Mr. Pioda to Mr. Adee.
Washington, D. C. , September 26, 1898 .
Sir: I have had the honor to receive and to communicate to my Government the note of your excellency’s honorable predecessor of July 29, written in reply to the request made in mine of June 29, that the reductions in import duties granted to France by the reciprocity treaty of May 30, 1898, should be extended to Swiss productions.
My Government instructs me to inform your excellency that it can not declare itself satisfied with that reply, and that it must persist in its claim, the justice of which can not escape you after a reexamination of the question.
Your predecessor was pleased to admit, himself, that Articles VIII to XII of the treaty of 1850 guarantied the rights of the most favored nation to both contracting parties; but he added that these rights did not extend to reciprocity treaties, the latter constituting, in his view, a “bargain” rather than a “favor.” The said note invokes, moreover, the fact that this view has always been maintained by the United States in the controversies of the same kind which it has had with other countries.
Allow me to remark that this view is in contradiction to the precise terms of the treaty and to the negotiations which led to its conclusion.
Article VIII provides as follows: “In all that relates to the importation and transit of their respective products, the United States of America and the Swiss Confederation shall treat each other, reciprocally, as the most favored nation, * * * as is explained in the following articles.”
Now, as regards the products comprised in the reciprocity treaty in question, the most favored nation is France, since the duties on its products have been reduced for the benefit of that country. Every reciprocity treaty is evidently a “bargain” between the two parties, but the reductions which the United States have granted to France certainly constitute a “favor” to the latter country, just as the concessions which she has made, by way of compensation, constitute a favor to the United States. The expression “most favored nation” is, therefore, properly invoked in this case.
The most-favored-nation clause, which figures in a general way in Article VIII, is most clearly developed in Articles IX, X, and XI.
The first of these articles (IX) reads as follows: “Neither of the contracting parties shall impose any other or higher duties upon the importation, exportation, or transit of the natural or industrial products of the other than are or shall be payable upon the like articles being the produce of any other country.” * * * It appears expressly, from this article, that the most-favored-nation clause extends to import duties, and that it comprises not only the duties in force at the time of the conclusion of the treaty, but also such as may be levied in future on the productions of any country.
Article X is in substance as follows: “Each of the contracting parties hereby engages not to grant any favor in commerce to any nation * * * which shall not immediately be enjoyed by the other party.”
Allow me to call your very special attention to the precision with which this article stipulates for the immediate extension to one of the contracting parties of any favor granted by the other to a third nation. [Page 743] The expression “immediate” leaves no doubt that the reciprocal enjoyment of the favors is not to be preceded by any understanding as to compensation.
Finally, Article XII, which treats of the flag, repeats very clearly that Swiss productions arriving under the flag of the United States or that of one of the most favored nations are to pay the same duties as the productions of the latter nation. As France is the most favored nation as regards spirits and other articles comprised in the reciprocity treaty, similar Swiss goods imported under the French flag could not, even if Articles VIII, IX, and X did not exist, be subjected to higher duties than spirits and other productions of French origin.
It is not, furthermore, only the text of the treaty which speaks in favor of the claim raised, but also the declared wish of the plenipotentiary of the United States of America who was charged with the negotiations.
In the treaties concluded by the United States with other countries, Belgium, Italy, Austria-Hungary, Denmark, and Prussia, for instance, which treaties were concluded partly before and partly subsequently to 1850, the most-favored-nation clause is followed by either one or the other of the following restrictive provisions: “gratuitously, if the concession or favor to such other State is gratuitous, and on allowing the same compensation, or its equivalent, if the concession is conditional;” or * * * “freely, when freely granted to such other nation, or on allowing the same compensation when the grant is conditional.”
Such a provision is entirely wanting in our treaty, and its absence is not due to chance, but to a very clearly expressed intention. As you will be pleased to observe, by reading the inclosed message, which was addressed by the federal council to the federal assembly December 3, 1850, a provision of this kind was, it is true, proposed by Mr. Dudley Mann, plenipotentiary of the United States of America, but the Swiss delegates having made some objections to accepting it, Mr. Mann abandoned it “out of friendly consideration for Switzerland.”
