Foreign Relations of the United States: Diplomatic Papers, 1945, Europe, Volume V

811.20 Defense (M) Swiss Jewels/8–1445

The Swiss Federal Political Department to the American Legation in Switzerland⁴⁶

[Translation]

The Legation of the United States of America, on July 16, 1945, delivered an aide-mémoire to the Federal Political Department concerning the estimate of the volume of watches and watch movements which Switzerland expects to export to the United States during the next 12 months and the refusal of the Swiss authorities to permit the exportation of machine tools and equipment, described in List VII of the Swiss Watch Chamber, to American Watch manufacturing companies:

The Political Department has the honor to acknowledge the receipt of this aide-mémoire and, after having approached the competent authorities who gave it their best attention, is able to communicate the following to the Legation of the United States:

The commercial treaty which governs commercial relations between the United States and Switzerland guarantees complete freedom for the importation of watches into the United States. Furthermore, according to declarations made by the State Department to the Swiss Legation at Washington, it is not the intention of the American authorities to withdraw from this liberal policy. The Federal authorities, for their part, have endeavored to take into consideration, within the limits of possibility, the desire expressed by the State Department. The Political Department takes pleasure in hoping that the following indications will be satisfactory to the Legation of the United States:

1. The exportation of watches to dollar countries is limited because of the payment problems (that is, conversion of the export products into Swiss francs). Exporters, however, have complete liberty to utilize the quota assigned to them for any country whatsoever. The division of the monthly quota of Fr. 25,000,000 to dollar countries cannot therefore be foreseen for each country.

2. According to Swiss trade statistics, exports to the United States for the first six months of 1945, amounted to 4,859,407 watches and watch movements as compared to 2,069,121 during the same period of 1944. These figures, however, are misleading and require comment. It must be observed, that as a result of transportation difficulties, the watches produced for export for October, November and December 1944 could not be delivered last year and they are therefore included in the statistics for the first 6 months of 1945. The foregoing figures for the first semester of 1945 also include important deliveries to the American Army in Europe. The Purchasing Commission of the American Government, which is entrusted with purchases in Switzerland, has, up to date, purchased 544,360 watches. This Mission has the intention to undertake, up to the end of the year, additional purchases of 255,640 pieces for the American Army in Europe and 500,000 for the Army in the Far East. Although these watches do not reach the American market, they are registered as exports to that country.

3. Watches delivered to the United States are not only destined for civilian use. In fact, an important part thereof has to be handed over by the importers for American Army supplies.

4. This increase in exports has not a speculative character. This is noted also from the fact that there is a considerable shortage of watches in the United States and the market requirements will not be covered. American production, after reconversion to peacetime production, should not therefore sustain any injury which might be imputable to Swiss imports.

5. The above-mentioned points and certain information permit one to suppose that the export of watches will be fully as large during the last 6 months of this year as it was during the first. There may even be a slight increase. Such a development, however, should cause no anxiety to the American watch industry. In effect, a sudden increase of Swiss importations to the United States should not be expected on the one hand in view of restrictions due to the quota system, and on the other hand, because Swiss factories are not in a position to increase rapidly their production.

In the second part of its aide-mémoire, the Legation of the United States expressed the desire that the exportation of the equipment needed by American watch companies be permitted in the near future.

The Federal Department, after having thoroughly studied this question with the competent authorities, has the honor to inform the Legation of the United States of America of the following:

The watch industry has developed in certain regions in Switzerland the population of which have no other means of livelihood other than that derived from this industry. A reduction in this industry would cause an irreparable catastrophe with unforeseeable social repercussions. Again, the watch industry is the cornerstone of Swiss industry. Even a partial diminution of work in this sector would have decisive consequences for the entire Swiss economy. Under these circumstances, the Government cannot fail in its duty to take and enact the necessary measures for the defense and the preservation of this industry. It takes pleasure in taking into consideration the desires of other countries insofar that they do not impede the execution of its duty which is to maintain the economic structure and the means of livelihood of an entire segment of the country.

The Political Department avails itself of this opportunity to renew to the Legation of the United States of America the assurance of its high consideration.

Bern , September 5, 1945.

46. Copy transmitted to the Department by the Minister in Switzerland in his despatch 12546, September 14, 1945; received September 26.