Foreign Relations of the United States Diplomatic Papers, 1938, The British Commonwealth, Europe, Near East, and Africa, Volume II

611.6831/190

The Secretary of State to the Minister in Greece (MacVeagh)

No. 445

Washington, March 8, 1938.

Sir: The receipt is acknowledged of your despatch No. 2009 of December 23, 1937, transmitting a copy of a note No. 26458 of December 18, 1937, from the Greek Prime Minister and Minister for Foreign Affairs, concerning Greek-American commercial relations.²

The Department has given careful consideration to the views expressed in the note of the Greek Government and has reexamined the whole question of Greek-American trade relations in an effort to devise an arrangement which would meet the desire of the Greek Government to avoid the general commitments embodied in the proposed modus vivendi and at the same time serve to obtain the substantial equivalent of non-discriminatory treatment for American trade interests in Greece. As a result of the studies made in this regard, the Department has decided to submit a proposal, based upon our past experience with Turkey, which it believes will meet the expressed desire of the Greek Government, as reported in the Legation’s despatch No. 1892 of October 4, 1937,³ of granting to the United States all the practical advantages which would result from the modus vivendi “without agreeing to any theoretical or doctrinaire principles.”

Accordingly, there is enclosed herewith the text of a note which it is requested that you address to the Greek Minister for Foreign Affairs. As you will observe, the note expresses this Government’s view that the method best suited to regulate the trade relations between Greece and the United States is an exchange of assurances incorporating the substance of the proposed modus vivendi but that, as a temporary arrangement, written assurances by the Greek Government would be acceptable that all articles of special interest to American trade, enumerated in a list attached to the note, shall be exempted from all prohibitions and restrictions on importation into, or sale within, Greece; that sympathetic consideration will be given to requests for additions to this list; that all other articles from the United States shall be granted facilities in accordance with the principles embodied in the draft modus vivendi; and that exchange in payment for imports from the United States shall be made available, when payments fall due, without any restriction or condition, at rates and charges no higher than those applicable in the case of payments for like articles from any third country.

In presenting this note to the Minister for Foreign Affairs you are requested to state that your Government appreciates the good-will manifested by the Greek Government in expressing its readiness “to consider the granting of special facilities calculated to eliminate in practice any discrimination which might eventually be found at the expense of American importations into Greece.” It should be made clear, however, that your Government does not consider such an arrangement a satisfactory method of regulating the commercial relations between the two countries if by it is meant a continuance of the present practice of bringing individual cases involving discriminatory treatment to the attention of the competent Greek authorities for adjustment.

You should state that whenever the Government of Greece feels so disposed your Government is prepared to enter into negotiations for the conclusion of a modus vivendi embodying the same principles of policy as contained in the text which was proposed in your note of July 19, 1937,⁴ and that pending such an exchange of assurances your Government is prepared to accept as the substantial equivalent of non-discriminatory treatment the arrangement set forth in the present note, which is based to some extent upon measures applied by the Turkish Government to American trade immediately prior to the removal by that Government on July 15, 1937, of all quota restrictions and prohibitions on importations from the United States.

A memorandum⁵ is enclosed for your confidential information outlining the steps which led up to the favorable treatment applied by the Turkish Government to American trade. Unless you perceive objection, you should emphasize the fact, without referring to the trade-balancing feature of the measures, that Turkey found it possible to apply this liberal treatment to American trade at a time when, like Greece, it not only had considerable funds blocked in Germany, but obtained, and still obtains, far less foreign exchange than Greece from its trade with the United States and from “invisible” items in the balance of payments between the two countries.

You should also state that unless the Greek Government takes prompt and effective steps to eliminate the present features of the Greek import control system which discriminate against American trade, your Government will be forced to consider withholding from Greece the benefits of the concessions which are now granted, or which may be granted in the future, to Turkey and other countries under trade agreements entered into under the authority of the Act of June 12, 1934.⁶

It may be stated for your confidential information that it is of course not known at this time which of the items contained in Table 3 attached to the note will be the subject of actual concessions in the proposed trade agreements with Turkey,⁷ the United Kingdom,⁸ Czechoslovakia⁹ and Canada,¹⁰ or whether such concessions as may be granted will consist of duty reductions or bindings of the present tariff treatment. For this reason, the Department feels that now is the most strategic time to press for definite assurances on the part of the Greek Government looking toward an alleviation of the adverse effect of the present Greek restrictions on American trade.

