611.5531/726
The Ambassador in Belgium (Gibson) to the Secretary of State
[Received December 22.]
Sir: Since the entry into force of the United States-Belgian Trade Agreement on May 1, 1935, this Embassy has had frequent occasion to report failure on behalf of the Belgian authorities to observe the terms and spirit of that Agreement.
I feel I should preface what I have to say on this subject with the statement of my conviction that the responsible heads of the Belgian Government have at all times had the best possible intentions of observing both the spirit and letter of the Agreement. The difficulty has in every instance arisen from the obstructive tactics of subordinate officials scattered throughout the various Ministries. Whenever abuses have been brought to the attention of the Prime Minister or the Foreign Minister, remedial action has been taken or at least attempted.
Shortly after my arrival here last summer, it became evident that a concerted drive was being made by a number of subordinate officials, members of the Inter-Ministerial Commission, with a view to curtailing American benefits under the Trade Agreement. After satisfying myself as to the essential facts, I called upon M. van Zeeland, then Prime Minister, on September 20th, and laid the whole subject before him in an informal conversation.
[Page 228]As I had anticipated, M. van Zeeland was indignant at this evidence that subordinate officials were seeking to evade strict observance of the Agreement and I soon had indications that he had acted with promptness and decision. There was a distinct betterment of the situation but with the usual intimation that in view of the temporary character of Cabinet Ministers the subordinate officials were merely holding in abeyance measures which they were determined eventually to put into effect.
Since the Cabinet crisis which began in October, there have been evidences that the members of the Inter-Ministerial Commission were emerging from their retreat and resuming their old tactics. I have therefore for some time been trying to gather definite information to serve as a basis for further representations. I have, however, encountered certain difficulties, not peculiar to this post, which I venture to restate briefly as essential to an understanding of the general situation. These difficulties may be briefly summarized as follows:
(1) Each time the Embassy takes up with the Belgian authorities an important question under the Agreement, it is my practice to urge the American interests involved to keep the Embassy currently informed as to developments in order that we may judge as to the efficacy of our representations and be in a position to take preventive action without waiting for serious difficulties to arise. It has been our almost invariable experience that once immediate danger is out of the way, these American interests neglect to keep the Embassy informed, take little notice of requests for information, and wait for a new crisis before communicating with the Embassy.
(2) The work of the Embassy has been complicated in several instances by the tendency of certain American interests to enter upon direct negotiations with subordinate Belgian authorities, making concessions the significance of which they do not understand until difficulties arise which bring them back to the Embassy for help.
As an illustration, the Department will recall that during the negotiations for the Trade Agreement the Belgian representatives proposed that the assemblers of American cars should consent to employ in all cars assembled in Belgium at least 40% of the value in Belgian work and materials. This proposal was rejected by the Department. However, soon after the Agreement went into force, the authorities renewed this proposal directly to the American assemblers, and General Motors, Ford, and Chrysler, the largest American assemblers in Belgium, made formal acceptance of the scheme without previous consultation with the Embassy or previous agreement with the other American assemblers operating in this country. The smaller assemblers were not in a position to accept any undertaking on a 40% basis and they felt that they were being put in a vulnerable position by [Page 229] the action of the three largest assemblers. On consulting the Embassy they were informed that under the terms of the Trade Agreement they were under no obligation to accept restrictions as to the use of Belgian material or labor. They appealed to the Belgian Government for special consideration in view of the fact that they had no installations for assembling that would permit the utilization of such a large percentage of Belgian material and labor. However, in view of the position taken by the larger assemblers it soon became evident that they must make some concessions or retire from the Belgian market, and after considerable negotiation it was agreed that they should incorporate 4,000 francs in Belgian labor and material in each vehicle assembled.
This unofficial acceptance of a proposal which had been officially rejected by our Government has now placed all these American importers in a difficult position. These percentages and quantities having been accepted, the Inter-Ministerial Commission is now discussing further increases, and it is obvious that if the American assemblers had stood on the position adopted by the Department they would be in a stronger position to resist increases than they now are, having accepted the 40% requirement.
In other words, there is a tendency on the part of some of these American companies to carry on their negotiations independently and apply to the Embassy for help only when they have got themselves into an untenable position.
(3) The difficulty of securing documentary information on which to base representations. There have been a number of instances of this sort. One of them I may describe briefly as follows:
Some time ago the director of one of the largest American assembly plants called on me and stated that the Inter-Ministerial Commission proposed to increase to 60% the proportion of Belgian material and labor to be incorporated in buses and trucks, and that one of the members of the Inter-Ministerial Commission had written to a certain Senator stating that this was with the knowledge and approval of the American Government. He himself had seen the letter. I said that if he could furnish me the letter or a copy of it, I would like very much to take the matter up with the Prime Minister. He then informed me that in view of the fact that the letter was not official, he was unable to give me a copy or authorize its being shown to me. I was obliged to state that under the circumstances it would be futile for me to call on the Prime Minister and inform him that I had been told that a subordinate member of one of the Ministries had written an unofficial letter to a Senator making incorrect statements about the attitude of the American Government.
