Memorandum of Conversation, by the Acting Deputy Commissioner of Customs (W. R. Johnson)28

Dr. Tannenberg, First Secretary of the German Embassy, called at my office this morning to discuss the outstanding countervailing duty order against German imports. He stated that he was fully authorized by his government in all that he would say.

He first asked whether it would be possible to clear importations without the additional 25 per cent deposit if they were financed solely in dollars or free reichsmarks. I advised him that this had been thoroughly considered but no practical procedure had been devised.

Tannenberg then said that his government is convinced that it will have virtually no trade with the United States if the order stands without modification, and that Germany does not want this result. His careful study of the order, the Attorney General’s opinion, and the practices which occasioned the order has satisfied him that there remains no practical way for Germany to assist her exports to the United States without incurring countervailing duties. He stated that if shipments to which their formal assurances made through the Department of State clearly applied could be cleared through customs without the 25 per cent additional deposit, Germany is prepared to repeal and prohibit completely, “today, if necessary”, all decrees, regulations, and practices under which the “barter” procedures have been carried on; to prohibit effectively any practice or procedure for offsetting the disadvantages to German exports resulting from our dollar devaluation; and to prevent exports to the United States unless the transactions are financed solely in free exchange and without price [Page 572] manipulation of any kind. He did not make it clear, but I understood these proposals to relate to dutiable merchandise, since free goods are not subject to countervailing duties.

Tannenberg seemed anxious for an early response to his proposals but stated that he, of course, did not expect any reply from me today. I made it clear that, in my opinion, complete revocation of the order could not be considered since Germany could not now stop or recall subsidies applying to goods beyond its control.

Several times during the conversation Dr. Tannenberg remarked that unless we would assume that his government proposes to act in entire good faith his visit could have no purpose.

In reply to my inquiries Tannenberg estimated the volume of dutiable German imports into the United States recently financed without subsidies at 40 per cent of the total. He estimated that this volume, plus a third of the remainder, or a total of 60 per cent of the past volume of trade, could be continued on a no-subsidy basis if the 25 per cent deposit were eliminated. The remaining 40 per cent, he said, is lost beyond recovery, since it cannot be carried on without some assistance.

W. R. Johnson
  1. Copy transmitted to the Department of State by the Treasury Department on May 3.