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United States Department of State / Foreign relations of the United States diplomatic papers, 1937. The British Commonwealth, Europe, Near East and Africa

Italy,   pp. 435-506 PDF (27.1 MB)

Page 474

  "Paragraph 3. The total amount of any permitted import, of which
a share is to be assigned by either country to the other, shall include
all imports of the regulated article, including such imports as may be
made through public or private clearing, compensation, or payment
  "If the authorities of either country permit imports additional to
the amount of any quota which has been established by establishing
a supplementary quota, in that event an equitable share of such sup-
plementary quota is to be assigned unconditionally to the other
  "It is also to be understood that the 'representative' base period
should be one in which the trade of the other country was not being
impaired by discriminations and was not seriously affected by condi-
tions of an unusual and temporary character.
  "Paragraph 4, subparagraph (a). To impose the condition that pay-
ment for the importation of any article must be made in compensation
would be to impose a 'restriction' on the transfer of payment.
  "Paragraph 4, subparagraph (b). In determining most-favored-
nation treatment with respect to rates of exchange it is suggested that
a suitable criterion would be cross rates of exchange in some free
market. If, for example, exchange control were in force in Italy
which prevented complete freedom of action on the part of importers
having payments to make to the United States, the rate of exchange
between the dollar and the lire should not be such as to result in a
higher cost in lire to the importer than it would be if he were free to
purchase the currency of any third country (including compensation
currencies) at a rate which applies to any imports from that third
country and -then to exchange this third currency for dollars at the
rate prevailing in some free market."
  When the Italian Government confirms to you that this Precis rep-
resents also their understanding of the provisions of Article- VIII
therein discussed you are authorized, as soon as we have received
your telegram defining Danubian preferences and telegraph you that
it is satisfactory, to conclude the temporary arrangement set forth in
Department's telegram No. 183 of November 27.
  If you perceive objections to the foregoing procedure we would
appreciate receiving your comments and suggestions.
711.652/131a: Telegram
  The Secretary of State to the Ambassador in Italy (Phillips)
                            WASHINGTON, December 2, 1937-2 p. m.
  186. Your 425, September 23, and despatch No. 579, September 24.41
Following is this Government's comment with respect to the Italian
counter proposals enclosed with your despatch in reference.
  Preamble. As a possible solution of the problems involved, you
  L Latter not printed.

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