611.6531/413: Telegram
The Acting Secretary of State to the Ambassador in Italy (Phillips)
40. Your 41, February 26, and despatch No. 819 of March 4.10 Although the Temporary Arrangement clearly permits the choice of [Page 562] a separate “representative period” for each product subject to quantitative limitation whenever the facts so warrant, we are disposed, in deference to the wishes of the Italian Government, to agree that for the purpose of Italian quotas for the calendar year 1938, the year 1934, with certain exceptions, is generally acceptable as representative of the participation by the United States in Italian imports of products of considerable interest to American exporters. This Government therefore requests for each product listed in the Pro Memoria which is subject to license, including those on which Italy has proposed long and short quotas, except items 96 and 181a, a quota based upon the actual proportion of Italian imports supplied by the United States in 1934. As regards the global quotas proposed by Italy, this Government requests assurances that they are inclusive of permitted imports from all countries, including imports permitted by public or private clearing, compensation, or payment arrangements.
Inasmuch as countries of the Danubian basin in Southeastern Europe are the only regions where prunes are produced commercially outside of the United States, there appears to be no basis for the 27.6 percent share offered by Italy, except on the ground of preferences to Danubian countries. It is suggested that the share of Italian imports of dried prunes (tariff item 96) enjoyed by the United States during the three year period 1932–1934, namely 64 percent, is representative of this country’s participation in the trade and a quota on this basis is requested.
Raw cotton (181a). This is the most important single item in American trade with Italy and is of major importance to our national economy. However, the proportion of Italian imports from the United States during 1934 is not representative of our trade position because during that year participation by the United States, with one exception, was the lowest in the 8 years from 1929 to 1936. United States participation during the 3 year period 1932–1934, namely 71.5 percent is deemed representative and a quota on this basis is requested.
Zinc, etc. (386a). With reference to the informal official explanation of this item, please point out that item 386b is not of interest because of the small participation therein by the United States and request that a quota be established for item 386a based upon United States participation during a previous representative period.
The Italian comment concerning exposed motion picture films (948b) has been noted.
Careful consideration has been given to the list of products in Annex A of the Pro Memoria for which Italy, on the ground of prior commitments to other countries, proposes to reduce the quotas to amounts less than those to which we would be entitled on the basis [Page 563] of the United States share of imports in 1934. The effect of this proposal is to request this Government to agree to discriminatory treatment of a sizable proportion of American exports of important products in violation of the terms of the Temporary Arrangement, the definite understandings reached during the negotiations and the well-known fundamental principles of American commercial policy. One of the major issues during the negotiations was the strong objection of this Government to the preferential treatment accorded by Italy to the products of other countries. The Temporary Arrangement was entered into only after explicit assurances of the Italian Government, in particular in its communication of November 24, 1937,12 that all preferences would be totally abolished as of December 31, 1937, except those reserved for Austria. In these circumstances, this Government finds the reduced quotas in reference unsatisfactory, and, moreover, in the light of the facts just cited, is at loss to understand the viewpoint of the Italian Government in this regard.
With reference to Italy’s proposal to increase contingents for certain raw materials and semi-manufactured products (also listed in Annex A), we do not concur with the principle that enlarged quotas for certain products can compensate for reduced quotas on other products. Moreover, this Government would find it extremely difficult to justify to American exporters the acceptance of this principle. We seek only an allocation for each of these products calculated on the basis of the proportion of the trade enjoyed by the United States during the year 1934, the general previous representative period chosen. The spirit and intent of the Temporary Arrangement is to assure a fair share of trade in each product rather than to permit the arbitrary redistribution of trade along the lines proposed.
Attention is invited to the following products, subject to import licensing restrictions, which were not mentioned in the Pro Memoria: Mules (2), honey (42a), wheat flour (70a), dried fruits n. o. s. (97), spinning machinery (414a and b), sewing machines without stands (426a), milling cutters, reamers, twist drills (470), aniline derivatives (748), and leather shoes (888).
Inasmuch as all of these articles are of considerable interest to the trade of the United States, it is requested that the total quantity of each product permitted to be imported be established and that a proportionate share of each be allocated for the United States. The year 1934 is satisfactory as a representative period for each product except wheat flour.
Although this country has not been an important supplier of wheat flour to Italy in recent years, the United States was the chief source [Page 564] of Italian imports during the period 1928 to 1933. During that period our share ranged from a low of 41 percent in 1931 to a high of 61 percent in 1929. Hence, the United States participation of 21 percent in 1934 can hardly be considered representative. It is suggested that the average share enjoyed by the United States during the 3-year period 1932–1934, namely 40 percent, is representative and a quota on that basis is requested.
As regards the regime of “bolletta” the Temporary Arrangement does not permit the restriction of imports solely upon the basis of a fixed percentage of prior importations. In fact, the provisions of the Arrangement clearly provide that whenever importations are subjected to a regime of regulation by permits issued to individuals or organizations, appropriate quotas shall be allocated on the basis of the proportionate share formula. Therefore, as regards the articles listed in Annex B of the Pro Memoria as well as those set forth hereunder, all of which are subject to “bolletta” and are of considerable interest to the United States, this Government requests that the total quantity of each product permitted to be imported during a specified period be established and that a proportionate share of each be allotted for the United States on the basis of a previous representative period. The additional bolletta items in reference are waxed cotton fabrics (197), chains and parts of iron and steel (323a), fine tools and implements (476b), cameras, except lenses (482), electric measuring instruments (491), telephone and telegraph apparatus [not radio] (497), parts of automotive vehicles (523), parts for airplanes (Ex 536), electric carbons (552), manufactures of asbestos fabric (598), manufactures of wood, n. o. s. (623), natural vaseline (652a), sulphoricinates of ammonium, etc. (664), greases for machines, containing lubricating oil (666a), organic chemical products, n. o. s. (769), medical specialties (782a), specialties for arts and domestic use, prepared for retail sale (804), hides in strips, for hat bands (811–b–1), rubber tubes, combined with textiles (828–b–1), rubber thread (830a), rubber tires and tubes (834), rubber transmission belting (835), rubber manufactures, n. o. s. (843b), emery paper (847–I), vulcanized cardboard (848–e), and small wares, n. o. s. (911e).
Unless you perceive objection, please present the substance of the foregoing to the appropriate officials in writing13 and at the same time express the hope of this Government that Italy can find its way clear to readjust the proposed quotas and bolletta restrictions so as to bring them in line with the provisions of the Temporary Arrangement. You may say also that if the administrative steps necessary for the transfer of the bolletta items to the quota list will require considerable [Page 565] time, this Government would appreciate having first attention given to its requests concerning quotas on products now subject to license. That is to say, we do not wish to have action concerning products on the license list unduly delayed because of our requests concerning the bolletta items.
- Neither printed.↩
- See telegram No. 488, November 24, 1937, 6 p.m., from the Ambassador in Italy, Foreign Relations, 1937, vol. ii, p. 466.↩
- Presented to the Ministry for Foreign Affairs as note verbale No. 628, April 25, 1938.↩