651.116/319: Telegram

The Ambassador in France (Edge) to the Acting Secretary of State

260. Your 156, April 21, 6 p.m. Points (a) to (f) in your above mentioned telegram were discussed at length yesterday afternoon at the Ministry for Foreign Affairs between six representatives of the Ministry for Foreign Affairs and Commerce and Howell and Allport. Monsieur Coulondre presided and stated that he had been instructed by Monsieur Tardieu to do everything possible to meet the American wishes. The attitude of the French representatives was decidedly one of being willing to endeavor to meet our desires in so far as was possible.

I give below in translation their counter-proposals of points (a) to (f). They stated that they would be applied to all French quotas except those on agricultural products which are issued by the Ministry of Agriculture and on fish issued by the Ministry of Merchant [Page 223] Marine. Monsieur Coulondre offers to arrange prompt conferences with appropriate officials regarding these two exceptions. Before doing so, however, I wish further instructions from you regarding the assurances you require regarding quotas on agricultural products as the French state that the Ministry of Agriculture employs a licensing system for all quotas and follows a uniform basis for all quotas, viz.: the percentage of the total quota to be allocated to any country six-tenths of its percentage of the total importations during 1927, 1928 and 1929 plus four-tenths of its percentage of the total importations during 1930 and the first half of 1931.

The timber quota is directed by the Ministry of Agriculture and is not on that Ministry’s uniform basis. That quota will be discussed at that meeting.

The French counter-proposals are as follows:

“Paragraph A. In the distribution of the quotas for all restricted commodities the French Government assures a proportionately equal treatment to the different countries concerned on the basis of the normal commerce”.

Comment. The French representatives maintain that they have no means of calculating future trade and therefore object to the last part of your draft of this paragraph. They understand however from paragraph B of your draft that what you desire is an assurance of proportionately equal treatment based on normal commerce. They are prepared to give this assurance and if their text is not satisfactory to you a new text might be submitted to them for approval.

“Paragraph B. The French Government will assure for importations of American commodities which during the year 1931 have not exceeded 10 percent of the total importations of these commodities into France a quota equal to the figure that these importations have reached in 1931.

This measure will be applied to new quotas from their publication and to the quotas now in force from their renewal.

For the new quota relating to commodities of which the importations from the United States exceed 10 percent of the total importations of these commodities the French Government will assure their distribution proportionately among the countries concerned on the basis of the average of the years 1929, 1930 and 1931.

The French Government will apply the same rule to the quotas of this last category now in force when they are renewed subject to the reserve that the rule may be adapted to the provisions of industrial agreements already at this date concluded.”

Comment. In this article the French propose to divide the quotas into two categories, first paragraph for all quotas where imports from the United States were in 1931 less than 10 percent total [Page 224] imports special terms are offered for the United States: (a) quota (for new quota from the date of publication; for existing quota from the next quarterly renewal) equal to the 1931 imports without any reduction. The French state that this will apply to the great majority of the quotas and will afford a considerable increase in several. Investigation is being made by me into the exact effect of this concession.

2. Where imports from the United States were in 1931 more than 10 percent of the total imports the French would prefer to take as a basis for all countries the years 1928, 1929 and 1930. They consider the year 1931 as abnormal with excessive imports from Germany and point out that importations of many American commodities were much less in 1931 than in 1930. They accept, however, if you insist, the years 1929, 1930 and 1931 as the basis for all countries but refuse double weight for trade of the year immediately preceding the imposition of the quota contending that this would give undue advantage to the countries that dumped goods into France in 1931.

Many, perhaps most, of the quotas are the result of trade agreements which the French Government has accepted for a year though the quotas have only been announced by quarters. These will not be altered to the new uniform basis until the year has expired. The remainder will be adjusted as the new quotas are published, that is in most cases from July 1st, 1932. A list of quotas which are not the result of trade agreements and can therefore be adjusted from July 1st will be submitted shortly by the Foreign Office.

“Paragraph C. The French will offer representatives of American industries the opportunity of taking part in conversations between industrials relating to the fixing of quotas when these quotas will be of special interest to American importation into France.

In order to avoid undue importations and the retroactive measures which these may involve the French Government reserves the possibility of taking for the duration of these conversations precautionary measures limiting foreign importations to the figures reached during the corresponding period of 1931”.

Comment. The French Government pointed out that an agreement to admit American representation in every case would compel them to do the same for every country no matter how small their imports, which would be very onerous from a practical standpoint. In all cases of especial interest to the United States they are prepared to assure every opportunity to American industries; in order to meet your wishes they considered defining what products would be of interest as being any that showed blank per cent of total French imports of this product. Another suggestion was that we should give them a [Page 225] list of all articles on the French tariff which would be of interest in case a quota were made. Perhaps you have some other suggestion if their draft does not meet your approval.

They stated that discussions with regard to the establishment of quotas by foreign industrialists were only with French industrialists and never with the French authorities.

As the quotas are primarily for regulating imports, the French attach great importance to minimizing any rush of imports due to the prospects of a quota. Heretofore the practice has been to make the quotas retroactive so as to cover the period when the probability of a quota was known. The French accept that the quotas should not be retroactive but insist upon some safeguard against a rush of importations during the conversations when the probability of a quota will necessarily become widely known in trade circles.

“Paragraph D. Goods en route at the time a quota concerning them is published will not be subject to any embargo. They will be charged against the said quota and if they exceed it, against the future quotas”.

Comment. The French claim that unless shipments en route are charged to the quota, shippers hear of the impending quotas and crowd shipments to avoid the quota. They state that this is done by American importers as well as others and cite the Underwood Typewriter Company which made large importations on the rumor of a quota on typewriters. It will be hard to make them change their mind on this article.

“Paragraph E. The French Government has no objection to the institution of a satisfactory license system for the allocation of the quotas among the various importers of the commodities subject to restriction, it being understood that the administration of this system will be intrusted to an organization authorized thereto by the American Government and approved by the French Government”.

Comment. Nearly all the French quotas are administered either by the Ministry of Agriculture or by the Ministry of Commerce. Owing to the extent to which quotas were exceeded before notice stopping imports could come into effect the Ministry of Agriculture established a license system. This has prevented shipments in excess of the quota but it is very elaborate and cumbersome. The Ministry of Commerce is definitely opposed to establishing one except through some American agency such as the American Chamber of Commerce in Paris.

“Paragraph F. The French Government will hold at the disposition of importers monthly statistics showing the status of [Page 226] importations subject to quotas, at Paris, at the National Office of Foreign Commerce; at Bordeaux, Cherbourg, Le Havre and Marseille, at the office of the Chamber of Commerce”.

Comment. The French say that these statistics are those which they use themselves in the establishment and control of quotas.

While the results [of?] the first conference between the representatives of the Embassy and the French Government have not secured everything that the Department has set forth in their general proposals, A to F inclusively, nevertheless the Department will recognize that the French conferees have gone a considerable distance and are showing a genuine desire to satisfy us. In view of the many other international issues at stake including the conversations now taking place in Geneva, it is my best judgment that every effort should be made to reach a compromise basis of agreement.

  1. Telegram in four sections.