In view of the Department’s telegraphic instruction No. 287 of September
22,77 directing this
Embassy to forward by mail to all diplomatic missions in Europe copies
of the first French note and of the Department’s reply,78 it is presumed that the
Department desires these missions to be kept informed of further
developments in this situation. Accordingly copies of the French text
and a translation of the note of September 30th are today being sent
forward, and the text and translation of any further notes that may be
exchanged will likewise be transmitted.
[Enclosure—Translation79]
The French Ministry for
Foreign Affairs to the American
Embassy
[Paris,] September 30,
1927.
The aide-mémoire which the Government of the
United States delivered on September 20 to the French Government has
been the object on the part of the latter of an especially
exhaustive examination which gives rise to the following
remarks:
1. The principle of the equality of commercial relations which the
Government of the United States declares is the only sound basis of
international relations and the only guarantee against a number of
political or economic dangers which it recites in detail is far from
having received the unanimous adhesion which the Government of the
United States deems it to have obtained.
It is true that this doctrine was formulated in the United States
during the latter part of the 19th century and “the equality of
commercial conditions” completed, it is true, by “the abolition of
economic barriers” was presented by them to the Allied and
Associated Powers as one of the conditions for the reestablishment
of peace.80 But
the principle of equality of economic conditions even completed by
the abolition of economic barriers was not held by the Peace
Conference of 1919 to be a sufficient guarantee in itself to ensure
fair and peaceful relations between nations and it is not the
equality of commercial conditions but the more comprehensive formula
of the equitable treatment of commerce which is contained in article
23 (e) of the Covenant of the League of
Nations.81 There is no doubt either
that the choice of this formula was dictated by reasons of necessary
fair reciprocity and liberalism.
[Page 683]
When in 1922 the nations of Europe again met at Genoa82 it was not again the simple formula
of equality of commercial conditions that they envisaged as the
guarantee of economic restoration. In fact, article 9 of the Genoa
proceedings states:83
“The Conference recalls the principle of the equitable
treatment of commerce set out in article 23 of the Covenant
of the League of Nations, and earnestly recommends that
commercial relations should be resumed upon the basis of
commercial treaties, on the one hand resting upon the system
of reciprocity adapted to special circumstances, and on the
other hand containing, so far as possible, the
most-favored-nation clause.”
All later technical conferences, in the first rank of which should be
placed the International Conference for the Simplification of
Customs Formalities,84 admit that discrimination can be envisaged and
content themselves with condemning unfair discrimination (article 2
of the convention).
Lastly, since the Government of the United States refers in its aide-mémoire to the conclusions of the recent
International Conference at Geneva, it should be specified that the
latter while proclaiming that “the mutual grant of unconditional
most-favored-nation treatment as regards customs duties and
conditions of trading is an essential condition of the free and
healthy development of commerce between states,” admits immediately
afterwards that it is for each country to decide “in what cases and
to what extent this fundamental guarantee should be embodied in any
particular treaty.”85
But what is most important to note is that the Economic Conference of
Geneva, to which the American Government refers, did not only
recommend the reciprocal granting in as large a measure as possible
of the most-favored-nation treatment but placed in the foreground of
its declarations the necessity of lowering excessive tariffs by
common agreement. At the beginning of the chapter relating to
commercial policy and commercial treaties it declares:86 “The main
conclusion to be drawn from the work of the Conference in the field
of commercial policy is that the time has come to put a stop to the
growth of customs tariffs and to reverse the direction by an effort
made along three lines, viz.: (1) individual action by states with
regard to their own tariffs; (2) bilateral action through the
conclusion of suitable commercial
[Page 684]
treaties; (3) collective action, by means of
an inquiry, with a view to encouraging the expansion of
international trade on an equitable basis by removing or lowering
the barriers to international trade which are set up by excessive
customs tariffs.”
Thus the Economic Conference at Geneva associates with the idea of
equality of commercial conditions the reduction by autonomous or
contractual means of the excessive tariffs at present in force and
it is in full conformity with the doctrine of this Conference,
warmly upheld by the French delegation, that the French Government
has proposed to the Government of the United States a treaty based
on both the application in as large measure as possible of the
most-favored-nation clause and on the customs adjustments which
might seem necessary in order to favor the commerce of the two
countries.