It was evidently feared that such a provision would open the door to a discriminating and even prohibitory system of treatment. The correctness of these fears is well shown by the controversy now under consideration. If, as is claimed by the United States Government, spirits and other articles of French origin may receive, on entering the United States, more favorable treatment than similar articles of Swiss origin, the effect of this may certainly be to exclude the latter articles from the said market, that is to say, to prohibit them. The same situation would arise if the United States should conclude reciprocity treaties with other countries.
Switzerland would be in constant danger of losing the market for one or another of her productions in the United States unless she offered a compensation each time, or if the latter should not be deemed sufficient.
There is no doubt whatever that the Swiss delegates wished to protect their country from such contingencies when they refused the insertion in the treaty of the restrictive clause proposed by Mr. Mann. They demanded and obtained a full and unlimited guarantee of the usage of the most favored nation.
I trust, in view of this fact, that the Government of the United States of America will not hesitate to concede our claim, and that it will admit the justice of our contention the more readily inasmuch as [Page 744] the special conditions which induced Mr. Mann to renounce a restriction of favored usage for Switzerland have not ceased to exist. In fact, as is stated in the message referred to, Mr. Mann further proposed the following addition to Article X of the treaty, the text of which I have reproduced above:
The United States pledge themselves the more readily to this stipulation inasmuch as the Swiss Confederation has inserted in its constitution certain liberal provisions which specially favor the productions of the United States.
It clearly appears from this proposed addition—afterwards withdrawn by its author, owing to the objections of the Swiss delegates—that Mr. Mann desired to do justice to Switzerland by granting to her, by means of the specially precise provisions of Article X and of the other articles invoked, the unlimited rights of the most favored nation, and by thereby showing that that country, by reason of the facilities which it granted already and in principle to the commerce of the United States, had established in advance, of its own accord, the compensations for the advantages which it might reasonably expect to derive itself from the clause conceded. This view held by Mr. Mann has lost nothing of its value. This appears from article 29 of the Swiss federal constitution and from the duties imposed upon the productions of the United States according to the principles which it embodies. The said article contains the following provisions:
The collection of the federal taxes (péages) shall take place in accordance with the following principles:
- 1.
- Import duties.
- a.
- Materials required by the manufacturing industries and the agriculture of the country shall be taxed as low as possible.
- b.
- The same shall be the case with articles necessary for the subsistence of the people.
- c.
- Fancy articles shall be subject to the highest taxes.
- Except in the case of obstacles over which no control can be exercised these principles shall be observed when treaties of commerce are concluded with foreign countries.
- 2.
- Export duties shall be as moderate as possible.
The principal articles which the United States export to Switzerland are: Raw cotton (according to the Swiss statistics for 1897 to the value of $2,730,635), wheat ($1,931,380), petroleum ($1,076,050), unmanufactured tobacco ($742,210), leather ($710,685), canned meats ($818,540), lard ($279,795), dried fruits ($216,100), bicycles ($53,600).
These articles are now subject to the following duties in Switzerland, France, and Germany:
| Duties expressed in per cent of the approximate value, Switzerland. | Duties on 100 kilograms. | ||||||
| France. | Germany. | ||||||
| Dollars | Dollars | ||||||
| Raw cotton | 0.06 | 0.3 | Exempt. | Exempt. | |||
| Wheat | .06 | 1.4 | 1.40 | 1.87 | |||
| Petroleum | 2.25 | 13 .0 | { | 1.80 | } | 1.50 | |
| 2.50 | |||||||
| Unmanufactured tobacco | 5.00 | 26.2 | Monopoly. | 21.25 | |||
| Leather | { | 1.60 | 2.4–6.7 | } | 5 to 12 | { | 4.50 |
| 3.20 | 9.00 | ||||||
| Canned meats | 1.20 | 5.4 | { | 3.00 | 4.25 | ||
| 5.00 | 5.00 | ||||||
| Lard | 1.00 | 9.2 | 5.00 | 2.50 | |||
| Dried fruits | .50 | 3.75 | 2.00 | 1.00 | |||
| Bicycles | 14.00 | 8.00 | 44.00 | 6.00 | |||
This table clearly shows that Swiss duties are exceedingly moderate, both as regards the value of the goods and in comparison to the duties levied by other countries. I will add, at the same time, that the principal Swiss productions exported to the United States pay there, for the most part, enormous duties, greatly in excess of those levied in Switzerland on American articles.
