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

376. Telegram From the Department of State to the Embassy in Italy¹

Washington, November 8, 1968, 1:50 p.m.

268884. Following based on uncleared memcon is Confidential Noforn/FYI subject to revision:

1. In presenting note on reprocessed wool bill (text transmitted septel) to Under Secretary Rostow November 7,² Ambassador Ortona commented that while law regrettable, President’s statement on signing bill and efforts to alleviate its impact are appreciated by Italians. Ambassador Ortona noted that GOI confronted by three options following signature of bill: 1) no response whatsoever; (2) prompt retaliatory action; or 3) preparations to do something in event no ameliorative action forthcoming after Tariff Commission study completed. Ortona said he had advised Foreign Office against taking retaliatory action now in order avoid danger of further reprisals and counselled that GOI should use intervening time to discuss what it might do in event matter not resolved favorably from GOI standpoint. He observed that note indicates GOI has taken third option and that language in final paragraph should not be regarded as threat but as meeting needed to take some kind of action now in order forestall adverse domestic reaction in Italy.

2. Under Secretary Rostow commented that this was wise approach. Fact that GOI not taking retaliatory action at this time greatly appreciated. Under Secretary referred to such positive factors as President’s concern re possible escalation, short deadline for completion of Tariff Commission study, and indications from Congressional leadership of readiness to consider Tariff Commission recommendations, and said he hoped GOI will take advantage of hearing procedure to make maximum presentation its case to commission.

Rusk

1. Source: Department of State, Central Files, INCO–WOOL 17 US. Confidential; Noforn. Drafted on November 7 by C.K. Johnson (EUR/AIS); cleared by Wells Stabler (EUR/AIS) and H. Quinn (S/S-O), and by Barraclough for substance; and approved by Alfred Puhan (EUR). Repeated to Geneva and Brussels for USEC.
2. In this note, the Italian Government expressed its “regret and disappointment” at the enactment of H.R. 653 in view of its probable adverse impact on Italy’s textile trade in general and on the city of Prato in particular. Italy would therefore invoke its rights under GATT and reserved the right to take appropriate countermeasures. (Text in telegram 268761 to Rome, November 8; ibid.)