740.00112 European War 1939/10657: Telegram

The Ambassador in the United Kingdom (Winant) to the Secretary of State

3433. For Department and FEA from Riefler and Lovitt. After discussing with MEW we believe Swiss offer to extend Agreement of December 19, 1943 discussed in Embassy’s 3374 of April 24 should be accepted now. As part of this offer Swiss wish to modify article 7 to provide only against concentration upon any particular article of manufacture. In this connection, Keller explained that export quotas are not assigned to manufacturers on the basis of 1942 business as was his impression in December and that except in a few cases these quotas are assigned by trade centers and not by the Swiss Government. The provision, therefore, does not operate and in order to avoid misunderstanding should be modified. The Swiss also desire to modify article 8B to read as follows: “For tariff items covered by Annex I to one-half of the global value of their exports in 1942”. The further reductions in items on Annex I are those previously reported to you (see Embassy’s 2383, March 23 and despatch 14640, March 2430). As further part of the offer Swiss desire a special quota of 1,563,000 francs for the export of 12 locomotives to Germany of which not more than 3 to be exported in the first half of 1944 (see Embassy’s 2286 March 2131); and a special quota of 625,000 francs for the export of flour-milling machinery to Axis Europe other than Germany. On our part, the acceptance of the offer involves the continuation of the import quotas contained in the December agreement and an assurance that the Swiss may take during the second half of 1944 any quota unused during the first half of 1944. We propose to tell the Swiss that we will accept the offer provided that except for unfilled orders exports of ball bearings, ball-bearing machinery, arms, ammunition and fuses are prohibited. It is unlikely that we can [Page 719] achieve our aim completely and we therefore should like authority to compromise on any figure between zero and the Swiss offer. Should we fail to get satisfactory reductions in priority items at this stage of the negotiations we will protect the position so that we can again press for these reductions in return for industrial raw materials. Authority to proceed as indicated is urgently requested. [Riefler and Lovitt.]

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