Our right to the usage of the most favored nation is thus doubly and trebly guaranteed, without any restriction, by the treaty of 1850 and by the history of its negotiation.
In view of this array of evidence in support of the claim of my Government, the objection which consists in saying that the most-favored-nation clause does not apply to reciprocity treaties, and that the United States have always maintained this restrictive interpretation, loses all possible value as regards the treaty with Switzerland.
In the note above referred to the fact is invoked that on other occasions Switzerland has not claimed the rights of the most favored nation. I had the honor to explain the reason of this in my note of July 29. I then stated, in substance, that the reductions of duties that were granted in 1890 to Brazil and other States, on the basis of the McKinley tariff, had reference to sugar, coffee, tea, hides, and other articles which Switzerland does not export; that Switzerland, consequently, had no interest in claiming these favors. It is, furthermore, to be remarked that the nonpresentation of a claim by Switzerland, even if that country had been justified in presenting it by a real interest, would in no wise detract from the value and justice of the present claim.
Your predecessor was pleased to add, at the end of his note, that the United States Government was prepared to enter into negotiations with Switzerland in order to render the “advantages” conceded to France accessible to her by means of the treaty based upon section 3 of the tariff.
As appears from the foregoing, my Government asks that these favors be granted without any negotiation and without compensation, as a necessary consequence of the treaty of 1850, and by way of respect for that international instrument. In a general way, and abandoning the ground of right, in order to speak of the question of fitness, I would remark that the reciprocal treatment, without compensation, which has been agreed upon between our two nations, is altogether in favor of the United States. The concessions which have been granted to France, and the benefit of which is claimed by my Government, are of exceedingly small importance to it. In 1897 Switzerland exported to the United States spirits to the amount of 215,000 francs. The exports of other articles, viz, tartar, wine lees, wine, vermuth, pictures, drawings, and statuary amount to little or nothing. On the other hand, Switzerland, by her treaties with Germany, Austria-Hungary, and Italy, has reduced her duties on canned meats, dried fruits, and bicycles, among other things. The imports of these American articles into Switzerland in 1897, at these reduced rates, were as follows:
| Francs. | |
| Canned meats, 18,518 metric quintals, valued at | 2,592,520 |
| Dried fruits, 13,381 metric quintals, valued at | 1,070,480 |
| Bicycles, 1,144, valued at | 268,000 |
If the instrument of 1850 did not oblige Switzerland to treat the [Page 746] United States on the footing of the most favored nation, the said articles would pay the following high duties:
Canned meats, 8 francs per 100 kilograms, instead of 6 francs.
Dried fruits, 5 francs per 100 kilograms, instead of 2½ francs.
Bicycles, 100 francs per 100 kilograms, instead of 70 francs.
You will observe from the foregoing that it would be greatly to the interest of Switzerland to adopt your interpretation and, consequently, to levy its high duties upon your productions. Nevertheless, the question is not now to seek the advantages of the treaty of 1850, but to respect its text and its spirit, whatever they may be, and to claim its strict and loyal execution.
Trusting that after a careful examination of the considerations which I have had the honor to set forth above, you will be pleased to favor me with a reply satisfying the claim of my Government, I beg you to accept, etc.,