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

611.60H31/87

Memorandum of Conversation, by the Assistant Chief of the Division of Trade Agreements (Deimel)

[Washington,] February 5, 1938.

Participants:	Mr. Constantin Fotitch, Minister of Yugoslavia
	Mr. Rybář, Counselor of Yugoslav Legation
	Assistant Secretary Sayre
	Mr. Tittman, Eu2
	Mr. Coe, Eu3
	Mr. Deimel, TA

The Yugoslav Minister called on Mr. Sayre by appointment today to present a memorandum containing his Government’s reply to our counter proposals handed him on December 15.⁴ He read the memorandum which said, in substance, that the Yugoslav Government would accept our points 1 and 2 regarding transferability of quotas and a single global quota for minor controlled products; that as to point 3, his Government pointed out that the transferability of quotas would make it possible to expand our automobile shipments, and that further than this, the Yugoslav Government would be willing to give us an increased quota for automobiles if our imports from Yugoslavia increased. Mr. Sayre pointed out that the transferability of quotas would not give much scope for increase in our automobile trade since not only would that transferability be needed within the other quotas themselves, but our automobiles formed the major proportion of Yugoslav controlled imports from us; as to the further proposition he pointed out that this seemed to involve the principle of bilateral balancing which, of course, we could not possibly accept.

The Minister said he expected as much and thought it would be better if he did not deliver this memorandum, but took it back and rewrote it to delete the reference to imports from us, and then if he handed it in it would form the basis for discussions of what increase in automobile quotas for us would be acceptable. Mr. Sayre mentioned some of the statistics regarding Yugoslav imports of automobiles to Mr. Fotitch, pointing out how our share had declined from 48 percent of the total in 1935 to 6 percent for the first six months in 1937, and that our point of view would be that we ought to get 48 percent of the total; however, that it seemed to him to be up to the Yugoslav Government to make an offer and then we could consider that. The Yugoslav Minister said that he was expecting some further word by the next mail and hoped he could bring it in when he brought the revised memorandum of reply.

There was some discussion of the increase in our imports from Yugoslavia, and at the end the Minister asked if we could phone him the total of our imports from Yugoslavia for 1937 as soon as these figures are available.

2. Harold H. Tittman, Assistant Chief of the Division of European Affairs.
3. Robert D. Coe, of the Division of European Affairs.
4. Foreign Relations, 1937, vol. ii, p. 593.