660f.116 Auto/37

The Chargé in Czechoslovakia (Gittings) to the Secretary of State

No. 1650

Sir: I have the honor to refer to the Legation’s telegram No. 74, of October 13, 1 p.m., and to previous telegrams recently exchanged regarding the automobile contingent situation in Czechoslovakia. As stated in that telegram, I presented this Note, as amended, to the Foreign Office on the same day. Two other small changes were the alteration of “to” to “of” (second line of first paragraph), and the substitution of “the Legation” for “I” (Page 3, lines 19–20), both for obvious reasons, and the former being for the sake of clearness. Copies of the Note as delivered are herewith enclosed.

The feeling of the Legation regarding the specific reference to Austria and to customs undervaluations have already been set forth telegraphically; and the Legation is pleased that the Department agreed. Aside from the difficulty of proof, etc., it may well be that Austria has a perfectly proper claim to this particular consideration, based on the Peace Treaties. The few Austrian cars sold here in no way affect, today, the American situation.

Elimination of the not strictly germane road tax feature was also considered but this was not referred to Washington because it had no harmful aspect. The Department’s reply giving the option to remove it, showed that it also had the same thought in mind. But the Legation retained that feature, feeling that after all it did not present the objectionable features of the other, and that, since it was based on legislation which would necessarily take time to work out, the first step might as well be made without further delay.

Matters of customs discriminations can be taken up at a later date, or opportunely in conversation as occasion may arise. But it is obvious that the main issue today is greater import latitude. Even if American cars were now on the free-list, no real relief from the present trouble is possible as long as their admission continues to be denied or limited. As the Department knows, American automobiles, despite the other handicaps, could be sold in much greater numbers than heretofore, if they were permitted entry.

The Department’s various instructions will be carefully followed, and everything possible will be done. The Department will be kept fully informed by telegraph as occasion arises.

I have [etc.]

John Sterett Gittings
[Page 714]

The Chargé in Czechoslovakia (Gittings) to the Czechoslovak Minister for Foreign Affairs (Beneš)

No. 1188

Excellency: I have the honor to inform Your Excellency that the Note of the Czechoslovak Government dated August 22, 1928,55 on the subject of import licenses for American automobiles has been transmitted to my Government which after due consideration has instructed me to reply thereto as follows:

It is noted that the Czechoslovak Government having regard for the domestic automobile industry and considerations affecting the labor employed therein is disposed to maintain the system of licensing for the further period contemplated in the agreement reached at the recent Geneva Conference for the abolition of import and export prohibitions and restrictions. In view of that agreement the Government of the United States hastens to make it entirely clear that it has no intention of urging the complete abolition of these restrictions before the expiration of the period agreed upon.

The present interest of the Government of the United States in this matter relates to the manner in which the contingent system is administered. The first conference on import and export restrictions last November enunciated the principle that insofar as such a system is maintained an equitable allotment of quotas is essential. The allotment of quotas by the Czechoslovak Government has not in the opinion of my Government conformed to that principle in respect of importation of American automobiles. The licensing system now in force applies with particular severity against the United States for the reason that quotas allotted other manufacturing countries fully satisfy or exceed their requirements, whereas the quota allotted the United States, even though greater in respect of the absolute number of licenses granted, has nevertheless remained chronically inadequate and uncertain. To instance the discrimination against American cars, my Government understands that in the last contingent year for which figures are available no country other than the United States exhausted its contingent whereas the American quota was fully utilized and many hundreds of additional licenses over and above those granted could have been utilized at any time. The limitations thus imposed interfere more seriously with the ability of American manufacturers to satisfy the demand in Czechoslovakia for American automobiles than they do in the case of automobile manufacturers in any other country.

[Page 715]

I have been instructed once more to appeal to Your Excellency’s Government for the fixation of a quota for American automobiles that will remove this discrepancy between the treatment accorded as to importation of automobiles from the United States and that accorded as to importation from other countries. The Government of the United States does not now ask unrestricted liberty of importation for American automobiles although it might be justified in doing so in view of the treatment accorded other countries. It asks, however, as a matter of fairness and comity that a definitely more liberal attitude toward American automobiles be adopted by the Czechoslovak Government than has heretofore been shown.

My Government has viewed with growing concern not only the above mentioned difficulties to which American trade in automobiles has been subjected but also the adoption of other measures which tend to aggravate the situation such as the road tax provisions which as drawn bear far more heavily on cars of the type manufactured in the United States than on those of the type manufactured in European countries. The latter provisions create a discrimination similar to that of the former luxury tax with respect to which the Legation made representations on behalf of my Government which tax was repealed for the purpose of removing precisely this difficulty. My Government considers that the matters above discussed represent a situation which is inconsistent with cordial trade relations between the two countries and it therefore requests that the Czechoslovak Government reconsider the position taken in its Note under reference and specifies [specifically] that an adequate number of licenses be allowed under the contingent for the current year to care for American cars now held in the Czechoslovak customs, that greater import latitude be granted during the time that the contingent system remains in force by according an equitable contingent for American automobiles and that the application of road tax be modified so as to place American automobiles on an equal footing with those imported from other countries. My Government further requests in the interest of greater stability in the conduct of this trade and to obviate further discussion between the two Governments that an indication be given before the beginning of the next contingent year what import latitude will be granted during the year.

Accept [etc.]

John Sterett Gittings
  1. Not printed. See telegram No. 67, Aug. 27, 1928, from the Minister in Czechoslovakia, p. 711.