611.5531/345: Telegram

The Ambassador in Belgium ( Morris ) to the Secretary of State

8. Department’s 5, February 7, 6 p.m. Belgian Foreign Office states that full particulars concerning the labor safeguard clause have been cabled to Belgian delegation in Washington. Proposed clause as explained to the Embassy by the Belgian Foreign Office provides in substance that, in order to benefit from the proposed reduced rates of duty, the total value of parts imported into Belgium may constitute not more than 60 percent of the value of the finished product calculated over an annual period because 40 percent must be expended for Belgian labor and materials. The proposed clause, therefore, constitutes a gross discrimination not only against manufacturers of finished cars but also against manufacturers of parts who are not in a position to comply with the clause and who, therefore, will not benefit by the lower duties on parts.

I regard the clause as dangerous and vicious in principle and if it is accepted in this instance it may create a vexatious precedent.