611.5131/1733: Telegram
The Ambassador in France (Bullitt) to the Secretary of State
[Received July 27—7:35 p.m.]
1062. Reference your 354, July 20, 1 p.m. We had a conference with the Minister of Agriculture yesterday afternoon which we regard as anything but satisfactory.
In the first place the study which he had assured us on July 7 (see our 936 July 7, 9 [10] p.m.8) would be made immediately as to the proportion in which old importers and national groups had utilized their licenses for real imports has not been completed. The only figures available and these are incomplete are for the last quarter of 1936. These figures purport to show that while only 65 per cent of the total licenses issued for the quarter had been utilized practically all the national groups had utilized fully their licenses. The Minister stated that he would have this study actively pursued and would advise us as soon as it had been completed. The Minister also stated that he intended to have a meeting personally within the next few days with representatives of the national groups in order to obtain from them exact information as to the manner in which they used their licenses. We pointed out that the value of information received from these sources would be doubtful since obviously they would desire in order to protect their position regarding licenses to present their case in the most favorable possible light.
During this discussion the Minister again mentioned the possibility of turning over the distribution of licenses to the Government of the United States or to some properly qualified organization approved by the two Governments (see our 358, March 13, 1 p.m.8). [Page 280] We have noted from your 146, March 24, 6 p.m.9 that Phillips stated that he would, in consultation with his association, further consider this question. We would be interested in knowing what views were developed by Phillips’ organization regarding this proposal and we would be glad to receive any instructions on this point which you might wish to give us. In this connection the Minister in our discussion yesterday indicated that if he found it impossible to work out a system for the distribution of licenses satisfactory to both Governments he might consider the possibility of establishing some form of Government import monopoly.
As regards the question of the license taxes the Minister made the statement that when estimates are available as to the size and price of the next French crop if these estimates should show that French fruit would be sold at a price so low as to make it impossible for American fruit to compete then he would do everything possible to suspend again the license taxes on apples and pears. He stated, however, that the estimates regarding the French crop would not be available before late October and that therefore there could be no question of suspending the license taxes before that time. He called attention to the fact that apples and pears are the only commodities on which the license taxes have not been restored to the level of October 1, 1936.
It is our considered opinion in which the Acting Commercial Attaché joins that the primary obstacle to the sale of American apples and pears on the French market, is not the existing system of distribution of licenses but rather the wide spread between the cost of American fruit cleared in France and the cost of French fruit. For instance last year American apples had to be sold in France at 75 to 80 francs a box against a price of approximately 65 francs for comparable French apples. The trade now estimates that for the coming season American apples will have to be sold at approximately 90 francs a box if the present charges are retained. It is likely that the price of French apples will not be appreciably higher than last year. In view of this situation it is obvious that there can be no interest or profit in trafficking in licenses and therefore under present conditions the license distribution system becomes only a secondary obstacle to the sale of American fruit here.
In considering the various factors which have brought about the wide differential in the cost of American and French fruit, it is evident that two successive devaluations of the franc have played an important role. It would even seem doubtful whether with the elimination of the license taxes we will be able to utilize fully our quota for apples and pears during this coming season.
[Page 281]While the foregoing was being dictated, the Acting Commercial Attaché reported that he was called on the telephone by Alphand, Director of Commercial Accords at the Ministry of Commerce, who told him that the last word in this matter did not rest with the Ministry of Agriculture, that the Ministry of Commerce was actively working on it with the National Economic Council and that they hoped to be able to find some solution satisfactory to our fruit people, Reagan is calling on Alphand at the latter’s request late this afternoon and we will report further following this conversation.