The Acting Secretary of State to the Ambassador in France (Edge)
156. Your 241 and 242, April 20, 7 p.m., and 8 p.m. After consultation with the Department of Commerce and the Tariff Commission we have come to the conclusion that the following statement embodies the changes which we desire the French to make in their present quota practice. Please discuss these as soon as possible with Tardieu with a view to getting some immediate adjustment of that situation.
- The French Government will agree to accord proportionately equal treatment to the various competing countries in the distribution of the quotas for any restricted commodities in proportion to the share of the trade which each country would have obtained had the restriction not been imposed.
- The French Government will agree that in calculating a basis for quotas operating after January 1, 1932, and for any future quotas [Page 217] or restrictions a uniform formula shall be employed, for example, the average of the import trade as a whole and from individual countries during the 3 calendar years immediately preceding the imposition of the quota with double weight for the trade of the year immediately preceding could be accepted as the fairest indication of what the trade would have been had competitive conditions been allowed to continue.
- The French Government will assure representation of American industries in discussions with regard to the establishment of quotas.
- The French Government will exempt from any restriction imposed shipments en route at the time the restriction is announced.
- The French Government will institute according to the principles laid down in Section 7 of the Protocol to the Convention for the Abolition of Import and Export Prohibitions and Restrictions of 1927,18 a satisfactory license system for allocation of the national quotas among the various importers in all commodities subject to quotas or restrictions, (e.g. for your own information, the system which France has adopted for the lumber quota.)
- The French Government will make provision for adequate measures of publicity to inform importers currently during the quota period of the status of importations under the quota.
The phraseology in the above lettered paragraphs is used merely to convey our objectives to you clearly; they are not phrased for transmission to the French Government. We would not wish the French Government to feel that there is any attempt on our part to dictate their quota system to them, our only concern being that it shall be entirely non-discriminatory. We leave it to your discretion to convey our desires in such manner to the French, or to evolve them in conversation with the French in such way that the French Government may be given no occasion to feel that we are attempting to dictate to them.
You may make it clear that while this Government has not yet finally decided to invoke article 338 it is under considerable pressure to do so and is giving very serious consideration to the possibility that it might have to do so. You should make it clear to M. Tardieu that we cannot give him any assurance that article 338 will not be invoked at this time. Claudel’s belief mentioned in your 241, that any definite action would be averted at least for the time being, must, rest on his estimate of what the French Government will be able to do to meet our difficulties for we have not given him any assurances in this sense.
Our conversation with Claudel was as follows:
He said intention to invoke section 338 meant a serious tariff war and France would have to retaliate. He expressed warm desire to [Page 218] conciliate with due recognition of bargaining basis of French tariff. He said that since 1927 95 per cent of American imports were granted French minimum rates without compensation and questioned whether small balance justified tariff war. He advanced usual arguments to justify the quota policy which he said would be easier to abolish than higher tariff rates.
He insisted quotas were fairly applied on the basis of ascertained normal year. We insisted that the years had been chosen after consultation with other interests but not with American interests; that quotas were evolving into a plan being employed for discriminatory and even political motives; that some 75% of the quotas had been adjusted on years selected to militate against us; that there was no uniform plan and that lack of consultation of American interests had aroused strong antagonism.
The French insisted that the choice of years had been wholly for the purpose of selecting a normal year. We advocated a uniform system including a series of years but giving special emphasis to the last year, thus approximating a distribution which would have occurred if there were no quotas.
The French replied that they would advocate a uniform system, which would thus eliminate necessity of their consulting any foreign interests.
We pointed out that the allocation to Germany of deliveries in kind showed discrimination against us.
Claudel emphasized his desire not to have precipitate action on our part and the Acting Secretary said we were as anxious as France to avoid a tariff war.
A number of reassuring stories have been written from Washington on the basis of Claudel’s call at the Department. You may point out that in order not to embarrass Tardieu the Department has done everything it could to allay stories of the imminence of a rift in the commercial relations between France and the United States, but that this should not be allowed to minimize the real gravity of the situation.
Please endeavor to obtain favorable action from the French promptly on all of the points cited in this telegram. Please make it clear that we can see no reason why effective compliance with these requests may not be made very promptly. If you deem it advisable you may make it clear that since long drawn out conversations on the above points are not necessary a tendency to draw them out might have adverse consequences and might result in the very action which both governments desire to avert.[Page 219]
We do not think that it is advisable to hold up quota negotiations by the injection of double taxation negotiations. If these can be kept separate and the quota decision arrived at at once there is no objection to carrying on the double taxation conversations but they should not be allowed to become dependent on each other. It is urgent that assurances on quotas be obtained at once.
Please repeat the above to the Secretary by mail.19