Memorandum of Conversation, by the Chief of the Division of Commercial Policy (Brown)

Participants: Mr. Charles Bruggmann, Minister of Switzerland
Mr. Wilcox, ITP54
Mr. Brown, CP

Mr. Bruggmann called at his request to express his very great concern at the note which Mr. Acheson had handed him on Friday, November 30, suggesting restriction of Swiss exports of watches to the United States to 3,250,000 for the 13 months beginning December 1, 1945. He said that this came as a great shock, in as much as no such proposal had been made before and, in fact, assurances had been given him by officials, even in the Department, that no consideration [Page 805]was being given to the possibility of denouncing the trade agreement He stated that he had talked to officials in other Departments of the Government who indicated that they were unaware of this proposal and he pointed out that no real warning had been given that we had such a proposal in mind; we had merely asked his Government for indication of the amount of anticipated exports for the balance of 1945 and 1946, which had been furnished. Mr. Bruggmann said that during the war, and particularly last year, both the United States Army and United States Treasury Department had insisted that the Swiss provide the maximum amount possible of watches for the United States, and that Treasury had objected when his Government proposed some limitation of the amount of dollars received from watches which could be converted into francs, which limitation might have acted as some brake upon the volume of exports to the United States. He said that he had received assurances from Senators that no quota would be considered, and pointed out that any quantitative restriction was wholly inconsistent with the spirit of the Trade Agreements Act and the commercial policy of the United States. He said that Switzerland was in a desperate situation, that the rest of Europe provided no market for watches, at least not on satisfactory terms, and that the livelihood of many thousands of people in Switzerland depended on the watch industry. He said that our suggestion was wholly incomprehensible to him at a time when we were probably headed for a boom and when all that he had been able to ascertain, plus statements even by the American watch makers themselves, indicated that they would have a market for everything that they could produce.

Mr. Bruggmann also said that the inclusion of the Mexican-type escape clause in the trade agreement would render it useless by taking away all the permanency and assurance of stability which the present agreement contained.

Mr. Wilcox explained that our proposal had been decided upon after very mature and serious consideration by all interested agencies, that the United States watch industry had been almost wholly converted to military production during the war, and it was now engaged in the process of reconversion faced by the fact that civilian demand for watches during the war period had been met from imports. Watches were a durable good, not items that one bought every day. Mr. Wilcox pointed out that the special skills of the watch making industry were something essential to the security of the United States and which we could not afford to lose.

Mr. Bruggmann said he could not understand why we could not have discussed this matter with him quietly in terms of specific proposals rather than presenting a note which would in all likelihood [Page 806]result in a break. Mr. Bruggmann was reminded that the matter of the volume of imports from Switzerland had been discussed on frequent occasions with Swiss representatives both here and in Berne, and that there had been long delays in receiving any replies to our inquiries. Moreover, there had been similar difficulties in connection with our request for licenses, for export of watch making machinery. Mr. Bruggmann said that he could not agree to “suicidal” export of watch making machinery to a competitor, when there was a possibility that thereafter proposals for limitation of watch exports would be made.

Mr. Bruggmann asked if there was anything that could be done to get out of the present situation and was advised that we had made our proposals to the Swiss Government and would have to wait for its reply.

Mr. Bruggmann said that the United States watch importers had often stated that they would prefer no trade agreement to a trade agreement with quotas, and that he thought that their view would be influential with his Government.

  1. Office of International Trade Policy.