France has on the other hand already applied the two inseparable
aspects of the doctrine proclaimed by the Geneva Conference in a
recent agreement with Germany. She is preparing other treaties on
the same bases and she is able to note, in the course of the
negotiations which she is pursuing, that most of the countries of
Europe would consider not as progress but as a step backwards in
commercial policy a partial application of the Geneva doctrine by
virtue of which, whatever may be the commercial advantages
exchanged, most-favored-nation treatment should be granted
indifferently to all countries without taking into account the
protectionism of some and the liberalism of others in such a manner
that there would result a benefit for the former to the detriment of
the latter and a miscarriage of justice as regards the contracting
state itself.
2. This opinion is furthermore in accordance with the one which the
United States endeavored to make prevail in the world when in 1778
in their treaty with France87 they
introduced the conditional clause of most-favored-nation treatment
and the obligation of a fair compensation for the advantages
accorded by them to a third state and claimed by the contracting
state.
The later declarations of President Monroe and President John Quincy
Adams also proclaimed that the most-favored-nation clause could only
be granted in exchange for special advantages. It would also be easy
to invoke the jurisprudence of the Supreme Court of the United
States, which decided, notably with regard to a treaty between the
United States and Denmark,88 that the most-favored-nation clause obligated
the two countries to avoid a hostile or discriminatory legislation
but that its object was not to interfere with the commercial
arrangements with other countries founded on the concession of
reciprocal privileges.89
[Page 685]
Lastly, it was to respond to that constant underlying idea of
equilibrium that the United States, during the 19th century, drew up
a series of contractual systems the history of which was recently
written by a former Chairman of the Tariff Commission,90 and all of which tended to establish a
reciprocity in fact.
When the Government of the United States abandoned its efforts in
this direction a few years ago91 one may
wonder if the principal reason was not, in view of the rising level
of its rates, that it preferred the liberty of autonomous tariff
action to a policy of tariff contracts whose first result would have
been, generally speaking, to impose sacrifices upon it.
It is true that the Government of the United States has thought that
it could invoke not only international doctrine but French law
itself. To bring out the essence of this law it relies upon the
statements of Monsieur Meline and Monsieur Jean Morel. But the
French Government cannot approve the presentation of French tariff
law which the Government of the United States believed it its duty
to make to it any more than it can its exposition of international
law.
The tariff doctrine of France has been unvarying since 1892 but it
does not correspond to the notion the American Government has of
it.
Indeed, the law of 1892 stipulated in its first article that “the
minimum tariff may be applied to goods of countries allowing French
goods to benefit by correlative advantages and which will apply to
them their lowest tariffs”.
This text expressly provides therefore that the absence of
discrimination does not suffice to justify the granting of the
minimum tariff but that in addition there must exist advantages
correlative to those included in the French minimum tariff.
Since the law of 1892, commented upon by M. Meline, and since the
report of M. Morel in 1906, the French Government has always
subordinated the granting of the minimum tariff, that is to say the
most-favored-nation clause, to the reciprocal granting of a regime
favorable to its trade.
From 1892 to 1914 France concluded many treaties of commerce in which
the concession of the French minimum tariff is limited to certain
articles in view of the not very favorable regime which the
contracting states granted in general to the French export trade;
and it is on the basis of this French tariff law itself that the
governments which from 1897 to 1910 negotiated with the United
States in conformity with the doctrine which the Government of this
country is invoking were not able to see their way clear, in view of
the disparity
[Page 686]
of French
and American tariffs and in view of the inequality of the advantages
resulting from the general tariff established by the United States
and the minimum tariff in force in France, to establish the
relations of the two countries on the reciprocal granting of the
most-favored-nation treatment.
The granting of the minimum tariff has never been considered by the
French Government as the starting point of a negotiation but as the
outcome of a compromise which has secured for French export trade
the necessary safeguards.
It is in conformity with this spirit that the law of 1919 (which the
Government of the United States did not mention) stipulated that in
commercial conventions France could accord “reductions in the rates
of the general tariff calculated in percentages on the difference
existing between this general tariff and the minimum tariff”. The
law of 1919 thus makes it clear that the granting of the minimum
tariff does not indicate the minimum concession and the usual regime
but the maximum concession and exceptional treatment which
negotiators can, in exchange for correlative advantages, accord to
foreign countries.
In the opinion of all the French Governments which have succeeded
each other, the granting of the minimum tariff may be claimed as a
matter of law but can only be obtained as a matter of fact by the
states which assure to French products real possibilities of sale on
their market.
