The Ambassador in Belgium (Morris) to the Secretary of State
[Received November 20.]
Sir: I have the honor to report that on October 24, 1935, the Embassy was informed by the Commercial Attaché, Mr. Hughes, that he had been told at the Ministry of Economic Affairs that in all probability a quota on automobile tires would be established in Belgium in the near future. Mr. Hughes reported furthermore that he had had a number of conversations recently with the importers of American automobile tires concerning this question.
A member of my staff (Mr. Sussdorff) called on Mr. Suetens, Chief of the Division of Commercial Agreements of the Belgian Foreign Office on the same day (October 24) and informed the latter that a report which had reached the Embassy that the Ministry of Economic Affairs was planning to place a quota on automobile tires imported into Belgium was causing the Embassy considerable concern. Mr. Sussdorff outlined to Mr. Suetens the following considerations:
- The United States Government is opposed in general to the idea of quotas, because it believes that they constitute a serious and unnecessary barrier to international trade.
- The negotiators of the United States-Belgian Trade Agreement had constantly in mind throughout the negotiations the enlargement of markets and an increased interchange of goods. No mention was made during the negotiations of restricting trade, but rather of increasing the exchange of American and Belgian products. The United States Government has carried out its commitments under the Trade Agreement to the letter and has not placed any restrictions on Belgian goods entering the United States.
- The Embassy feels that it would be unjust for the Belgian Government to place a quota on American automobile tires—a product which is closely allied to products on which tariff concessions were granted to the United States in the Trade Agreement—particularly as the United States is pursuing a liberal policy toward Belgian exports to the United States.
Mr. Suetens replied that the report which had reached the Embassy had had a rather wide circulation, but was not accurate. He said that [Page 133] he had received calls from the British and French Commercial Attachés the day before who had also expressed the opposition of their Embassies to a quota on automobile tires. Mr. Suetens declared that he had informed the British and French Commercial Attachés that there was no question of instituting a quota on automobile tires, but “merely a simple system of control—all licenses will be granted” (“un simple régime de contrôle—toutes les licences seront accordées”).
On October 29, 1935, the Commercial Attaché addressed a letter, a copy and translation of which are enclosed,35 to the Minister of Economic Affairs concerning the desire of the American importers of automobile tires regarding the choice of a base-year in case a quota should be established. The Embassy did not know that Mr. Hughes was taking this action until after the communication had been despatched.
In view of the developments indicated in Mr. Hughes’ letter, the Embassy felt that the case should be brought again to the attention of the Foreign Office and that objections should again be made in principle to the quota. In the absence of Mr. Suetens, Mr. Sussdorff called on Mr. Casteur, Director-General of the Division of Foreign Commerce at the Ministry of Foreign Affairs, on November 7, 1935. Mr. Sussdorff explained to Mr. Casteur, as he had to Mr. Suetens on October 24, that in addition to general objections to quotas the Embassy considered that the institution of a quota on automobile tires would be extremely unjust in view of their relationship to the automobile parts on which the United States received tariff concessions in the Trade Agreement.
Mr. Casteur said that he was not conversant with the case in question and asked Mr. Sussdorff to call on him again the next day. In the second conversation on November 8, Mr. Casteur stated that at an inter-ministerial meeting it had been decided in principle that a quota ought to be established on automobile tires. Mr. Casteur said that the reasons behind this decision were as follows:
On November 19, 1934, a “gentlemen’s agreement” was concluded between the Belgian tire manufacturers and the foreign importers of automobile tires. This agreement was sanctioned by a Royal Decree of January 9, 1935. The tire agreement was denounced by the French firm Michelin on August 29, 1935. The Belgian producers, especially the firm of Englebert, are now insisting on protection in the form of a quota against a threatened invasion of the market by cheap and inferior tires from foreign countries, especially Germany, Austria and Italy. Mr. Casteur said that he understood that the American importers of automobile tires were in agreement with the Ministry of Economic Affairs regarding the institution [Page 134] of a quota on tires and were only interested in securing the adoption of a basic period that was favorable to them.
Mr. Sussdorff replied that the American importers were very much opposed to the placing of a quota on automobile tires, but that they, of course, recognized that the Belgian Government, as a sovereign power, could institute a quota if it so desired and that as businessmen they were naturally anxious to receive the best conditions obtainable in the event that a quota system was adopted.
Mr. Casteur promised to study the question very carefully in the light of the Embassy’s representations.
In view of the important questions of principle involved in quota cases and the divergence of views between the Belgian Foreign Office and the Belgian Ministry of Economic Affairs, the Embassy has informed Mr. Hughes that it desires to make itself all representations concerning quota matters to the Ministry of Foreign Affairs and has requested him not to take up such cases with the Ministry of Economic Affairs but to report all pertinent information obtained by his office to the Embassy, which will then take the appropriate action in the case. This policy had already been explained to Mr. Hughes on a previous occasion and he had agreed to conform thereto. He apparently forgot the details of the agreement with the Embassy when he addressed his letter of October 29 to the Minister of Economic Affairs. He has now assured the Embassy that he will conform completely with its policy in the future.
The Embassy will continue to press the Belgian Ministry of Foreign Affairs concerning the above question and will keep the Department informed regarding any developments in the case.
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