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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 491

Should the cost of the Reichsmark to Italian importers be reduced be-
low this figure, the cross-rate in New York remaining unchanged, we
would be entitled, under our understanding of the terms of paragraph
4 of Article VIII, to an equivalent reduction in the cost of the dollar to
Italian importers. It is not, of course, the intention to require the im-
porter actually to purchase the currency of a third country and con-
-vert it into dollars. The provisions of paragraph 5 of the Precis relate
only to the method of computing the required rate for the purchase of
dollars. It is not the intention of this Government, however, to seek
to apply the provisions of subparagraph (b) of paragraph 4 of Article
VIII in respect of compensation currencies, except where American
trade is materially affected. If the Italian Government accepts this
interpretation we agree to omit the second sentence of paragraph 5 of
the Precis.
  In order that we may be fully informed you are requested to cable
immediately all parts of the Italian memorandum regarding Article
VIII which were not transmitted with your 509 of December 10. We
are hopeful that the Embassy can report the Italian reaction to the
foregoing and that agreement can be reached on the Precis in time to
authorize signature of the temporary arrangement on December 15.
  For your information and use at the proper time, the Italian pro-
posal with respect to the third paragraph of the temporary arrange-
ment is satisfactory, but it is suggested that it be amended to read
as follows:
  "It is agreed that on its part the Government of Italy will in fact
apply the provisions of Article VIII of the proposed new treaty on
and after December 15, 1937, and that the Government of the United
States will on its part continue to accord . . ."
  Also the last paragraph of the temporary arrangement should be
amended to read as follows:
  "It is understood that the stipulations of this temporary arrange-
ment do not apply to-
      (a) Preferential advantages which Italy accords to Albania,
    Austria, Bulgaria, Hungary, and Yugoslavia between December
    15, 1937 and December 31, 1937, -or to
      (b) Preferential tariff advantages which Italy accords to
    Austria after December 31, 1937, under the terms of the treaty
    between Italy and Austria signed at ... . on December 2,
  Before proposing the foregoing change in the last paragraph, the
Embassy should satisfy itself that the treaty between Italy and Aus-
tria of December 2 accords only the advantages set forth in Lists A and
B as telegraphed to the Department in your 492 of November 29.47b
 47b Not printed.

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