It is in conformity with this same conception that the French
Government in its explanatory statement of the draft tariff bill
which it recently submitted to Parliament contemplated that in case
the needs of the French export trade should be met by an equitable
regime the most liberal application could be made of the law of
1919, namely, the general and unconditional granting of
most-favored-nation treatment.
It is this treatment which the French Government has envisaged for
the United States, if, however, the United States is disposed to
assure to French commerce equitable conditions and possibilities of
facilities to which, in order to respect the fundamental laws of the
Republic, the Government must subordinate the favorable treatment
which it offers to the United States.
The United States cannot be surprised that France should wish, in
order to safeguard its exchanges and commercial balance, to obtain
contractual guarantees. She must do so in the interest not only of
her monetary and economic restoration but also of her international
engagements. As the American experts were the first to say in the
Dawes plan92 any country can only secure for
itself possibilities of transfer by the sale of its goods.
3. The Government of the United States draws, moreover, from its
trade with France and with foreign countries an ensemble of
deductions
[Page 687]
tending to
prove that France is not subjected to any discrimination; that this
general regime which the United States accords it has not been
unfavorable to its commerce and that in order to improve this
commerce there is no need to provide any concession.
France is not complaining of being discriminated against by the
United States; what she is complaining of is being subjected
together with other states to a restrictive regime which, in view of
the character of her production, is more prejudicial to her than to
others and which although applicable to everybody has hit her
commerce most particularly.
When the Government of the United States invokes in support of its
argument the comparison of our exports of 1921 and 1926, specified
in dollars, it is no doubt fair to object that the year 1921, when
France still bruised by the German devastation was incapable of
exporting, cannot serve as a term of comparison.
Even if the figures of 1921, that is, $141,885,000, are a trifle
higher than those of 1913, which amounted to $136,877,990, in order
to appreciate in an equitable manner the fate of French exports to
America it is from these latter figures that calculations must be
made taking into account moreover the world-wide increase of prices
even when specified in dollars and France’s present power of
exportation as compared with that of before the war.
If the regime which the United States imposed on French exportation
had not been subjected since 1913 to regular restrictions both by
the schedule of rates of the Fordney bill93 and by
the manner in which they have been applied, the figure of
$136,878,990 for 1913 should have amounted in 1926 to about
$200,000,000 taking into account the increase which prices specified
in dollars have undergone and the new possibilities of French
exports.
It may therefore be rightly concluded that if the French exports of
1913 came to $136,877,990 and if the exports of 1926 are limited to
$152,020,000, that signifies that French export trade to the United
States has undergone a formidable restriction.
It is impossible not to recognize that this restriction is due to the
excessive elevation of American tariffs affecting the principal
French products as is shown by examples here given: fresh or dried
or preserved mushrooms, 45 percent ad valorem; perfumery, cosmetics,
etc., containing alcohol, 40 cents per litre plus 75 percent ad
valorem; not containing alcohol, 75 percent ad valorem; porcelain,
55 to 70 percent ad valorem; cutlery, dutiable by the piece
increased on an average by 45 percent; cotton plush, 50 percent ad
valorem; upholstery fabrics, 45 percent ad valorem; yarns, weaves
and fabrics of wool, dutiable by the pound increased by from 30 to
50 percent; twisted silk threads,
[Page 688]
25 percent ad valorem; sewing threads and
floss silk, 40 percent ad valorem; silks in piece and knitted
fabrics, 55 percent ad valorem; velvet and silk plush, 60 percent ad
valorem; tulle and silk lace, 90 percent ad valorem; clothes,
articles of clothing of all sorts, 60 percent ad valorem; clothes
containing lace or embroidery, 90 percent ad valorem; articles of
jewelry or imitation jewelry, 80 percent ad valorem; men’s gloves,
$5 per dozen pairs or 10 francs per pair.
Duties of this nature are in most cases higher than those of the
French general tariff for the same articles and these duties are
quadruple those of the minimum tariff.
It must be noted, moreover, that from 1913 to 1927 exports from the
United States to France passed from 890,302,000 gold francs in 1913
to 1,512,968,000 gold francs from the period July 1, 1926 to June
30, 1927, although during that period the purchasing power of France
was markedly diminished as a result of the monetary crisis and the
increased production of France might have allowed her to dispense
with such large imports.
It can, therefore, not be contended that the present regime to which
imports from France into the United States are subject has not
seriously prejudiced French exports and that the balance of benefits
established by the simultaneous decrees of 1910 has not since that
time been profoundly altered to our disadvantage.
