Foreign Relations of the United States, 1964–1968, Volume IX, International Development and Economic Defense Policy; Commodities

373. Telegram From the Embassy in Italy to the Department of State¹

Rome, October 29, 1968, 1640Z.

9184. Subj: Woolen fabric bill enacted. Ref: State 262292 (not sent Geneva).²

1. We gave copies Presidential statement today to Ferlesch and Garrone (DirGen and Deputy DirGen, Commercial Agreements, MinFonTrade). They described in detail political difficulties US measure will cause for GOI. Decision on nature of Italian reaction has not yet been taken. GOI will consult within EC on matter. In any case matter will be raised in GATT. In this connection, they asked what procedural route US intended to follow. They assumed we would request waiver prior to putting new tariffs into effect. If we did request waiver, this would provide opportunity for discussion of whole situation. If not, they indicated they would probably initiate discussion during November meeting of Contracting Parties. They believed strong reactions should at least be placed on record to avoid giving Congress impression that such meas-ures would be taken lying down.

2. We noted that Tariff Commission had been instructed study problem and determine tariffs which would afford reasonable degree of protection to US industry and we asked if GOI could not defer decision on reaction until after Congress had had opportunity to consider results of study. Ferlesch pointed out that any Congressional action would probably not be taken before next spring at earliest and he expressed pessimism that next Congress likely be favorably disposed to liberalizing measure. We said that President had taken unusual step of consulting with members of Congress who had agreed with procedure outlined and that this might facilitate possible favorable action. We stressed dangers of chain reaction of protectionism at present conjuncture, acknowledged that pressures in US were currently very high, and pointed out very valuable contribution Italy could make by exercising restraint. Ferlesch and Garrone seemed reasonably impressed by this line of thought but said they could not commit GOI to degree of restraint we were requesting. They again outlined political pressures that played, including fact that most affected Prato workers were Communist and that PCI could therefore be expected to exploit issue.

3. In any case, whatever ultimate decision GOI takes re counteractions, they want subject aired in GATT in near future. Preferably at our initiative, otherwise at theirs they specifically asked that we inform them our plans in this respect and we agreed seek guidance from Washington.

4. We took occasion mention to them US preoccupations with changes in market regulation for fats and oils and processed fruits and vegetables which seem to be germinating in Brussels and left with them informal working papers drawn respectively from State 256477³ and 262304.⁴ Garrone sardonically remarked that this was fine time for us to be talking about European protectionism. We again stressed importance of European restraint and avoidance own protectionist measures at present critical juncture, and point seemed have at least their theoretical acceptance. Italians did not seem knowledgeable about precise nature of regulations being considered; Ferlesch did remark that cap was generally under review since expense had become “intolerable burden” and he had earlier acknowledged that US preoccupation with cap protectionism was not entirely unjustified.

Ackley

1. Source: Department of State, Central Files, INCO–WOOL 17 US. Limited Official Use. Repeated to Bonn, Brussels for USEC, Luxembourg, London, Paris, The Hague, Tokyo, and Geneva.
2. Telegram 262292 to Rome and Brussels, October 26. (Ibid.)
3. Telegram 256477 to Brussels and five other European posts, October 16. (Ibid., INCO–FATS EEC)
4. Telegram 262304 to Brussels and 10 other posts, October 26. (Ibid.)