The Secretary of State to the Ambassador in Italy (Phillips)
42. Your telegram No. 197, May 19, 5 p.m. You may explain to appropriate authorities that Section 303 of the Tariff Act of 1930 is mandatory and leaves no discretion as to its application by the Treasury Department under the conditions set forth in paragraph 2 of my telegram No. 36 of May 13, 2 p.m.,26 and that this administrative measure is not directed exclusively against Italy.
In fact, as a result of findings by the Treasury Department, countervailing duties are now in effect or have in recent years been in effect upon various products of Australia, Denmark, England, Ireland, Netherlands, Germany, South Africa, Lithuania, Nova Scotia, Poland and other countries. In a number of cases the other country involved has modified its practices so as to avoid the necessity of incurring countervailing duties. Some times the other government has taken the corrective steps after the countervailing duty order was issued, in which case the order has been revoked or appropriately modified. In other cases it has proved not to be necessary to issue the countervailing duty order at all since the other government acted promptly upon the receipt of prior notice, such as that which has been given to the Italian Government, to eliminate the subsidy procedure in question, in so far as it applied to exports to the United States.
For example, extended discussions took place last year between representatives of the Netherlands Government and the Treasury Department with a view to determining how the various Netherlands procedures with respect to dairy products could be modified so as to keep exports of such products free of entanglement with Section 303.
Explanation along the foregoing line would appear timely since the Italian Commercial Counselor recently stated informally at the Treasury Department that the Italian Ambassador here might request assurances that contemplated action has no political significance.