(4) Difficulty in securing definite facts and figures as to the business of various companies. Such information is occasionally important in [Page 230] determining the effect upon American business of measures taken by the Belgian authorities. This reluctance which I have encountered in other posts is for the most part due to fear that this information may reach their American and other competitors, and it is not always easy to secure sufficiently detailed information to serve as a basis for representations.
Since the Cabinet crisis referred to above there has been a noticeable revival of abuses which fall into a number of clearly defined categories which may be briefly indicated as follows:
(1) Duties have been increased through the subterfuge of increasing the valuation on a number of articles on which a quota was bound under the Trade Agreement. One item particularly involved is ladies’ dresses. (See Annex IV of the enclosed memorandum.)19
(2) Although quotas have not been established for articles on which only the duty is bound by the Trade Agreement the same purpose has been achieved by establishing quotas on certain important commodities not specifically included under the Trade Agreement, thereby vitiating our benefits under the Treaty.
Although automobile tires were not specifically included in the Trade Agreement, they are obviously considered as an essential factor in the automobile business. This would appear to be clearly shown by the action of the Belgian authorities themselves in giving tires a specific value in their requirements for the incorporation of 40% of labor and materials in cars assembled in Belgium. The clear purpose of this measure is to bar so far as possible the importation of American tires and thereby permit the increased use of Belgian tires.
It will be remembered that the duty on Diesel motors was reduced under the terms of the Trade Agreement. Since the Agreement went into effect consideration has been given to the establishment of a quota, and while matters have not yet gone so far, other expedients adopted by the Belgian authorities have for all practical purposes achieved the approximate effect of a quota. As matters now stand, a Belgian desirous of importing a Diesel motor from the United States is called on for such extensive and vexatious information and for the disclosure of trade secrets to such an extent that, coupled with the delay in granting the license, he is turning more and more to the purchase of Diesel motors from other countries. (A more complete statement in regard to these two items will be found in Annex III of the enclosed memorandum.)
(3) Licensing systems have been established for various articles. At the time this system was established, it was explained that the system would have no restrictive application but was merely set up in order to make sure of full statistical information as to imports into [Page 231] Belgium. While there could have been little objection to such a system if it had been used in this way, I regret to report that it has been used to the detriment of American commerce. On numerous recent occasions the difficulty in obtaining licenses has delayed delivery of American products so long that the importer has finally found it more advantageous to buy elsewhere. One article which has been particularly affected is silk hose. (See Annex V of the enclosed memorandum.)
(4) Regulations have been put into force which prevent American firms from enjoying the full benefit which would be derived from the Agreement. One article seriously affected is linseed oil cake. (See Annex VI of the enclosed memorandum.)
(5) The administration of quotas has been carried out in such a way as effectively to block the use of the amounts to which we are entitled. The authorities have withheld information concerning the employment of quotas and the amounts remaining available. At the end of the last calendar year it was found that on several articles large quotas still remained unused and this information was brought to the attention of the interested importers only when it was too late to obtain delivery from America. This practice alone brought about a material cut in American exports of certain items, particularly automotive tires, silk hose, ladies’ dresses, and lard. (Annexes III, V, IV, and II, respectively, of the enclosed memorandum.)
(6) The authorities have also without consultation divided some quotas arbitrarily into monthly instalments and have taken the position that if the monthly allocation was not exhausted in January, it was irrevocably lost. This has had a harmful effect as regards some quotas, particularly lard, of which imports are far below the quota agreed upon. (See Annex II of the enclosed memorandum.)
(7) The Inter-Ministerial Commission, the members of which are under all sorts of pressure from private interests, has tried various other expedients to restrict American trade.
One of the most conspicuous examples is the successful attempt to impose on assemblers of American cars the incorporation of 40% of the value in Belgian labor and materials. The Commission has for some time been engaged in an effort to increase this percentage by substantial amounts which are calculated to drive American manufacturers from the Belgian market as regards buses and trucks. This situation is further complicated by the fact that the Belgian Railways Administration is exerting all possible pressure on behalf of any measure calculated to drive trucks and buses off the roads in order to increase the business of the State Railways. This has, of course, no bearing on the principle involved but does constitute an added difficulty from our point of view. (See Annex I of the enclosed memorandum.)
