654.116 Lard/18

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

No. 4592

Sir: I have the honor to refer to the Department’s instruction No. 3660 of August 7, 1936, regarding the measures taken by the Swiss Government in connection with the importation of lard, and to the Legation’s despatch No. 4534, of August 19, 1936, with which was enclosed a copy of an informal letter to Dr. Stucki, setting forth the Department’s point of view in the premises.

The Legation has now received a reply from Dr. Stucki, dated September 19th, in which he sets forth at considerable length the attitude of the Swiss Government in the matter.

While Dr. Stucki takes issue with the point of view expressed by the Department as regards the legality of the measures adopted, it is felt that the detailed explanations furnished by him as a result of the Legation’s informal representations may be helpful to the Department in determining its attitude in any review of the question which may become necessary in the future.

There is also enclosed a copy of my acknowledgment18 of Dr. Stucki’s note in which I stated that his explanations would be submitted [Page 813] to the Department of State for use in any review it may care to make of the question.

Respectfully yours,

For the Minister:
Donald F. Bigelow

Secretary of Legation

The Delegate of the Swiss Federal Council for Foreign Trade ( Stucki ) to the American Chargé ( Bigelow )

Mr. Chargé d’Affaires: In your note of August 19th last, you were good enough to call my attention to certain measures taken by the Swiss Government with a view to controlling the importation of lard. You added that the Department of State considered these measures to be in violation of commitments undertaken by the Swiss Government in the commercial agreement of January 9, 1936, with respect (1) to the method employed in the granting of import permits for lard and (2) the levying of an elastic contingent allotment license fee for such imports.

After having conscientiously studied this matter, I have the honor to reply as follows:

The importation of lard into Switzerland was restricted by the decree of the Federal Council No. 33, of April 27, 1934, concerning the limitation of imports. It is precisely because of this fact that the American Government had formulated, in its first list of desiderata for the commercial negotiations, the request for the abolition of the quota. Since the American Government has been aware since 1934 of the existence of this restriction, it could not invoke against it paragraph 2 of Article VII of the agreement, which refers to new quotas.
The American authority who, according to your note, refers to paragraph 2 of Article VII, as well as to the note ad 95 of Part B of the commercial agreement, does not seem to be entirely familiar with the history of the stipulation regarding lard and with the formal declarations made in this regard by Switzerland. Although you may be aware of these declarations and they must be known also to the competent authorities at Washington, I desire to recall that in the course of the negotiations the Swiss Delegation constantly stressed the fact that, in view of the precarious situation of Swiss agriculture and Switzerland’s domestic policy, the Federal Council could not undertake a commitment for the importation of even small quantities of lard in the near future. It agreed to the inclusion in the agreement of the stipulations relative to lard only on the insistence of the American Delegation, which attached great importance to the stipulation in question—if only for visual effect! In order to avoid any future misunderstanding, [Page 814] the Swiss Government confirmed in writing that the competent authorities could, until further instructions, grant import permits for very limited quantities only (note from the Swiss Legation at Washington to Mr. Hull, Secretary of State, of January 9, 1936, which Mr. Hull acknowledged the same day19).
In spite of this formal declaration, the federal authorities have endeavored to devise means to be agreeable to the Government of the United States. In a note of May 27th last20 addressed to your predecessor, Mr. Hawks, the Director of the Division of Commerce took pleasure in bringing to his attention the happy results of these efforts. If it has been possible to achieve these results, it is due only to the measures against which objection is raised in your note.
According to that note, the American authorities seem to consider that the practice of making the grant of import permits dependent on Swiss exports of livestock is inconsistent with the undertaking of the Federal Government. I venture to reply that I am unable to share this view. This is a condition imposed long before the conclusion of the commercial agreement and which has not been abrogated by the latter. It does not, furthermore, exist at present (see paragraph 6 below).
The same applies to the “lard tax” or “license fee” mentioned on page 2 of your note (see also paragraph 6 below). Contrary to the view expressed in your note, there was no question of an import tax in the sense of the provisions of Article 1 of the commercial agreement, but simply of a contribution by which the importer of lard might be relieved of the obligation to export, to any country, livestock or livestock products, mentioned in paragraph 4 above. The body entrusted with the levying of this contribution then undertook the exportation in lieu of the importer of lard. The clearing of the domestic market resulting from these exports made it possible to be more liberal in the granting of import authorizations for lard.
In the meantime, the method described in paragraphs 4 and 5 has been replaced by the centralization of lard importation in a single office. There results therefore a monopoly in fact in the sense of Article VIII of the commercial agreement of January 9, 1936. This article obligates Switzerland to give to the other country fair and just treatment, in so far as concerns purchases made by the office vested with the monopoly. It goes without saying that the competent Swiss authorities will take pains to see that this provision, as well as the stipulation under the number 95 of Part B of the commercial agreement relative to the purchase from the United States of 90% of total lard imports, shall be strictly observed by the office above mentioned.
In summarizing the foregoing, I desire to point out once again that the measures taken by the federal authorities are not contrary to the commitments undertaken in the commercial agreement. Furthermore, far from impeding the importation of lard, they make possible purchases which, without them, would be absolutely impossible—in view of our agricultural situation and of our domestic policy—and [Page 815] which the American Government could not expect in face of the Swiss declarations made during the negotiations and confirmed in writing on the very day the commercial agreement was signed.

The measures taken, it is true, are looked upon with dissatisfaction by certain Swiss importers, who, in their thought of profit and ignoring the declarations referred to above, see only their immediate interests without taking into account the disastrous effects which, in the circumstances described, the realization of their desires would have on the importation of American lard.

I venture to hope that, in the light of the explanations you will submit, the American Government will recognize the entire good faith with which Switzerland has acted in this matter and the legality of the measures taken from the point of view of the commercial agreement, and particularly articles I, VII, and VIII. I trust that it will appreciate furthermore that the interest of certain Swiss importers of lard, opposed to the provisions in force, is absolutely incompatible with the well-understood interest of American exporters wishing to maintain and even increase their lard exports to Switzerland.

Please accept [etc.]

  1. Not printed.
  2. Ante, pp. 796 and 797.
  3. Not printed.