611.51G31/17
The Ambassador in France (Leahy) to the Secretary of State
[Received November 27—7:36 p.m.]
1470. Department’s 847, November 15, noon. The following letter dated November 25 signed by Admiral Darlan has been received:
“By a note dated November 18, Your Excellency informed me that the Government of the United States, taking as a basis the text of the Franco-American agreement of May 6, 1936, which provides most-favored-nation treatment for American products in Indochina, protests against the concession of a preferential régime for Japanese products imported into that colony and enumerated in list A annexed to the Franco-Japanese economic agreement of May 6, 1941.
Your Excellency adds that instructions have been received from the American Government ‘to make formal reservation of all American rights in this matter.
I have the honor to inform Your Excellency that the above mentioned note of November 18, calls for the following observations on the part of the French Government:
1. In negotiating with Japan, the French Government did not lose sight of or contest the provisions of the Franco-American Agreement of May 6, 1936, which assures American products in Indochina the enjoyment, without limitation, of most-favored-nation treatment. If, following the conclusion of the Franco-Japanese accord of May 6, 1941, the tariff reductions and exceptions, accorded to Japan, have not been applied in practice to products of the United States, it is because no actual importation of American merchandise has been made into Indochina.
Otherwise, such merchandise would have enjoyed the same treatment accorded to similar Japanese products.
Nevertheless, and in order that there may be no doubt as to the interpretation given by the French Government to the provisions of the Franco-American Agreement of 1936 concerning the application of most-favored-nation treatment, I am disposed to proceed with an exchange of letters with Your Excellency extending to American products the benefit of the reduced duties exemptions and fixed tariffs accorded by Articles 2 and 4 of the Franco-Japanese Agreement to the Japanese products enumerated in List A annexed to that agreement.
On the other hand, the French Government would be willing to agree to a regime specially favoring the entry into Indochina of the [Page 352] American products listed below which are now particularly necessary for Indochinese economy:
Preserved food, raw cotton, oil (mineral), leaf tobacco, metallic or metal products, pitch, asphalt, chemical products, pharmaceutical products, paper, machines and machinery, automobiles, tires, wheat flour, canned foods, prepared tobacco, hides and skins, miscellaneous.
2. The French Government recalls that prior to the conclusion of the Franco-Japanese Agreement of May 1941, and with a view to facilitating the resumption of exchanges between Indochina and the United States, which has been interrupted since the Armistice, it instructed its Ambassador at Washington on February 12, 1941, to present the following proposals to the Department of State:44
- (a)
- To facilitate exchanges between the United States and Indochina the French Government would be disposed, in agreement with the Government of the Colony, to examine the terms to be accorded, with respct to the tariff, to American products.
- (b)
- These terms, which might be based on the contractual régime at present in force between Indochina and the other French possessions (Journal Officiel of January 4th, 1941) as well as on the régime of exchanges then envisaged between Indochina and Japan, might admit of tangible advantages in favor of American products.
- (c)
- As a quota system is now applied in Indochina with regard to the majority of French and foreign importations the French Government would be disposed to grant special quotas in favor of the greater part of American products;
3. The American Government has not yet replied to these proposals. It has simply indicated that it would be a buyer of Indochinese rubber and ore.
The French Government recalls that if these negotiations could not be concluded with regard to the furnishing of ore to the United States in 1941, it is because of circumstances beyond its control. On the other hand and with regard to rubber no actual delivery has yet been possible to the American market notably because of delays with regard to the conclusion of contracts.
Nevertheless the French Government will address to Your Excellency new proposals in this regard in the immediate future.
4. The French Government considers the note sent by Your Excellency on November 18, as the proof of the renewed interest of the American Government in the Indochinese market. The French Government has all the more reason to be pleased as the well understood interests of Indochina constrain it:
- (a)
- To continue its exchanges with the other French possessions and
- (b)
- To buy and sell on other markets besides the Japanese.
The Federal Government is in a position to help Indochinese economy on the first point, by facilitating the obtaining of free passage for ships on the Saigon–Dakar–Casablanca run (note from the Ministry of Foreign Affairs to the American Embassy dated November 10, [Page 353] 194145) and, on the second point, in favoring the exchanges between this French colony and the American market or the Philippines market. In this respect, the proximity of this American possession to Indochina, and the possibility for French ships of going there easily (in fact French ships en route to Shanghai stop at Manila) should favor exchanges consonant with the enlightened self interests of these two possessions.
I may add that although Indochina has not since the armistice effected any important direct exportations to the Philippines, this French colony actually sells great quantities of rice, coal and miscellaneous products to Shanghai, to the great advantage of foreign colonies there and particularly of American interests. The Manila market would consequently appear to be the appropriate one to furnish Saigon and Haiphong especially with the products enumerated in the above list, and eventually with other merchandise to be determined by common agreement between the two Governments.
If the Federal Government agrees in principle to this suggestion the French Government will examine with Admiral Decoux the Indochinese products which might be exported to the Philippines (notably rice and coal).
I may add that the ships which link Indochina and the Philippines should of course have free passage for themselves and for their cargoes. Furthermore the French Government would be disposed to authorize the Consulate of the United States to verify the use in Indochina of the merchandise imported from Manila.
I would be grateful if Your Excellency would inform me as soon as possible of the American Government’s reply to foregoing proposals, (signed) Jean Darlan.”
A copy of the above letter is being forwarded by air mail.
Repeated to Algiers and Casablanca by air mail.