It is believed that the note and the list of products and the tables¹¹ to be attached thereto require no further comment by the Department. You are authorized to incorporate in the note which you address to the Minister for Foreign Affairs any more recent statistical data available to the Legation with respect to the decline in the share of the United States in the import trade of Greece than are contained in the enclosed draft of the note. If the note contains passages that are obscure to you or statements that in your opinion should be altered, or if you feel that changes should be made in the list of products, you should withhold action and consult with the Department by telegraph.

If after presenting the note to the Greek Minister for Foreign Affairs you should learn that the Greek Government prefers to give further consideration to an exchange of assurances in the form of a modus vivendi, you are authorized to inform the Minister for Foreign Affairs that your Government is prepared to propose a new text which would embody the same principles of policy as the text proposed in your note of July 19, 1937, but which would be more flexible in certain aspects. The Department will transmit to you shortly the text of such a new modus vivendi. However, in the event that the Greek Government intimates that neither the present proposal nor the proposed new modus vivendi would be acceptable, and it offers no definite counter proposals, you are authorized to address a note to the Minister for Foreign Affairs stating that your Government is willing to accept, as a temporary arrangement, the procedure indicated below:

(1) The Royal Hellenic Government would give written assurance that it would not limit or control by import licenses or permits or by any other method the amount of importation from the United States of any article, unless the importation of such article from all other countries is similarly limited or controlled.

(2) The Royal Hellenic Government would present to the Government of the United States a list of all articles of interest to American trade, the importation of which from the United States and other countries is to be subjected to any form of quantitative limitation or control, and would indicate in such list: (a) the amount of importations of each listed article from the United States which it intends to permit during a specified period of not less than three months; and (b) the global amount of the importations of each listed article from all countries which it intends to permit during such period. In the event that the share of the total permitted importations which is thus allotted to the United States should appear to the Government of the United States to be inadequate, the two Governments would enter into discussions with a view to an adjustment of the matter in accordance with the principles embodied in the draft modus vivendi. At least one month before the expiration of the period during which such list is valid, the Royal Hellenic Government would present to the Government of the United States a similar list for the ensuing period of not less than three months. This procedure would be repeated one month before the expiration of every such period.

(3) The Royal Hellenic Government would give written assurance that exchange would be made available in payment for imports from the United States, when payments fall due, without any restriction or condition, at rates no less favorable than those applicable in the case of payments for like articles from any third country.

It is requested that you report by telegraph the results of your conversations on this matter with the Minister for Foreign Affairs.

Very truly yours,

Cordell Hull

[Enclosure]

Draft of a Note To Be Addressed to the Greek Minister for Foreign Affairs

Excellency: I have not failed to inform my Government of the contents of the Royal Ministry’s note of 26458 of December 18, 1937,¹² relative to trade relations and the proposed modus vivendi between Greece and the United States to replace the provisional commercial agreement concluded by exchange of notes on December 9, 1924.¹³

My Government has noted with gratification the reiteration of the Royal Hellenic Government’s desire to improve Greco-American trade relations and the expression of its willingness “to consider the granting of special facilities calculated to eliminate in practice any discrimination which might eventually be found at the expense of American importation in Greece”. My Government notes with regret, however, that the Royal Hellenic Government apparently is unwilling at the present time to enter into negotiations for the conclusion of a modus vivendi on the basis proposed by the United States.

In reply to the Royal Ministry’s note my Government has instructed me to state to Your Excellency that it is most anxious to regularize the trade relations between Greece and the United States, and that in this spirit it proposed the modus vivendi which was presented to you on July 19, 1937.

My Government feels that, in the absence of formal agreement as to what in fact shall be considered as constituting non-discriminatory treatment in respect of the various forms of control of trade and of commercial payments, the method of procedure whereby the Legation of the United States shall in practice bring to the attention of the competent Greek authorities each concrete case of discriminatory treatment has not proved, and will not prove, a satisfactory method of regulating the trade relations between Greece and the United States. In support of this position, the attention of the Royal Hellenic Government is called to the fact that, despite frequent representations made by my Government with respect to discriminatory treatment of imports into Greece from the United States, the share of the United States in the import trade of Greece has declined. According to the official statistics of the Royal Hellenic Government, imports into Greece from the United States during the first ten months of 1937 were valued at only 511,103,000 [651,939,000]¹⁴ drachmas, or 4.1 [4.3] percent of the value of total imports, compared with 730,387,000 [845,891,000] drachmas, or 7.5 [7.1] percent of the value of total imports, for the corresponding period of 1936 [for 1936]. This decline in the Greek purchases of American goods has resulted in a shift of the United States from third place to seventh place as a supplier of the Greek import trade. Moreover, as was indicated in the statistical analysis of Greek imports from the United States which I presented to Your Excellency on November 29, 1937,¹⁵ the decline which has taken place in imports into Greece from the United States has occurred in those groups of articles which are the subject of import control by the Royal Hellenic Government.

