Foreign Relations of the United States Diplomatic Papers, 1935, General, The Near East and Africa, Volume I

681.003/205

The British Embassy to the Department of State

Aide-Mémoire

His Majesty’s Government in the United Kingdom, in concluding with the French Government on the 29th January last an exchange of notes regarding contemplated economic measures and reform in the French Zone of Morocco and the International Zone of Tangier, were, as the United States Government are no doubt aware, moved primarily by the ruinous effects of Japanese competition upon Lancashire’s exports to Morocco.

2. The United States Government are similarly aware of the assistance which has been afforded to the United States cotton industry by the quotas imposed in the British West Indies with a view to meeting Japanese competition. The value to the United States of the quota restrictions in the British West Indies on the importation of Japanese cotton piece goods can be seen from the fact that whereas in the basic period 1927 to 1931 the United States sent to Jamaica, the largest market, on an average 13 million yards annually and Japan sent practically none, the latter country so increased her trade that in 1933 she had sent 6.7 million yards as compared with 2 million from the United States and in the first six months of 1934 a total of nearly 6 million yards as compared with just over 700 thousand yards from the United States. The imposition of the quota resulted in a complete stoppage of imports from Japan during the remaining six months of 1934, while on the other hand, imports from the United States attained a monthly average of about 500 thousand yards, a very considerable improvement over the imports during the earlier six months. Further the quota limits Japan’s imports for 1935 to 600 thousand yards while leaving open to the United States her former market of 13 million yards.

3. In view of these facts, measures intended to rehabilitate the position of the United Kingdom cotton industry in Morocco will, it is hoped, be examined with special sympathy by the United States Government.

4. His Majesty’s Government have been much impressed not only by the continuous pressure exerted by French interests in the Zone with a view to the institution of preferences for French goods and for other measures which would have the ultimate effect of bringing the Zone virtually into the position of a French dependency, but also by the undoubted financial difficulties of the Zone, which has to depend almost wholly for its revenue upon import duties which are fixed at an extremely low level by comparison with those existing today in most countries. It appears to His Majesty’s Government that the indefinite continuance of a state of affairs in which the French authorities are debarred from taking effective steps, on the one hand, to recoup the heavy expenditure which France has incurred in the pacification and development of Morocco and on the other to check the flooding of Morocco by imports of low-priced goods produced under oriental conditions of labour and standards of living, cannot but produce a growing discontent and agitation both in France and Morocco, which may ultimately drive the French authorities to take matters into their own hands and institute remedial measures based solely on considerations of French interests, in defiance of what French public opinion has come to regard as obsolete treaty limitation.

5. In these circumstances His Majesty’s Government are disposed to take the view that the interests of the other Powers in Morocco are in the long run best likely to be served, not by a policy of uncompromising opposition to any change, but by seeking, as and when necessary, agreed solutions such as will accord to France a reasonable measure of satisfaction without involving serious injury to the interests of the other Powers.

6. It was with these considerations in view that His Majesty’s Government felt themselves able, for their part, to agree to the French proposal for a moderate all-round increase of the import duties and to various other provisions which, while going some way to meet the desires of the French administration, did not appear likely in practice to react prejudicially upon any substantial British interest.

7. The proposed increases of duty are entirely non-preferential—a matter in which His Majesty’s Government have always taken up a determined standpoint—and are thus unlikely to harm United States interests in comparison with those of other countries, while opening up to the Moroccan Administration a much-needed source of revenue.

8. With regard to the principle of economic liberty embodied in the Act of Algeciras, an overrigid insistence on this must surely tend both to play into the hands of the Japanese, and to stimulate the already strong desire of the French interests to see the Act drastically modified.

9. The scheme provides for quotas based on the average imports from each country in the years 1928 to 1933 inclusive. The enclosed table⁸⁹ shows that the adoption of these basic years would, in the case of chassis and of tyres, allow to the United States a substantially higher proportion of the total imports into the Zone than that which she enjoyed in 1933, while involving substantially no change in her percentage as respects the other commodities of which particulars are given in the table.

10. Japanese competition may not so far have made itself seriously felt in those classes of Moroccan imports which principally interest the United States, but the extreme versatility of Japanese industrial enterprise and the rapid progress of which it has shown itself capable in new lines of manufacture, when once undertaken, are well known to the United States Government. Japan’s exports of motor-cars to Eastern and Near-Eastern markets may have hitherto been largely of an experimental character (though her competition in parts and accessories is already making itself felt), but given the Japanese aptitude for acquiring new forms of industrial technique and the favourable conditions which have been created by the success of Japanese textiles, rubber footwear, etc., for the launching of new exports lines in markets of low purchasing power, in a few years’ time the competition of the Japanese motor-car and allied products in Morocco may well have to be seriously reckoned with.

11. It would be a source of great satisfaction to His Majesty’s Government in the United Kingdom if the United States Government could see their way to review the whole matter in the light of the considerations summarised above.

Washington , September 18, 1935.

89. Not printed.