The Department of State to the Swiss Legation
In discussing the matter of future imports of Swiss watches and watch movements with the Swiss Minister on June 8, 1945, officers of the Department of State referred to the recent large imports of watches and watch movements into the United States from Switzerland and pointed out that representatives of the domestic watch manufacturing industry had expressed concern with respect to the possibility of excessive imports of watches and watch movements during the coming months when it would be reconverting to civilian production. It is recalled further that the Swiss Government was asked to provide an indication of the anticipated volume of exports of watches and watch movements to this country during the coming twelve months.
In an aide-mémoire dated September 5, 1945, presented to the United States Minister in Bern, the Swiss Government stated that 4,059,407 watches and watch movements had been exported from Switzerland to the United States during the first six months of 1945. Furthermore, it was indicated that a similar volume, or perhaps even an increased volume, was anticipated for the last half of 1945. No estimate was given for the first half of 1946. United States imports of watches and watch movements during the first ten months of 1945 indicate that the volume estimated by the Swiss Government is likely to be exceeded.
A vigorous domestic watch manufacturing industry is vital to the national security and defense of the United States. The Government of the United States, therefore, is deeply concerned lest the domestic watch manufacturing industry be injured substantially by excessive imports of watches and watch movements, particularly during the period of its reconversion to civilian production.
It is the opinion of the Government of the United States that the importation of watches and watch movements in recent months has been excessive. Because of certain reconversion problems facing the domestic watch manufacturing industry and the importance of this industry to national security and defense, it is believed that the importation of more than 3,000,000 watches and watch movements into the United States during the calendar year 1946 would be excessive and would be injurious to the domestic industry.
As the Government of Switzerland is aware, Article VI of the trade agreement between the United States and Switzerland, signed January 9, 1936, prohibits the imposition of import quotas, licenses, or any other form of quantitative regulation upon imports of watches [Page 803]and watch movements into the United States. In view of the volume of such imports in recent months the Government of the United States believes it of the utmost importance that some form of limitation be imposed.
As a first step in such a limitation, the Swiss Government is requested to indicate whether it would be willing and able to restrict the export of watches and watch movements so that not more than 3,000,000 units would reach the United States in the calendar year 1946. As the United States Government would desire a limitation to become effective retroactively to December 1, 1945, however, an adjustment for the extra month would produce a total of 3,250,000 units for the thirteen-month period ending December 31, 1946. The Government of the United States would also like to avail itself of this opportunity to propose, by means of a supplementary agreement, an amendment of the existing trade agreement between the two countries so as to include therein an article conforming in substance to Article XI of the trade agreement between the United States of America and Mexico, signed December 23, 1942, a copy of which is attached.52
Should the Swiss Government state that it is unable to limit direct exports of watches and watch movements to the United States and to administer such a limitation of exports in a manner so as to minimize shipments by way of third countries, and is unable to agree to an amendment of the trade agreement as outlined above, the United States Government proposes as an alternative that a supplementary agreement be concluded at once for the specific purpose of so amending the trade agreement of January 9, 1936 to permit the Government of the United States to establish a quota limitation upon the importation of watches and watch movements for the period and in the amount set forth above.
The United States Government considers this matter to be one of extreme urgency and would appreciate receiving a reply from the Swiss Government by December 15. In case the Swiss Government finds itself unable to agree to either of the foregoing proposals, the Department of State believes that it will be necessary, shortly after that date, to give formal notice of intention to terminate the trade agreement between the United States of America and Switzerland, in accordance with Article XVIII thereof, in order to obtain liberty of action in regard to the importation of watches and watch movements into the United States.