Atomic Energy Files, Lot 57 D 688
Statement of the Position of the Government of Belgium1
Memorandum
i.
1. The Belgian Government has studied the Memorandum dated April 5th last.
2. It regrets that the United Kingdom and the United States Government are not able to take into consideration the Congo aspects of the problem. In its opinion any solution ignoring—or seeming to ignore—those interests would be basically unsatisfactory and likely to prejudice the international position of the three Governments concerned. Propaganda hostile to the Western Powers would not fail to take advantage of what would be labeled a demonstration of economic imperialism at the expense of a nonautonomous territory.
3. It is felt therefore that even a postponement in the conclusion of an agreement would be less harmful than a settlement open to criticism.
ii.
1. The negotiations initiated at the end of 1949 were not successfully terminated because the Belgian Government has arrived at the conclusion that any agreement that did not embody a substantial increase in uranium taxation would be totally unacceptable either for public opinion or for the Belgian Parliament.
2. The financing of the atomic program to be carried out in Belgium is contemplated through the earmarking by the Colony of part of the resources derived from uranium for the purpose of scientific research which will contribute to the valorization of the natural wealth vested in the ore.
3. The rate increase of the special surtax on uranium will of course bring about a rise in the ore price. However the Belgian Government does not consider that the very fact that the Colony believes it should submit uranium to the same treatment applied to all its other exports, can be construed as implying a recognition by the United States and [Page 731] the United Kingdom Governments of a commitment to support financially programs for the social and economic advancement of the Congo.
4. In their Memorandum the United States and United Kingdom Governments point out that uranium cannot be singled out as a special source of revenue. It is not a question of giving uranium a special treatment, but on the contrary of applying to this ore the common treatment imposed on all other raw materials exported from the Colony. In this connection, it is not without interest to quote hereafter the present rates of export taxes on some raw materials from the Congo:
| coffee Arabica per ton | Frs. | 5.010 |
| plantation rubber | 6.500 | |
| cotton | 8.300 | |
| cassiterite | 12.850 | |
| tin | 17.750 | |
| tungsten | 21.550 | |
| granulated cobalt | 23.375 | |
| cadmium | 96.450 |
iii.
1. The Memorandum contends that the Congo has greatly benefited from the general rise of all raw materials, and is not justified therefore in increasing its taxation on uranium.
The Belgian Government considers it would be wholly unjustified to maintain, for uranium alone, taxation at the 1948 level while fiscal revenue on all other raw materials have increased.
2. The Memorandum further indicates that the fairest—and only— means of establishing a price is by starting with the costs of production. This way of computation would only be valid if easily replaced materials or practically unlimited deposits were involved. Experts of the purchasing countries do agree that such is not the case for Congo uranium: the deposits, though exceptionally rich, are indeed very limited and there are no substitutes for them. It is not at all unlikely that they will be completely exhausted by the end of the present contracts. One cannot reasonably pretend that the mere collection of a normal industrial profit on the transfer of the uranium ores to the United States and Great Britain would equitably compensate the owner for this loss.
3. The Belgian Government wishes to emphasize that when the 1944 agreements were concluded, the problem of the export duties and that of the surtax on uranium ores were specifically reserved for settlement at the end of the hostilities—exclusively for military security reasons.
As pointed out in the Memorandum—the price was calculated on the basis of production costs augmented by what was considered by the purchasers a fair profit. Thus, no account was taken of the fiscal necessities.
[Page 732]It is on this profit—considered fair by the purchasers themselves— that a retroactive taxation was established, the rate of which was fixed at 60 frs per kilo by Decree of June 9, 1947 and carried to 85 frs per kilo from May 1, 1948 on.
It is to be noted that at the time of the 1944 Agreements substantial surtaxes were levied by the Colony, besides the usual export duties, on other raw materials as for instance 7.500 frs per ton of tin, 3.500 frs per ton of cadmium, 5.400 frs per ton of tantale ore, 4.000.000 frs per ton of gold. This surtax was due only on the difference between costs of production plus a fair profit and the sale price actually obtained.
It would therefore have been logical to fix the sale price of uranium on the basis of the costs of production augmented by a fair profit, plus a surtax similar to that levied on other exported goods. The question of the surtax to be levied on uranium was left in abeyance in 1944 in order to conceal the importance of this strategical material.
4. Successive readjustments of the ore price were justified by purely economical factors and not caused by any taxation by the Colony.
5. From the aforementioned it results that if the Colony levies at present about frs 100 per kilo of uranium ore, this amount does not represent an increase (as advanced by the Memorandum) in the price supported by the taxpayers of the purchasing countries, but a loss of legitimate profit suffered by the Union Minière shareholders.
6. From the calculations of the Union Minière—and without prejudice of their accuracy—it appears that purchasers pay at present, for the Colorado ores, between 2 and 2.50 dollars more per lb of oxide contents than for the Congo ores.
Even increased by an additional 200 frs surtax per kilo, the price of Congo ore would thus be inferior to the price paid for American ores. Although the Congo ore cannot be materially estimated as a potential source of energy, its worth is well established and unquestionably greater than that of the Colorado ores. It is the sense of the Belgian Government that the costs of ores from other sources can be validly taken into account when a fair price for the Congo ore is being determined.
iv.
The Memorandum considers an increase of $2 million annually on the basis of 40 cents per lb. It is the hope of the Belgian Government that the United Kingdom and the United States Governments will find ground, in the above exposé, for a more substantial increase of the surtax.
v.
Whatever the amount that will be agreed upon by the three Governments, the Belgian Government must make it clear that, in any public [Page 733] release, the increase be given the character of a profit by the Belgian Congo, it being understood that part of the resources drawn by the Colony from its uranium exports will be earmarked for the financing of the atomic program to be carried out in Belgium.
The Belgian Government agrees that all publications on the matter be made only after consultation between the parties concerned in such a way as to avoid any possible disclosures inconsistent with security requirements.
vi.
The Belgian Government has noted with sincere appreciation the readiness of the United States and United Kingdom Governments to promote talks between experts with a view to provide technical assistance to Belgium for the implementation of her atomic research program.
- Transmitted to United States and British officials by the Belgian Embassy on June 1.↩