611.6331/136
Memorandum by Mr. Rudolf E. Schoenfeld of the Division of Western European Affairs
The Austrian Minister called this morning on Mr. Sayre4 and said that he had been instructed by his Government to propose negotiations for a reciprocal trade agreement. He explained that the Austrian Government had originally not intended to propose such negotiations at this time. It had, however, decided to do so upon his recommendation. He had taken up the matter with his Government following a recent conversation with Mr. Grady, in which the latter had told him that Austria had been included in the list of countries to which the tariff reductions embodied in reciprocal trade agreements negotiated by the United States with third countries would be granted, but that unless the Austrian Government took steps to remove the existing discrimination against American automobile interests, it might in the future be necessary to withhold from Austria the tariff reductions now being generalized to her.
Mr. Sayre pointed out that there was difficulty in undertaking negotiations for a reciprocal trade treaty with Austria involving tariff reductions, since Austria was not the principal source of supply of the great majority of commodities which it exported to the United States. In consequence an agreement to reduce duties on those commodities would be advantageous principally for those countries which were the main sources of supply and only in less degree to Austria. Austria would seem to profit more by advantages resulting from the generalization of tariff reductions embodied in the growing number of trade agreements between the United States and third countries.
Mr. Prochnik said that there were, of course, a few commodities of which Austria was the leading supplier, among them being magnesite and foudrenier wires (the latter used in machinery for the manufacture of paper).
Austria would be interested in an agreement which would grant tariff reductions on those commodities and which would also assure to Austria the generalization of the tariff reductions extended to other countries.
Austria might, in turn, agree to grant the United States most-favored-nation treatment with no discrimination except for preferences in connection with border traffic with the succession states and possibly Germany. Austria might also agree not to divert to other countries as a part of barter arrangements any share of purchases now made from the United States, such as cotton and tobacco. Mr. Prochnik [Page 99] said that he had not consulted his Government regarding these specific matters, and that he was merely tentatively outlining his own views without in any way committing his Government.
Mr. Sayre told the Austrian Minister that he would be glad to consult his associates regarding a possible agreement and to give him an answer as to what might be done next week.
- Francis B. Sayre, Assistant Secretary of State.↩