On the other hand Greece has enjoyed full opportunity, on a basis equal with that of any other most-favored-nation, of participating in the expanding market of the United States. The beneficial effects of this liberal treatment to Greece is apparent from an examination of the provisional American foreign trade figures for 1937, which show that the value of the United States general imports from Greece totalled $17,773,000 as compared with $10,700,000 for 1936, or an increase of 66.1 percent. As the comprehensive trade agreements program on which my Government has embarked continues to develop it is reasonable to assume that the American purchases of Greek products will continue to expand materially.

The broad scope of the reductions in duties made in connection with the agreements so far negotiated by the United States with foreign countries under the Trade Agreements Act of 1934 was indicated in my note to Your Excellency of July 19, 1937. Since that date my Government has published formal notices of intention to negotiate trade agreements with the Governments of Turkey,¹⁶ the United Kingdom,¹⁷ Czechoslovakia¹⁸ and Canada.¹⁹ With each of these notices there has been published a list of products upon which the United States will consider granting concessions to the country in question. Products of importance in the imports into the United States from Greece with respect to which the benefits of trade agreement concessions are now extended to Greece, or with respect to which concessions may be granted in the contemplated agreements referred to above, are shown in the three tables attached hereto. As summarized in Table 1, these products accounted for 81.3 percent of the value of total imports of Greek products into the United States in 1936.

My Government has also instructed me to inform Your Excellency that it is a fundamental principle of United States commercial policy to extend the benefits of the duties proclaimed under the Trade Agreements Act of 1934 only to those countries which do not discriminate substantially against American trade.

While my Government is still strongly of the opinion that the method of procedure best suited to regularize the trade relations of Greece with the United States is by an exchange of assurances incorporating the substance of the modus vivendi proposed in my note to Your Excellency of July 19, 1937, it has taken cognizance of the fact that the Royal Hellenic Government would prefer to grant special facilities to imports from the United States with a view to eliminating the discriminatory effects of the Greek import control system. My Government therefore is willing to accept, as a temporary arrangement, written assurances by the Royal Hellenic Government that all articles of special interest to American trade in Greece, enumerated in the attached list, shall be exempt from any prohibitions, customs or tariff quotas, import licenses, or any other form of quantitative regulation of their importation into, or sale within, Greece; that sympathetic consideration will be given to requests by the United States Government for additions to this list; that articles the growth, produce or manufacture of the United States which are not enumerated on this list shall be granted facilities in accordance with the principles embodied in the draft modus vivendi; and that exchange in payment for imports from the United States shall be made available, when payments fall due, without any restriction or condition, at rates and charges no higher than those applicable in the case of payments for like articles from any third country.

My Government feels that unless the Royal Hellenic Government takes prompt and effective steps to remedy the present unsatisfactory situation with respect to Greco-American trade relations it will regretfully have to give consideration to the question of withholding from Greece the benefits of the concessions which are now accorded, or which may be accorded in the future, under the trade agreements program. As considerable time has elapsed since my Government first broached the matter of regularizing Greco-American trade relations on a new basis, I should be most appreciative if Your Excellency would inform me at an early date regarding the measures which the Royal Hellenic Government contemplates instituting with a view to alleviating the adverse effect of the present Greek restrictions on American trade.

2. Despatch not printed; for enclosure, see ibid., p. 424.
3. Ibid., p. 420.
4. See first paragraph of despatch No. 1876, September 20, 1937, from the Chargé in Greece, Foreign Relations, 1937, vol. ii, p. 416; for text of draft modus vivendi, see ibid., p. 414.
5. Not printed.
6. 48 Stat. 943.
7. See pp. 1052 ff.
8. See pp. 1 ff.
9. See pp. 223 ff.
10. See pp. 164 ff.
11. List of products and tables not printed.
12. Foreign Relations, 1937, vol. ii, p. 424.
13. Foreign Relations, 1924, vol. ii, pp. 279–281.
14. In the note sent to the Greek Minister for Foreign Affairs on April 1, the American Minister modified the import figures as indicated in brackets in this sentence (611.6831/195).
15. Not printed.
16. Department of State, Press Releases, January 15, 1938, p. 108.
17. Ibid., January 8, 1938, p. 45.
18. Ibid., September 4, 1937, p. 195.
19. Ibid., January 29, 1938, p. 156.