The Italian Ministry for Foreign Affairs to the American Embassy 34
In reply to Note Verbale No. 1023 of April 25, last,35 in which the Embassy of the United States of America conveyed the observations of its Government regarding the quotas established for the importation of United States products into the Kingdom during the year 1939, the Royal Ministry of Foreign Affairs has the honor to inform the Embassy of the United States of America that the competent Royal Authorities cannot but confirm, in general lines, the views already expressed on previous occasions regarding the criteria which governed the determination of the said quotas.
Moreover, the Royal Government does not consider that such criteria are contrary to the spirit of Article 8 of the Modus Vivendi of December 16, 1937, it having been understood during the negotiations, as is known to the Embassy of the United States of America, that an interpretation [Page 643] in harmony with the exigencies of the Italian economic situation would be admitted.
It should on the other hand be borne in mind that as regards certain products (manufactured tobacco, cotton, scrap iron, animal hairs, mineral oils, wood, lubricating oils, benzol, lamp black, organic chemical products, etc.) the competent authorities of the Kingdom during 1938 authorized acquisitions in the American market considerably in excess of the quotas previously assigned, quotas which in large part had been accepted by the Government of the United States of America, and this was done in spite of the fact that the Italo-American trade balance was always very unfavorable to Italy. Furthermore, there has been manifest on the part of Italy the utmost good will in allowing importations of North American products not included in the quotas established for the United States, whenever national economic conditions permitted.
It is not, moreover, out of place to recall that in the course of the negotiations of the provisions of the Modus Vivendi, it was understood that the assignment of contingents for the importation of North American merchandise into Italy would be followed by negotiations for a Trade Agreement which would include tariff concessions to Italian products imported into the United States. Instead, the Royal Government has had to take note of the fact, especially recently, that the authorities of the United States of America are resuming the application to certain Italian export products of the most drastic investigations designed to ascertain whether the countervailing duties provided for in the American customs legislation are applicable to those products. The decision just adopted to apply such additional duties to Italian manufactures of silk confirms the views of the competent Royal Authorities regarding the not inconsiderable difficulties that obstruct the flow of Italian exports to the United States.
Consequently, the Royal Government, for the reasons above set forth, does not feel that it can accede, at least for the present, to the requests advanced by the Government of the United States of America.
In communicating the above, the Royal Ministry of Foreign Affairs has the honor to inform the Embassy of the United States of America that the Royal Government, in view of the differences of opinion that have arisen regarding the interpretation and practical application of Article 8, would be disposed to take under examination the possibility of revising the Modus Vivendi, to the end that the special exigencies that may arise in connection with certain branches of Italian economy might be taken into account in the practical application of the provisions in question.