611.6531/428: Telegram
The Secretary of State to the Ambassador in Italy (Phillips)
89. Your 224 of September 2. It appears from the Pro Memoria of February 19, 1938 and the Commercial Attaché’s comment thereon that the Italian Government took the general position that only those products for which the proposed quotas would be equivalent in value to not less than $25,000 annually, estimated on the basis of 1937 import price levels, are of “considerable interest” to the United States within the meaning of the Temporary Arrangement.
The Department in its No. 40 of April 23, 1938, requested that quotas be established for products not mentioned in the Pro Memoria and, insofar as could be determined, not coming within the Italian formula in certain cases, but it purposely did not agree to the formula or comment thereon. The chief reasons for this were—(1) the value of exports for any product for a given period is not the only factor in determining whether it is of “considerable interest”; and (2) it is probably impracticable if not impossible to devise a formula which would be inclusive of all cases which might arise. For example, a quota for typewriters might be warranted on a value basis but may not be warranted for typewriter parts on the same basis. Yet typewriter parts would be of considerable interest because old machines could not be serviced without them and sales of new machines would be adversely affected if there were doubt about the future availability of parts for repairs.
It will be noted from the foregoing that it is advantageous not to attempt to agree upon a specific formula for determining which products [Page 577] are of considerable interest, if that can be avoided. On the other hand, since it is impracticable to determine in advance all of the factors which may exist in specific cases, it is necessary to follow broadly some general rule in preparing preliminary desiderata. In this connection you are informed that the additional products mentioned in the Department’s No. 40 of April 23, 1938 are for the most part those in which the trade amounted to $25,000 in 1934, calculated on the basis of 11.68 lire to the dollar. This criterion seems equitable and reasonable, but in view of the fact that it was not followed strictly and the fact that Italy has agreed to establish quotas for additional products as requested by this Government, it is desired that you avoid making an issue of the question of which products are of “considerable interest.” Hence, if the Embassy is in doubt concerning complaints from the trade with respect to any product not referred to in the Department’s No. 40 of April 23, 1938, it is suggested that you report to the Department in each case.