depend on the amount of our export. Here the
export of copper would have to be excluded, as we do not
participate in the profit of the export of that metal, as copper
is the product of the Bor Mines, which are the property of a
French company, registered in Paris. The credits established for
the exported copper, therefore, do not belong to us but to the
French company.
The import of controlled articles from the United States would
have to represent 25% of our export to the United States
(excluding copper), on the ratio of the last yearly quarter. We
have to propose this ratio of 25% for the reason that our import
of uncontrolled, articles (cotton and raw materials) from the
United States is much larger than the import of the controlled
articles, which represent only 10% of our imports.
In the meantime, independently of the amount of our export, we
propose to guarantee, in any case, the import of controlled
articles to the amount of 50% of the importation of such
articles in 1935. (The total import of controlled articles in
1935 amounted to 30,000,000 dinars).
One example will give a good illustration of this:
For every hundred units of value of our exports into the United
States (copper not included) an amount of 25% of the import of
controlled articles is allowed (the import of uncontrolled
articles is completely free).
| In 1936 our export into the
United States amounted to |
214 mil. din. |
| From that sum was applicable
to copper |
118 mil. din. |
| Remaining |
96 mil. din. |
According to the above formula the import of controlled articles
into the United States would amount, in the year 1937, to 25% of
the 96 million dinars, i. e. 24 million dinars or 80% of the
imports in the year 1935.
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If our exports to the United States should rise to 120 million
dinars, the import of controlled articles would reach a total of
100% of the import for the year 1935. Naturally, if this
percentage should be exceeded the import would be larger than in
1935.
As will be seen, this system also excludes compensation and is
now applied to England with very satisfactory results for both
sides. The general standard of exchange has greatly
increased.