Moreover, French exports encounter obstacles not only by virtue of
restrictions resulting from the new American tariff but also by
virtue of the methods of its application not only in America at the
moment of customs clearance but also in France itself where, with a
view to this clearance, the American customs administration asserts
its right to resort to practices which the French law forbids to the
French Government itself.94
In addition to the tariff and customs formalities there exists a
series of regulations of a sanitary or phytopathological nature
which are often completely fatal to agricultural exports from
France.
To the argument of principle invoked by the American Government to
establish that no concession can be made by America and that that
country cannot contemplate any treaty of reciprocity, the French
Government is obliged to reply that it does not believe that these
concessions are impossible under the American law and that it had,
moreover, never envisaged such a treaty of reciprocity as would be
forbidden by that law.
The tariff act of the United States, notably section 315, gives the
President the power after an investigation of the possible
differences
[Page 689]
in costs of
production between articles wholly or in part the growth or product
of the United States and of like or similar articles wholly or in
part the growth or product of competing foreign countries, to change
the classification and to decrease the rates of duty in such measure
as may be necessary to equalize the costs of production.
As regards the regulations concerning the application of tariffs and
the regulations of a sanitary and phytopathological nature it
likewise does not seem that alleviations cannot be found for the
treatment which in many cases appears unjust to French
exporters.
The French Government wishes to emphasize that it is not a question
of engaging in tariff bargaining negotiations; it is only a
question, in exchange for the particularly favorable regime of the
French minimum tariff, of obtaining for certain articles of French
exportation a less prohibitive tariff incidence than that to which
they are subject at the present time by means of a rectification
effected conformably to section 315 (a) of
the compensatory duties which, upon erroneous data, the American
Government has felt that it must establish, and of revising in such
measure as may seem equitable the provisions of those regulations
dealing with the application of tariffs or with the preservation of
national hygiene which at the present moment result in an absolute
prohibition in fact for certain French products.
Upon these tariff alleviations, which in all respects conform to the
Constitution and laws of the United States, and upon these
administrative investigations which are called for by considerations
of simple equity, the French Government by virtue of the unchanging
doctrine of France and of its laws must make dependent the grant to
America of the most favorable regime which France grants to all
other countries. These countries have in fact only themselves
obtained this regime by giving France similar guarantees and it
would constitute a failure to recognize their interests as well as
those of French exportation to grant to American products, in spite
of the restrictions to which at the present moment French products
are subject, a treatment as favorable as that granted the products
of other countries which, on the contrary, in order to obtain it
have withdrawn the restrictions which they themselves oppose to
French exportation.
4. The French Government, moreover, cannot fail to regret that the
aide-mémoire saw fit to mention article
317 of the American tariff act whose application would be in
conformity neither with the common desire for agreement on economic
questions nor with the still too recent memory of the struggles
which our two countries waged upon the ground of international
justice.
The French Government must express its deep surprise to see that as a
result of respecting the laws by which it is bound it
[Page 690]
finds itself threatened
with reprisals whose injustice or excess becomes apparent as soon as
one tries to evaluate the actual damage of which the United States
alleged that it has to complain. The recent increases of duties only
touch in fact 180,000,000 francs worth of American exports which
from July 1, 1926, to June 30, 1927, reached 7,561,834,000 francs,
that is to say, scarcely 2½ percent of American exportation.
Furthermore, the French Government has been willing to propose a
notable diminution of the duties to which since September 6 last
this negligible proportion of American interests have been
subject.
The American Government felt it could not agree to this proposition
and replied to it by a note of principle to which the present note
in the eyes of the French Government carries a decisive
response.
The American Government will doubtless recognize, after having
weighed the considerations above set forth, that on the ground of
principles and of systems a compromise can doubtless not be found
between the opposing points of view which the legislation of each of
the two Governments obliges it to maintain.
On the ground of practical measures, however, the reciprocal good
will of the two countries can easily show itself by provisional
amelioration of the injury which each of them pleads. The French
Government has already shown this good will in proposing to
alleviate in a certain degree the tariffs recently raised to the
detriment of a part, negligible, it is true, of American
exportation. It is prepared to contemplate others which would not be
of a nature to prejudice further negotiations for a long-term treaty
or to render such a treaty futile, if the American Government will
not refuse, as it has hitherto, to examine within the limits of its
own legislation the just claims of the French exporters.
If this proof of common conciliation should result within a short
time in a provisional arrangement, the French Government does not
doubt that negotiations immediately to be undertaken may lead to a
durable treaty doing justice to the interests of both countries.
