The Minister in Yugoslavia (Lane) to the Secretary of State
[Received 9:50 p.m.]
118. First meeting with Yugoslav trade delegation took place this morning. Following is substance of statement given to press this afternoon by the Foreign Office:
“The Governments of the United States and Yugoslavia, after having up to the present time maintained contacts through regular diplomatic channels, have decided to entrust to a delegation the regulation of the question of the application of Yugoslav import control.” (Here follow names of members of delegation and statement that first meeting was held this morning.)
Pilja18 stated that while subsequently Yugoslav Government might be prepared to sign agreement along the lines of the Department’s draft modus vivendi17 (as transmitted with Department’s instruction No. 55 of June 24) present desire is to conclude “practical agreement” covering solely importation of automobiles. Following agreement on this point, modus vivendi to be followed by formal treaty might be negotiated including settlement of other matters of mutual economic importance. He advanced as reason for non-acceptance of modus vivendi that if such an instrument were signed, adoption of policy of non-discrimination would have to be applied to all countries which would mean abolishment of present import control. While admitting that remittances from Yugoslav emigrants in the United States constitutes large item in balance of payments he contended that service of the Yugoslav Government and state mortgage bank debts together with unfavorable trade balance more than offsets this item.
With respect to importation of American cars he proposed that instead of taking as a basis the year 1935 (as proposed by us and constituting 45% of total imports) which according to him was an especially favorable year to the United States, he proposed that all the years since the World War be taken as basis of calculation which would [Page 697]show that the United States had on an average received a 25% share of the market. I stated that while I had no authorization to accept or reject this offer I felt reasonably certain that my Government would not accept any figure based in part on years in which import control was exercised. Pilja requested me, however, to submit this offer to the Department, adding that the 25% would be applied to the total Yugoslav importation of automobiles during the previous year and that in actual practice calculation be made quarter by quarter.
Subsequent to meeting Macatee19 has made computation based on Yugoslav Government statistics indicating that from 1925 to June 30, 1936, our share of passenger automobile imports amounted in volume to over 49% and in value to over 46%, and from 1925 to December 31, 1937, over 42% in both volume and value. Our share of truck imports for these two periods amounted respectively to 33% of volume and 42% of value and 26% of the volume and value. Figures from 1919 to 1924 inclusive are not available to us inasmuch as automobiles were for that period classified under the general heading of vehicles embracing all means of transport including railroad cars. Pilja has promised to furnish us with definite figures at next meeting which will take place on the day following Department’s reply to this telegram.
The fact that Yugoslav Government has proposed definite percentage figure, which is in fact considerably greater than the proposed quota of 18,000,000 dinars, is encouraging and may even though not satisfactory be considered as a point from which definite progress may be made. Please telegraph instructions. As Pilja states that he must go to Berlin and Rome at the beginning of the month urgent reply will be greatly appreciated so that negotiations can, if possible, be terminated by that date.