611.5431/207

The Minister in Switzerland ( Wilson ) to the Secretary of State

No. 3956

Sir: I have the honor to acknowledge the reception of the Minutes of the meetings which took place in the State Department between the Swiss Delegation and the members of the State Department on tariff negotiations. I also acknowledge the very courteous letter which Mr. Grady sent me on the subject.

I took occasion today to call on Minister Stucki and inasmuch as I am inclined to think that the conversation will be of interest to you, I shall give a summary of his observations.

Mr. Stucki said he was deeply touched by the warm welcome which he received; that everyone in the Department, including the Secretary, was not only courteous but friendly; that it was the best atmosphere in which he had ever negotiated. He continued by saying that even if the negotiations did not achieve results, he was more than glad he had spent this week in Washington because his knowledge of the individuals in the Department gave him a better understanding of the problems of our two countries for the future.

As to the future of the negotiations, Mr. Stucki divided the problems roughly into three categories.

The first category embraced the general questions. After sketching to me the way in which it was hoped to work out the problem of the most-favored-nation coupled with that of contingents, he told me that Mr. Micheli with a representative of the State Department were now occupied in preparing a suggestion, and that he had no doubt that on this class of general questions Switzerland and the United States could find agreement.

As to the second category, that of America’s demands, Mr. Stucki pointed out that he had not been able to give full satisfaction on all matters, but he thought that he could say that on 80 percent of our demands satisfaction had been given. On the question of lard to which we attached much importance, as well as typewriters and adding machines, he believes compromises and agreement can be worked out.

[Page 760]

As to the third category, namely the Swiss demands, while some progress had been made, he did not hide from me that on certain matters the attitude taken by our Government had been very disappointing to him. In the matter of cheese, while it was difficult to find a formula which would apply only to products made in Switzerland, nevertheless he believed that such a formula might be found. Watches, however, presented a real problem and one which he confessed he did not see the way out of for the moment. The offer of the United States had been approximately a 50 percent reduction for the cheap watches, in which Switzerland is not interested, and 18 to 22 percent on those grades which are especially Swiss production. Mr. Stucki said that here was a classic example on which to apply the theories under which Secretary Hull is working. The watch industry in Switzerland is of centuries of growth. Some 60,000 workmen earn their living thereby. It deeply affects the economic well-being of the Cantons of Geneva, Vaud, Neuchatel, sections of Bern, sections of Baselland and sections of Solothurn. In the United States the industry is of relatively short life. It employs some 5000 men. There is no one section of the United States dependent upon this industry. Contrast, says Mr. Stucki, the importance of the industry to Switzerland, with 60,000 employees out of a population of 4 millions, with that of the United States with 5000 employees in 120 millions. Further, the Hawley-Smoot Tariff19 took the previous tariff rates of approximately 100 percent duties and quadrupled them all along the line; therefore even with a maximum permitted under law of 50 percent reduction on present duties, the duties would remain double what they were before 1930—surely an adequate protection for any but a completely abnormal industry.

Mr. Stucki said that they were working hard all along the line and hoped to resume discussions in September, discussions directed on the part of Switzerland by the Legation in Washington with the collaboration of Mr. Nef, Consul General in New York. But in the midst of this work he had received this morning a “cold douche” in the shape of a despatch from Mr. Peter in which Mr. Peter transmitted a copy of the Hearings on June 10 relative to smuggling of watches, as well as a copy of H. E. 8624, June 24, introduced by Mr. McCormack.20 Mr. Stucki was especially upset by the fact that lie was actually in Washington on June 10 and never heard that these hearings were being carried on and that he was surely the most vitally interested person and competent in this matter. Mr. Stucki had only yesterday persuaded the Federal Council to allow him to collaborate with the United States in the endeavor to stop smuggling of watch [Page 761] parts and watches. This, Mr. Stucki pointed out, was a reversal of the policy Switzerland had followed for many years, namely, to refuse to collaborate in stopping smuggling on the grounds that the state into which the goods were smuggled was responsible for methods of prevention, and as Mr. Stucki added, one of the best methods of prevention, was the reduction of tariffs to such an extent that smuggling was not worth while. Mr. McCormack’s Bill, if passed, would require not only the word which now appears oh parts, “Suisse”, but further, the words “Switzerland”, “Suisse”, the number of the part and name of manufacture. It is easy to see, said Mr. Stucki, that such a requirement on minute parts would be an impossible one for the trade.

Mr. Stucki continued to talk regarding H. R. 8624. He pointed out that Switzerland had made a definite undertaking that during the course of the negotiations no change would be made in respect to American importations and that he had scrupulously resisted pressure to make such changes. This Bill, if adopted, would be a very distinct change in respect to Swiss importations into America, and while he recognizes that a Bill introduced in the House is not necessarily an indication of the Government’s policy, nevertheless the mere introduction of such a Bill, if known throughout Switzerland, would render still more difficult his endeavors to work out a satisfactory solution with ourselves.

He added that he has given instructions in his Bureau and to the commercial associations in Switzerland to work out demands which are not so wide as those presented to us. For instance, in the chemical industry he realized it was too much to ask for concessions on all points covered by the desiderata and is going to try to make their request bear only on the points in which they are most deeply interested.

If the Department could give me any assurance to carry to Mr. Stucki relative to H. R. 8624, it would be highly useful.

Respectfully yours,

Hugh R. Wilson
  1. Approved June 17, 1930; 46 Stat. 590.
  2. John W. McCormack, Representative from Massachusetts.