The Yugoslav Minister called at the Division this morning to leave
his Government’s reply to our latest note on Yugoslavia’s war-time
indebtedness to the United States10 The opportunity was taken to read
to the Minister the attached memorandum outlining our position with
respect to the trade proposals communicated by his note of April 6,
1937. The Minister had previously been advised orally that neither
of his Government’s two proposals was sufficiently in harmony with
our trade policy as to make it likely that we could give a favorable
reply with respect to either.
The discussion which followed the reading of the memorandum indicated
that the Minister would comment favorably to his Government upon its
contents. It was clear to the Minister that the memorandum contained
a counter proposal to those of his Government. He was supplied with
a copy of the document and said that he would send it to Belgrade by
mail with his comment on June 9.
It was explained orally to the Minister that if the year 1935 as a
base year seemed disadvantageous from the Yugoslav point of view the
Department would probably have no objection to the choice of a more
representative period for the application of the formula suggested
in paragraph one of the memorandum.
[Annex]
Memorandum Concerning Yugoslav Trade
Proposals
(1) This Government cannot accept any restrictions on Yugoslav
imports of American goods which do not conform broadly to the
principles of equality of treatment outlined in the note which
was handed to the Yugoslav Minister on December 17, 1936.10a
This Government
[Page 591]
is
therefore able to accept a limitation of imports of any article
produced in the United States to a given percentage of the
imports from the United States of such article in a given period
only if the global amount of such imports from all countries is
similarly restricted, and the percentage applying to imports
from the United States is not less than that applying to the
global amount of imports of the article in question.
The principle described above is illustrated by the following
figures, which are purely hypothetical:
|
Imports into Yugoslavia in base
period |
Proposed imports into Yugoslavia
in 1938 |
| From all countries |
100 |
80 |
| From the United States |
25 |
20 |
Assuming that imports of any restricted article from all
countries are reduced to 80 percent of the amount imported in
the base period, then the Yugoslav Government would be required
by the above formula to be prepared to grant permits for the
importation from the United States of an amount of the
restricted article equal to not less than 80 percent of the
amount imported from the United States in the base period.
It should be observed that the United States would not under this
formula, require that the percentage applied to imports from the
United States be as favorable as that applied to any individual
country, but only that it be as favorable as that applied to all
countries in the aggregate.
(2) In general, this Government holds that quantitative
restrictions applied in accordance with the formula indicated
above should be applied separately to each article and in terms
of the physical quantity of imports of each article. In view,
however, of the peculiar difficulties faced by Yugoslavia at the
present time, this Government would be prepared to accept
temporarily the application of the formula to the total value of
imports of each of the controlled articles, should the Yugoslav
Government consider this preferable.
(3) This Government will be prepared to give careful
consideration to any proposals which the Yugoslav Government may
make with a view to giving exceptional treatment to any
particular controlled article or articles. If examination of the
economic circumstances affecting trade in such an article should
make it appear that in the absence of quantitative restrictions
Yugoslav imports of such an article from the United States would
in all probability bear a smaller ratio to imports in any
previous period than would total imports of that article, then
this Government would be prepared to accept an appropriate
modification of the formula indicated above, with respect to the
article in question.
[Page 592]
(4) In view of the close economic relations which exist between
Yugoslavia and those other countries of which a large and
substantial part was formerly included in the Austro-Hungarian
Empire, this Government would be ready to give sympathetic
consideration to any proposals which the Yugoslav Government may
make concerning special favors it may desire to accord to the
trade of these countries in derogation of the formula indicated
in paragraph (1) above.
(5) However, this Government is ready to give sympathetic
consideration to any further proposals which the Yugoslav
Government may wish to make, bearing in mind the essentials of
this Government’s commercial policy as set forth above, and in
the note which was delivered to the Yugoslav Minister in
Washington on December 17, 1936.