[Page 232]Another instance may be found in the arbitrary regulations concerning the importation of American linseed oil cake. The practice in the past has been to utilize American linseed oil cake carrying approximately 9% of moisture with other cake containing larger amounts up to 15%, the combination working out at the legal limit of 12%. At the instance of local interests the authorities have now issued a regulation preventing the addition of any moisture to the linseed oil cake during the process of crushing, even in order to bring it up to the legal proportion of 12%, with the result that American cake, if used alone, sustains an appreciable loss. This is a clear case of arbitrary regulations enforced for the purpose of restricting American imports. (See Annex VI of the enclosed memorandum.)
The Embassy has been in constant touch with this general subject through frequent calls at the Ministry for Foreign Affairs and other Ministries as regards specific cases. However, in the light of the accumulated evidence of the serious inroads that are being made on American trade, I think the Department will agree that it is desirable to make representations bearing upon the whole scope of the Trade Agreement. In view, however, of the importance and delicacy of the entire subject I do not feel that I should take it upon myself to make representations of this character without the knowledge and approval of the Department. The reaction of American interests in Belgium has now reached a point where I feel that this is a matter of some urgency and trust therefore that I may be afforded the benefit of the Department’s instructions if possible by telegraph.
Unless the Department prefers some other method of approach I should like to bespeak its consideration of the following suggestions. I think it would be wise for me to call on the Minister for Foreign Affairs and Foreign Commerce, M. Spaak, as soon as possible and hand him a memorandum accompanied by certain carefully considered remarks. In order to indicate what I have in mind, I venture to submit herewith a tentative draft of such a memorandum for the Department’s approval or to serve as a basis of alternative instructions. As will be seen, this memorandum is confined to a rather direct statement as to the nature of the infringements which have come to the notice of the American Government of both the terms and spirit of the Trade Agreement, concluding with a request for adequate remedial action.
On the last occasion I took the matter up with the Prime Minister but that was because he was giving his personal attention to all economic matters, and the present Prime Minister, M. Paul Emile Janson, does not interest himself particularly in such matters; and I therefore feel that it would be better to deal direct with M. Spaak.
[Page 233]If the Department approves, I would propose to preface the presentation of this memorandum with some general remarks as to the importance attached by the American Government to our Trade Agreement policy and our conviction that this policy can be expected to give its maximum benefits to all concerned only if loyally and even generously interpreted and executed, that for this reason the American Government is disturbed at the long series of complaints which have been received from American interests as to obvious violations of the terms and spirit of the Agreement. I would add that we are thoroughly convinced of the desire and intention of the Belgian Government loyally to interpret its obligations but that in the course of months and in the light of previous experience it has become evident that the violations which form the subject of this memorandum are due to the action of subordinate officials who would appear to be acting independently and against the declared policy of the Belgian Government; that I have discussed this matter previously with M. van Zeeland who took prompt and decided remedial action with the result that the complaints subsided for a time, but that since the recent Cabinet crisis the complaints have increased in volume and I feel I cannot any longer delay bringing them to the attention of the Minister for Foreign Affairs with the request that he afford them his earnest study; in numerous previous cases the Embassy has had occasion to appeal to the Foreign Office and that I am glad to be able to say that the Foreign Office has always risen to the occasion by using its best efforts to meet any just cause for complaint from the Embassy; that the difficulty has arisen from the fact that no means have been devised for obliging officials of other Government Departments to conform to the wishes of the Minister for Foreign Affairs even in matters affecting Belgian foreign policy and that the only way I can see of putting an end to the present abuses would be for the Foreign Minister to make a clear statement of the present situation before the Belgian Cabinet and insist that orders be given by his colleagues to their representatives on the Inter-Ministerial Commission that in any matter affecting American trade there shall be no action against the recommendations of the Foreign Office representative unless and until the matter has been carried to higher authority and a decision reached by responsible Ministers. If we can keep these questions, some of them petty in themselves, out of the hands of subordinate officials, I feel that the existing good will is an adequate guarantee that we could put an end to the difficulties which we have experienced.
To supplement the foregoing and reinforce these general observations, I could then hand M. Spaak the memorandum and go over it with him carefully. In order further to reinforce our representations [Page 234] I would suggest, if the Department approves, that at the same time I call on M. Spaak, the Belgian Ambassador in Washington be called in and given a similar statement of the Department’s views on this whole subject as well as a copy of the memorandum and that at the same time he be requested to impress upon M. Spaak by telegraph the great importance we attach to such action as may be necessary to bring about the full observance of the terms of the Trade Agreement.
In view of the urgency of this question I should be glad to receive the Department’s instructions by telegraph as soon as may be possible.
Respectfully yours,
- Memorandum and its annexes not printed.↩