811.20 Defense (M) Swiss Jewels/7–445

The Department of State to the Swiss Legation

Memorandum

The Department of State refers to its memorandum of June 8, 1945, asking the Swiss government for an estimate of the amount of watches and watch materials which might be exported from Switzerland in the next twelve months. This request grew out of the concern of the American industry over the possibility of injury to it during its period of reconversion from the war time production in which it has been almost exclusively engaged.

The attention of the Department of State has now been drawn to the fact that the Swiss Department of Federal Economy continues in numerous instances to refuse to permit exportation to American Watch manufacturers of Swiss machine tools and equipment described in a certain List VII prepared by the Swiss Watch Chamber. This has caused the domestic industry and this Department considerable concern. The American government finds it inconsistent that the Swiss industry should expect to compete freely for a large share of the American market, at the moment when American producers are handicapped by their war effort, while at the same time the export of machinery to American watch manufacturers is refused.

Because of the urgent need for replacement of equipment worn out by abnormal use in the war effort, the American companies require [Page 796]this machinery to remain in operation. The machinery is, therefore, necessary to the national defense. The United States War Production Board has recently requested the aid of this Department in obtaining the Swiss machinery which the American companies require.

This Department has evidence that the Swiss Department of Public Economy will permit exportation with exemption from export duty only on certification that the machinery will not be used in making products for the watch industry. Even more serious, however is the circumstance that export is apparently prohibited even if the American company is willing to pay the duty. By these measures of arbitrary trade control the Swiss watch industry apparently seeks to restrict future watch production in this country.

It is sincerely hoped that the Swiss government will modify these regulations in order to permit exportation of the equipment required by the American companies as soon as practicable.