611.516 Wines/2: Telegram

The Chargé in France (Marriner) to the Acting Secretary of State

558. With reference to the Department’s telegram December 15, 5 p.m., I talked yesterday on this subject with De la Baume, head of the Commercial Section of the Foreign Office. There can be no question of the evident desire of the French to obtain increases in the wine quota and that they are showing willingness to improve commercial relations by rectifying various outstanding commercial difficulties. De la Baume earnestly expressed the hope that their efforts in this direction would be appreciated.

It is noted that the French wine quota restores France to its full preprohibition situation on this its most important export item. Would we not be justified in requesting general restoration of agricultural quotas to our quota status?

In connection with the matters discussed there is the vital question of protection against import quota license taxes which may be imposed, increased or diminished on extremely short notice and vitiate any possible advantages. For example, I have learned that the import license tax of francs 125 on one hundred kilograms of apples and francs 175 on a hundred kilograms of pears is proposed for the first quarter of the coming year. De la Baume explained to me that these import license taxes were intended to make up for the differences in the cost of production in America and France and that they would still leave adequate margin for profit to American producers.

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Certain of the American fruit importers, however, feel that the increases suggested would practically nullify the increases in quotas as they would amount to approximately 30 francs per case for apples and 40 francs per case for pears. As apples are now being sold at 83 francs per case with the tax imposed they would sell for 95 francs; pears now selling for 90 francs to 100 francs per case would be increased to 110 francs to 120 francs by a similar tax. Therefore it would seem that the question of the amount or percentage of such a tax must inevitably be considered in negotiations.

Certain products which have been subject to ever increasing restrictions are not mentioned in the Department’s telegram and may be worth consideration, namely, lard on which a quota license fee of 5 francs per kilo on crude and 7 francs 20 centimes on refined is proposed [apparent omission] radio sets and nitrates.

With regard to the decrease in the turnover tax on copper which would be of considerable value I believe that changes in this law were inevitably going through regardless of the present negotiations.

In connection with the whole matter of commercial relations American business in France is still hampered by the uncertainty of the tax question inherent to the fact that the double taxation treaty11 has not yet been ratified by the French Parliament. I took occasion yesterday to mention this fact to De la Baume and I feel that it may be well to suggest that the French Government should attempt to arrange for its speedy ratification.