654.116/60: Telegram

The Chargé in Switzerland ( Hawks ) to the Secretary of State

51. Department’s 46, May 29, 6 p.m. According to information from Consulate General import permits for foreign lard are conditional on payment of a tax representing the difference, approximately 35 francs per 100 kilograms, between the c. i. f. Basel, duty paid, price of that lard and the price in Switzerland as fixed by the Swiss Association of Importers of Livestock being the same as that for domestic lard. This tax is paid directly to the Federal Veterinary Bureau to a special account known as “export of livestock” and is used solely to encourage exports of livestock.

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This action is taken under a Federal decree dated April 7, 1936 (see Recueil des Lois Fédérates number 11, April 8, 1936). Article 5 provides that imports of lard shall be granted as against exportation of livestock but according to the Consulate General Swiss importers have found it impossible to arrange for exports of livestock to the United States and therefore, in lieu of such compensation the present tax has been imposed to be used to aid exportation of livestock to European countries. Article 5 states in part that a consultative commission will propose “transactions of compensation” and article 7 provides that after certain reductions “the proceeds” shall be used to encourage exportation of livestock. This decree was issued under general authority granted by the Federal decree of October 14, 1933, concerning measures to be taken for economic defense against foreign countries (see despatch No. 3134, November 6, 193312).

While the actual decree was issued after the coming into force of the Trade Agreement, it was based upon authority granted in a decree promulgated prior to the agreement. Therefore, in my opinion, it is a question of argument whether Switzerland has technically violated article I of the Trade Agreement.

While we could argue that the controlled tax decree was passed after the coming into force of the Trade Agreement, the Swiss could argue, in my opinion, without much justification in equity that it was passed [based?] upon a law in force prior to the agreement.

The Consul General informs me that despite the increased price which they must ask for imported lard importers have no difficulty in selling all they are allowed to import.

Granting of import permits for foreign lard is based on domestic supply and demand. Already this year there have been imported approximately 220 metric tons and if ordinary conditions prevail at least an equal amount will probably be further imported before the end of the year.

Consulate General concurs in the above.

Hawks
  1. Not printed.