611.5531/555: Telegram

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

48. Embassy’s telegram 42, April 25, 6 p.m. In a conversation at the Belgian Ministry Economic Affairs yesterday, Camu informed Hughes confidentially that the Belgian Government is preparing to [Page 122] make further concessions on the importation of automotive vehicles and parts, supplementing the concessions contained in the United States-Belgian Trade Agreement.

Camu outlined the project of the Belgian Government as follows: (1st) the Ministry has deemed it consistent to permit the importation of a partially assembled automotive vehicle including motor, gearbox, steering, clutch, differential, transmission, chassis, frame, axles, brakes, and shock absorbers to receive the same treatment of 2.50 francs per kilo duty as if they were spare parts. This has been done with a view to assisting some of the firms which are not fully equipped to assemble automotives as completely and efficiently as a few of the larger assembly plants.

As a favorable consideration to importers of automotives who produce steel bodies that cannot be economically welded in Belgium, owing to the fact that the companies’ plants are not equipped with welding machinery for such work, automotive bodies for passenger cars completely assembled, as well as fenders, will be placed in a category carrying an import duty of 5.50 francs per kilo.

In view of the inconsistency of permitting a reduction on passenger cars completely assembled and not granting a favorable consideration to chassis, the Belgian Government will grant a concession of 15 percent on the rate of duty on passenger car chassis.

In order to placate the French on account of their many demands and strong resistance to the United States-Belgian Trade Agreement it has been decided to grant a reduction in duty of 15 percent on automotive vehicles weighing less than 1150 kilos.

The Commercial Attaché considers that this is in a measure unfavorable to the American automotive industry since if the former duties had been maintained on the light European model car American automotive manufacturers would have been placed in a stronger competitive position; but, in view of the fact that so many other valuable concessions have been granted, he is of the opinion that this 15 percent reduction on light-weight cars is of relative unimportance. In fact, with the export bounty granted by the French Government on automotives amounting to more than 2 Belgian francs per kilo this differential was already sufficiently marked to be a deciding factor for the purchaser of a motor car if only the price were considered.

There will be another change in the schedule of duties in the forthcoming decree that is of very little importance to our automobile manufacturers. Under item 1100 bis (a) 5 of the Belgian tariff 4-cylinder passenger automobiles weighing not less than 1150 nor more than 1600 kilos, carrying a duty rate of 9 francs 35 centimes per kilo, will be subject to a license tax of 20 percent of the amount of duty. This 20 percent may be considered simply as a bookkeeping transaction between the customs authorities and the Ministry of Economic Affairs to cover [Page 123] expenses in connection with the administration of the licensing system which will be applied to all categories of automobile parts.

In reply to the inquiry of Mr. Camu if we would have any objection to this license tax, Hughes replied that while it would not appear to affect us seriously if restricted to this category in general we do not relish a license tax in any form since some subsequent regime might extend it to other categories that would affect us. However, Hughes thinks that we need have no apprehension as to the assessment of this particular license tax.…

Camu said that the decree putting the entire automotive sections into effect will be issued within a few days since it is believed that the conference with the French delegation last night will conclude the discussions.

Camu indicated to Hughes that he had asked him to the Ministry to consult him as to whether the project outlined above would meet with the approval of the American automobile industry. If the Department desires to instruct the Embassy on this subject it is suggested that the instructions be cabled immediately as time is of the essence.

Please repeat to Commerce.