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

Participants: The Minister of Yugoslavia, Mr. Fotitch
Mr. Hawkins
Mr. Coe
Mr. Tittman
Mr. Deimel

Mr. Fotitch, the Minister of Yugoslavia called to inquire as to our views with respect to the memorandum he had recently handed in pursuant to his conversation of February 5, 1938, with Mr. Sayre.

It was pointed out that on the first three points mentioned in his memorandum, relating to (1) carrying over of quotas from quarter to quarter; (2) a single quota for minor articles; (3) carrying over from quota to quota; we were in accord, but that with respect to the fourth point relating to imports of American automobiles into Yugoslavia the proposal appeared to us inadequate since it meant an increase in our share of the Yugoslav market from the quite unsatisfactory [Page 691]6 percent of last year only to 18 percent of the total whereas on a representative period basis we should have 48 percent.

In the ensuing discussion the Minister mentioned Yugoslavian exchange difficulties, the trade balance between Yugoslavia and the United States and also an alleged preference in Yugoslavia for lighter automobiles than the American type because of the high cost of gasoline and said he thought that the American industry could probably not sell a larger proportion of Yugoslavian purchases; he intimated that, if it could, means might be found of increasing the quota after it had been filled.

The last-mentioned possibility was further discussed and at the Minister’s request it was agreed that we would give the question further study with a view to devising if possible some formula by which we could be assured that any initial quota would not be absolute and would be subject to expansion on the basis of evidence that the demand for American automobiles in Yugoslavia would afford scope for increased sales beyond the quota.