740.00112 European War 1939/11118: Telegram

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

5060. For Department and FEA from Lovitt. Reference your 5005, June 24. Reference is made to instructions that in clinching Swiss offer it should be made clear that export ceilings are open to review at any time and that a marked change in military conditions would in all probability cause such a review to be initiated by us.

Your attention is called to paragraph 3 of December agreement to the effect that upon the opening of the Swiss frontiers it is agreed to hold new negotiations to meet the new situation and to the provision in the first letter of December 1962 from Foot and Riefler to Keller which provides inter alia that we may regard ourselves released [Page 738] from the agreement should any development materially increase the benefit, derived from Switzerland by our enemies. We believe these two provisions in the December agreement give us substantially the latitude of review desired. For instance, with change in military conditions a small export of ball bearings may become more important to Germany. Do you have situations in mind which could not be taken care of within the terms of the December agreement? Any clarification would be appreciated.

It is of course desirable that the Swiss should accept the statement as worded in your telegram in order to prevent any future misunderstanding.

The Swiss may, however, want some more definite statement as to our intentions with respect to the review of export ceilings on the ground that they must have an export basis for current trade discussions with the Germans which would be reasonably stable for the last half of 1944. In this event could we say that except in exchange for raw materials et cetera, we have no present intention of asking for lower ceilings for the balance of 1944 otherwise than as provided for in the December agreement.

In considering this problem we must bear in mind that Swiss in all probability will want an escape clause in the parallel terms to any such clause that we insert for our benefit. This was the case in the December agreement. [Lovitt.]

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