611.5131/1296: Telegram
The Ambassador in France (Straus) to the Secretary of State
966. The Department’s approximate minimum request for concessions as outlined in telegraphic instruction No. 446, November 5, 6 p.m. and the French Government’s response which was telegraphed to French Embassy on November 14, have been the object of three long discussions with Foreign Office and of careful study by this Embassy and the Consulate General, Commercial and Agricultural Attachés.
With regard to our request for further removals from the list of exceptions to minimum tariffs, it is evident that the progress made is by no means impressive although five of the nine items included by the Department have received at least conditional favorable action. Of remaining four items the French reasons for refusal appear reasonably sound as regards borax and rough rice. Carbons and pumps might well have been granted but are not highly important.
Concerning reductions from the minimum tariff it is much regretted that the request was not granted on some of the six agricultural items particularly pineapple, which is very little competitive save for French colonial production; and dried fruits [sic] involves reclassification, a point which may not have been understood by the French. Dried prunes and canned asparagus are very important to our trade and the Embassy has also argued in their behalf but it can well understand the French contention that these commodities are in competition with politically powerful agricultural interests here and furthermore that we have developed an excellent market despite the present tariff rates. The Embassy feels that the large tariff reduction granted on automobile chassis taken in conjunction with the reductions on grapefruit and spark plugs manifests a sincere effort to grant us concessions in fields where such is practicable and is psychologically important.
With regard to new quota concessions the French obviously go a long distance towards compliance with our full request. The refusal on nitrate of soda is readily understandable since French domestic production is now practically sufficient to meet French needs. It is felt that we might reasonably have been given supplementary quotas on radios and tubes but the French explanation is based on their established quota policy. In typewriters we already enjoy a very large share of the market and the French motives for denial seem well grounded. Two or three of the minor commodities might have been favored. On the other hand, the list of articles for which quotas are [Page 236] increased or done away with is not only long but contains trade items susceptible of very considerable expansion; notably, frozen salmon, apples and pears and passenger automobiles. The concessions granted on the latter two items are, of course, of outstanding importance and I think satisfactorily approach our desiderata. The advantage for automobiles has been extremely difficult for the French Government to obtain consent to and it merits due weight.
The question now arises whether the Department considers that the French Government has substantially met its requests of October 28. In evaluating this question it would seem that although we may be disappointed that certain meritorious tariff requests were not complied with, the French response must be viewed as a whole and not discarded because tariff satisfaction or any other individual satisfaction was not given. If thus examined it is believed that with the very definite large scale trade expansion possibilities crowded into the quota section and with such particular tariff as that on automobile chassis, we will find the French reply in its totality of commercial potentialities worthy of serious and sympathetic consideration. While the Department is in a better position to judge whether satisfactory basis exists for an agreement I feel that the French offers do represent an increased advantage of material importance to our trade and furthermore that the French Government has been sincere in its offers and has gone about as far as it feels it can do at this time both from its political and economic considerations. In this connection Bonnef on Craponne, Director of Commercial Accords at the Ministry of Commerce, has definitely informed the Commercial Attaché that such is the case stating that the extreme limit in concessions by France has now been reached and that if the new proposals just made are not acceptable to us the negotiations may as well be broken off. Foreign Affairs is of the same attitude relative to having reached the limit.
As a matter of record it may be well to recall that the present French concessions are in addition to those already accorded by them, the previous having included the granting of: general minimum tariff treatment throughout the entire list save for some 45 items; reductions from the minimum tariff on 7 items; supplementary quotas on some 20 items; and reduction of the import turnover tax to a uniform 2%. In the process our very shaky modus vivendi is replaced by a far more stable and extensive structure and it is important to remember that if negotiations were not successful the modus vivendi would, in their opinion, not be continued. Moreover, the French Government believes it should be given credit for blocking the recently contemplated film decree which incidentally Monsieur de la Baume informally assures us will not be revived as legislation [Page 237] during the first year of the treaty in such manner as to prejudice American films. The French argue that weight should be accorded for the following:
- (1)
- American goods have already obtained what is tantamount to 40% tariff advantages through dollar devaluation. In this connection it is pointed out that in anticipation of the negotiations the exchange surtax was not applied against the United States whereas it was applied against every other country and only removed from them in consideration of commercial treaties.
- (2)
- The present French offer extends, practically gratuitously, to the colonies trade advantages estimated at some 100 million francs.
We here understand that the French concessions and in fact any agreements whatsoever are contingent upon procuring from the United States greater reductions than those which we thus far offer on laces, wines and cigarette paper. If the French offer is accepted in the belief that it is the best that can be obtained I cannot too strongly urge, not alone because it is a French sine qua non, but as well as a vindication, the sincerity and consistency of our announced trade barrier reduction policy that every effort be made to approximate French requests on the three items lace, wine and cigarette paper. If material satisfaction throughout cannot be given it is confidentially suggested that lace be emphasized, particularly fine and semi-fine Calais cotton lace. Further, if it proves absolutely necessary to deny satisfaction on all three of these items, the Embassy is convinced that substantial satisfaction on lace request is essential and might be the means of avoiding necessity of granting requests on cigarette paper.
Culbertson29 returned to Paris yesterday and has been consulted in connection with this telegram.