In an address before the American Club yesterday, Minister of Finance
Reynaud summarized the present trade problems between France and the
United States as follows:
“… What we need is not men, but arms, and raw materials and
machines.
“And here comes a great problem, the problem of commercial
exchanges between our countries. Long before this war began
President Roosevelt and Secretary Cordell Hull often
emphasized the need—which was one of the reasons for the
tripartite monetary agreement28—for stimulating exchanges of wealth among
nations. They proved that freedom of trade is one of the
important aspects of that ideal of liberty which we cherish.
When goods move across frontiers they carry ideas with
them.
“Now what was true before the war is still truer today. Let
us not forget the bitter lessons of the last war, which was
not so long ago; let us not forget the unprecedented
economic depression that it brought about. If, during the
present war, we should commit the
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old blunder of letting ships come over
from the United States full of goods and go back empty, we
should be sowing the seeds of another and perhaps more
terrible post-war crisis. French purchases in America must
in large part be paid for by French labor or if not, both
countries will suffer.”
It is obvious that France must make war-time purchases abroad and
that the growing dependence upon the United States for arms,
munitions and raw materials will further augment France’s
unfavorable trade balance with the United States.
[Enclosure]
Memorandum by the Commercial Attaché in
France (Reagan)
In view of the heavy purchases which France is making in the
United States to meet its war-time needs, French officials, and
trade and press sources have emphasized that every legitimate
effort should be made to stimulate French exports to the United
States in order to keep the adverse physical trade balance as
low as possible and thereby reduce the amount of gold which may
have to be transferred in payment against these imports.
French exports to the United States have already been reduced by
the handicaps resulting from export prohibitions, increased
war-time requirements for various commodities and the partial or
complete lack of availability of typical items in this
trade.
From a preliminary study made here on the basis of the principal
products imported into the United States in 1937, from all
French sources, it appears that 30% of this trade has already
been stopped either by complete embargo or lack of available
supplies for export; an additional 10% has already been affected
by partial or conditional embargoes or by partial lack of raw
materials. For Metropolitan France alone, the corresponding
percentages are 23% and 13%; for French Colonies, Possessions
and Protectorates, on the same basis, items representing 56% of
the value of this trade are already affected by rigid export
prohibitions some of which, however, will undoubtedly be relaxed
after stocks necessary for France have been accumulated.
Obviously, the restraint apparent in this trade is subject to
change, as new prohibitions may be imposed or existing
prohibitions relaxed, or the availability of products and of raw
materials may improve.
French Government officials, trade association executives and
individual exporters have since the beginning of the war brought
up in informal conversations their strong desire to facilitate
French exports
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to the
United States. However, Alphand, director of foreign trade, Ms
experts and these trade interests have uniformly centered their
suggestions for improving French exports to the United States
upon the obvious means of duty reductions for some items not yet
included in any of our trade agreements or for further
reductions upon some items which have not been accorded the
maximum cut. Most of the items to which they attach special
interest as the object of such duty cuts are given in the list
attached to the memorandum handed to the French Ambassador on
July 7, 1939, and transmitted in the Department’s confidential
despatch No. 1657 of August 3.28a In their efforts to explore
the possibility for increased sales through duty concessions
they have also mentioned, in addition to the items cited in the
list under reference, shelled almonds, shelled walnuts, certain
China and porcelain ware, corn oil, olive oil, and certain
categories of glassware and gloves formerly included in the
Czech agreement.
The reliance upon duty reductions as the principal and almost
exclusive proposal for increasing French exports, even if the
major portion of the reductions on the items of special interest
were feasible in exchange for adequate concessions or assurances
for our exports, does not appear to be an adequate answer to
their problem. Even radical increases in the sales of these
products in the United States can scarcely be expected to make
up the reduction, due to export control measures, which is
equivalent to from 30% to 40% of the total exports from French
sources to the United States on the basis of 1937.
A quick survey indicates that this gap might be materially
reduced through an increase in the sales to the United States of
such products as potash, champagne, brandies and liqueurs,
hides, skins and furs and certain colonial raw materials, such
as rubber, cocoa, chromite, nuts, olive oil, crin végétal,
graphite, mica and fine woods, provided a special effort is made
to maintain or increase production. For most of these items, the
possibility of increased sales to the United States is not
dependent upon duty reductions—some of them are already on the
free list—but upon the capacity of the French to increase
production and to improve their export organizations and sales
bases and methods in the United States.
In the informal talks with the French officials and trade
representatives who have recently approached the Embassy, we
have considered it advisable to point out that French producers,
exporters, and their representatives in the United States must
get down to brass tacks in their sales methods and be willing to
participate in the expenses of developing this trade. From the
trade information available
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here, we have felt it necessary to cite
certain instances, as in the wine and glove trades, where the
exporters continue to quote in dollars at approximately the same
levels as prevailed when the franc was at 15 to the dollar. As a
result, these exporters complain that their volume of sales
continues to be moderate, while they continue to skim off a
large portion of the franc equivalent of their dollar prices.
That French officials and French exporters are counting almost
entirely upon possible duty reductions as a means of increasing
their trade is indicated by the fact that they have brought
forth no practical trade promotion suggestions nor have they
indicated any sincere willingness to contribute part of their
profits, in some instances very high in francs, to stimulate
this trade.
The only instance of a concerted, if limited, effort to stimulate
American buying of French products is the advertising campaign
to be run in several of the leading American papers during this
month, presumably paid for by the French Government, and in
which, it is said, it will employ the theme “France is fighting
for the liberty of the democracies—Buy French wines, de luxe
articles, cheese, porcelain, etc.” It would appear that one
weakness of this general campaign is the fact that some of the
articles which Americans are asked to buy do not now have
adequate distribution in the United States. Its hasty conception
appears to be indicated by the fact that several of the French
trade association representatives have stated that they have no
knowledge whatsoever of this campaign and were not consulted
with regard to its policy.
Obviously, we are not in a position to appraise definitely
whether there is a real basis for the French belief that duty
reduction for a number of items would help their trade
materially. From the general trade information at hand, it is
our impression that they are exaggerating the value of such
reductions in the hope that they would be an easy answer to
their export problems. If and when consideration is again given
to possible further duty concessions for French products, the
soundness of the French hopes can, of course, only be tested by
the usual investigation of the Trade Agreements Committee
through the import studies of the Tariff Commission.
