Foreign Relations of the United States Diplomatic Papers, 1934, Europe, Near East and Africa, Volume II

811.114 Liquor/771

The American Embassy in France to the French Ministry for Foreign Affairs⁵⁴

Aide-mémoire

In a note of April 3, 1934,⁵⁵ the Embassy recalled the existing discrimination against American exports to France in the matter of the application of the 2, 4 and 6 per cent import turnover tax which arises from the circumstance that France has suppressed the higher rates of the tax in favor of Belgian and Italian products and the products of certain other countries. While citing the point of view of the American Government that the removal of this discrimination should not depend upon the granting to France of what might be considered compensating advantages the Embassy pointed out that in actual fact its Government did accord to France as a quid pro quo for the removal of the discriminatory tax on copper the elimination of the restrictions on French samples of women’s wearing apparel entering the United States, this advantage having been given without waiting for the French Government to make the necessary adjustment with regard to copper which had orally been promised. As the Ministry for Foreign Affairs is aware, the satisfaction sought by the United States in regard to copper was never given.

The Ministry for Foreign Affairs replied to the Embassy’s note in a note dated May 7, 1934.⁵⁶ In the last paragraph the Ministry stated that it might reexamine the whole question when circumstances permit. It is believed that as stated somewhat further below, conditions have now so shaped themselves as to render it advantageous to the French Government to give further and serious consideration to the matter.

It may be remembered that the Embassy, in a note of May 16, 1933,⁵⁷ asked the removal of the discriminations inherent to the present application of the import turnover tax as concerns all products imported from the United States. The Ministry for Foreign Affairs responded under date of May 20, 1933,⁵⁸ stating that a bill had been laid before the French Chambers authorizing the French Government to reduce the import turnover tax to 2% “en ce qui concerne tout ou partie des produits originaires des divers pays étrangers dont la production est grevée de charges fiscales équivalentes à celles que supporte la production françhise ou qui auront conclu avec la France des arrangements spéciaux à cet effet”.⁵⁹ The Ministry’s note continues, “Dès que cette loi sera votée et mise en vigueur, ce qui ne saurait tarder, le Ministere des Affaires Etrangeres se mettra en rapport avec l’Ambassade pour examiner la question avec elle”.⁶⁰ (It is interesting to observe that the Ministry’s note coupled with this question the desire of the French Government to secure protection in the United States for French wines as regards the use of geographic names of origin.) While the bill cited by the Ministry was not approved by Parliament last year an analogous law was later approved by Parliament and signed by the President of the Republic on March 10, 1934. This law affords the French Government the authority, up to November 15, 1934, to effect by decree the reduction of the higher rates of the import turnover tax in favor of the products of another country. It would appear therefore that the French Government has at its disposal the means for affording relief to American products as regards the import turnover tax.

While the Embassy, in reply to the Ministry’s note of May 7, 1934, must reaffirm that the American Government is still of the mind that the discriminations in the application of the import turnover tax should be gratuitously removed and in particular that the oral understanding relative to a reclassification of copper should be fulfilled, it is at the same time mindful of the mutual interest of both Governments in improving commercial relations. It therefore invites attention to developments in the United States which may possibly be turned to the advantage of France.

The French Government has long sought protection of geographic names of origin of French wines. On August 10, 1934 the Federal Alcohol Control Administration promulgated regulations, which it is believed will prove satisfactory to foreign interests, which would provide protection for geographic names employed for distilled spirits. Of particular interest to France is the protection henceforth afforded to brandy or cognac.

The Embassy is now informed that hearings will very shortly be held regarding the granting of analogous protection to geographic names of wines. It is, however, learned that considerable opposition to the proposed wine regulations has developed in the United States, notably among the wine growers in California, New York and Ohio. Further, prior to the promulgation of the regulations concerning geographic and distinctive designations of wines, the regulations will be referred to the Department of State at Washington for consideration in the light of their effect on American foreign commerce etcetera.

The Embassy realizes that the French Government has for long considered that the adoption of such regulations as those now contemplated is of the utmost importance to the French wine trade. In fact protection of the nature was one of the demands made by the French Government during the course of the commercial treaty negotiations two years ago,⁶¹ a declaration in that regard having been suggested as an annex to the draft treaty. In consequence, it is felt that the French Government will desire that everything possible be done to assure the promulgation of the regulations in question.

It therefore occurs to the Ambassador that through the cooperation of the Ministry for Foreign Affairs and the Embassy, it may be practical to secure the approval of the wine “name” regulations which the French Government has so long sought and at the same time liquidate some of the problems which have proved irksome to American producers.

The Ambassador feels that it might weigh heavily in overcoming opposition in the United States to the regulations now under study if American interests in general could be assured of a substantial quid pro quo in return for the consideration given French geographic names of wine origin. Such a quid pro quo would doubtless also tend favorably to influence the Department of State in reviewing the effects of the regulations on American foreign commerce.

The Ambassador therefore proposes to the Ministry for Foreign Affairs to employ his good offices before his Government to the end that adequate protection be given geographic designations, upon the understanding that the Ministry similarly will exercise its good offices in obtaining certain adjustments sought by American trade. To be specific, there is suggested as possibly satisfactory to the American Government the reduction of the import turnover tax to 2% as concerns all products entering France from the United States and the granting to the United States of modus vivendi treatment, that is the minimum tariff rate, on American rice (in this latter connection please see the Embassy’s note No. 939 [507] of March 29, 1934).⁶²

If the Ministry for Foreign Affairs is in agreement with this procedure the Ambassador hopes that immediate steps may be taken to reach an arrangement, since not only does the special authority granted the French Government for free negotiation on the import turnover tax shortly expire but it is important that prior to the termination of the study of the regulations for wine names, now going on in the United States, every effort be made to make them as advantageous to France as the domestic situation shall permit.

[ Paris ,] September 7, 1934.

54. Transmitted to the Department by the Ambassador in France in his despatch No. 1198, September 11; received September 20.
55. Not printed.
56. Not printed.
57. Note No. 2386 from the Chargé in France to the French Minister for Foreign Affairs, Foreign Relations, 1933, vol. ii, p. 156.
58. See telegram No. 234, May 22, 1933, 4 p.m., from the Chargé in France, ibid., p. 157.
59. Translation: “with regard to all or part of the products of origin in the several foreign countries on the production of which taxes are levied equivalent to those placed on French production, or which will have concluded with France special arrangements to this effect.”
60. Translation: “As soon as this law is passed and put into effect, which will not be long, the Ministry for Foreign Affairs will get in touch with the Embassy In order to examine the question with it.”
61. See Foreign Relations, 1932, vol. ii, pp. 195 ff.
62. Not printed.