611.5431/197⅓
Memorandum by Mr. David Williamson of the Division of Western European Affairs
Memorandum of Fifth Meeting15 with the Swiss Negotiators, Wednesday, June 12, 1935, at 3:00 p.m.
- Those Present
- For Switzerland:
- Mr. Stucki,
- Mr. Micheli,
- Mr. Nef.
- For the United States:
- Mr. Grady,
- Mr. Culbertson,
- Mr. Williamson,
- Mr. Barker,
- Mr. Hunt,
- Mr. Hawkins (later).16
- For Switzerland:
The discussion of the individual items was taken up from where it left off at yesterday’s meeting.
[The discussion of individual items is omitted.]
Mr. Stucki presented a counter draft to the agreement and took his draft up point by point:
[Page 754](1) In discussing the phrase “equality of treatment” in the preamble, Mr. Stucki pointed out that the most-favored-nation principle had been stressed in various subsequent paragraphs, and suggested that for the word “equality” be substituted the word “equitable”. The Swiss position concerning most-favored-nation treatment is clear: it is granted unconditionally for tariffs, but it is not applied to quota restrictions. Mr. Hawkins saw no objection to substituting “equitable” for “equality.”
(2) Mr. Stucki explained that since the whole Swiss system of political economy was based on quotas, he could not agree to the stipulation that during the life of the agreement Switzerland was bound not to establish new quotas. He accepted not to establish a new or raise the existing tariff, but he must retain liberty in so far as quotas are concerned. He can give assurance that in case a new quota were established, the United States would receive a fair share of that quota calculated on a representative period. Mr. Hawkins suggested that in that case it would be necessary in advance to allot the American quota on each item in the Swiss tariff. Mr. Stucki said that this was of course impossible, and that in any case all the important items of American trade had been included in Schedule I. A long discussion ensued concerning what guarantees the Swiss could give us that an American product on which there was no quota at present (e. g. cotton) would be protected against discrimination or restriction were a quota to be established on it later. The upshot of the discussion was that Stucki suggested that he would give:
1. Special assurance that items mentioned in Schedule I would be protected against governmental measures taken in the future; and 2. the general assurance that all other items of trade would receive fair treatment.
Mr. Stucki then asked what assurances we were prepared to give that Swiss trade would not be hampered by a future United States quota, and suggested that cheese, for example, might be made a basic commodity. Mr. Grady pointed out that we had a provision which says that all Parties will consult before putting into effect a restrictive measure. This Stucki could not accept, as the Swiss put quotas into effect without notice to prevent last minute dumping. Moreover, he believed that neither Government wished a temporary agreement.
(3) Mr. Stucki said that he could accept the “fraudulent practice” clause of Section 337 of the Tariff Act17 only if we would accept mention of the Swiss Federal Decree of October 14, 1933. He preferred to mention neither of these, and Mr. Grady agreed to consider the matter.
[Page 755](4) Mr. Stucki said that the result of the agreement might be quite opposite from that expected, and that Swiss exports to the United States might conceivably decrease instead of increase. He suggested inclusion of a clause that the agreement might be denounced in case the balance of trade on either side should decrease. Mr. Grady replied that if this was the Swiss point of view, the alternative was to put in a clause that the agreement might be denounced at any time on six months notice. We cannot accept the trade balance idea. Mr. Stucki said that he deplored concluding an agreement for so short a time as international commerce asks for security, but that it might be necessary in spite of that to include a six months clause.
(5) Mr. Stucki then brought out that since neither the United States nor Switzerland had exchange restrictions, it seemed useless to include a specific mention of them in the trade agreement. He suggested that our language be replaced by a clause stipulating that if either country introduced such measures, new negotiations would be entered into.
At this point Mr. Grady made the remark that we were dissatisfied with the Swiss concessions offered to us, and that we wished to reexamine not only the concessions on the various items, but also the general question of reductions in the Swiss tariff. Mr. Stucki appeared rather taken aback, and made a remark to the general effect that if we did not like the Swiss concessions, he saw no possibility for an agreement, as he had already gone as far as he could in this matter. He could say no more until he had heard our proposed concessions in the watch schedule. Mr. Grady assured him that we were making every effort to arrange this matter before tomorrow afternoon. It was agreed to resume conversations at 3 p.m. Thursday, June 13.