611.6531/420: Telegram
The Ambassador in Italy ( Phillips ) to the Secretary of State
[Received 8:20 p.m.]
193. Department’s No. 40, April 23, 3 p.m. Italian reply dated August 1 received yesterday. Text in translation reads as follows:
“The Royal Ministry of Foreign Affairs has the honor to advise the Embassy of the United States in answer to note verbale No. 628 of April 25, 1938 that the propositions and objections regarding quotas admitted and to be admitted for American imports into Italy contained in that note have been carefully examined in consultation with the Royal technical administrations.
It has been ascertained by the latter after a careful examination in order to determine the real importance and possible consequences of accepting the requests formulated by the Embassy of the United States in so far as they concern the integral and automatic application of the criterion of article 8 to all items of American imports into Italy that not only would imports be largely out of proportion with the requirements but also that the resulting effects would be prejudicial to the country’s economic structure.
Besides as known to the Embassy of the United States it was understood during the negotiations that the provisions of article 8 regarding quotas would not be interpreted absolutely rigidly but in a spirit of comprehension of the needs of Italy’s economic position and in harmony with adequate concessions which on the basis of expected negotiations the United States Government was to grant to Italian exports.
The criterion adopted, that is to reduce certain items of American imports equitably compensated by adequate increases of others, is therefore in accord with the spirit of the agreement and the understanding that led to its acceptance.
With this premise the Ministry of Foreign Affairs has the honor to advise that the competent Royal administrations do not consider it possible to recede from the reductions proposed for the goods indicated in enclosure A (first list) to the pro memoria dated February 19, 1938 of the Royal Ministry for Foreign Trade and Exchange, these reductions being compensated by corresponding increases to be granted to other goods (enclosure A second list to the above-mentioned pro memoria).
However in order to meet similar requests of the Embassy of the United States formulated in the note verbale in question provision has been made for the allocation of further quotas for American imports into the Kingdom as per list attached.
In compiling this list the following desiderata of the United States Government have been taken into consideration:
- (1)
- The requested eight (sic) items not contained in the former list, being of a value less than $25,000, have been included.
- (2)
- The requested 35 products which up to the present were admitted on the 1934 quota basis (‘bolletta’) have been included in view of the opposition of the United States to accepting the ‘bolletta’ (quota) system.
- (3)
- Provision has been made to revise the zinc quota by including it in customs sub item 386a; the quota in the attached list substitutes therefore the quota indicated in the first list.
This list contains the quotas allotted to the products of the United States as of considerable interest to American exporters with the exception of the following six items for which the reduction of approximately 50% as indicated in the pro memoria of February 19 has been maintained: 497 subparagraph c loud speakers and amplifiers et cetera; 497 subparagraph d space parts for radio telegraph apparatus; item 551 manufactures of emery; item 798 varnishes and enamels, liquid or in paste; 947a1, photographic films not exposed sensitized; 948a [947a?] motion picture films not exposed.
These reductions are justified by the reasons explained and motivated by the situation of the national production in relation to the requirements of the home market.
In compensation of the reductions effected with regard to the six above-mentioned items estimated at approximately 6 million lire the Royal Government is disposed to grant a quota of 192,000 quintals, already allotted, for item 650 solid paraffin which previously was reduced to 150,000 quintals, this constituting an increase in value of about 8 million lire and largely compensating the reductions made in the six stated items.
The Royal Ministry of Foreign Affairs has the honor to state that in conformity with the desire expressed by the Embassy of the United States a special higher quota has been granted for phosphates in the amount of 47,500 tons; the quota for manufactured tobacco imported through the Italian tobacco monopoly has likewise been increased as a result of special agreements concluded by the above mentioned monopoly with American manufacturers from 11,655 kilos, the amount allotted, to 35,000 kilos.
The increases granted evidences the favorable disposition of the Royal Government to examine with large comprehension every request of American exporters to which the provisions of article 8 justly interpreted may be applied when such requests are not in opposition to the present compelling needs of Italian economy, bearing in mind also the exchange sacrifices which the increasing deficit of the trade balance with the United States at present imposes.”
Careful examination of Embassy’s records discloses nothing which confirms understanding mentioned in third paragraph of the foregoing.
List of additional quotas follows …
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Please advise Commerce.