611.5131/993
Memorandum by the Second Secretary of Embassy in France (Williamson)27
On August 29, Dr. Feis, Economic Adviser to the Department of State, accompanied by the Second Secretary of Embassy, called on [Page 177] M. de la Baume, Chief of the Commercial Section of the Ministry for Foreign Affairs.
After the exchange of appropriate amenities the conversation turned to the contemplated commercial treaty negotiations with France. Dr. Feis explained in a general way why the negotiations must be deferred, probably until spring approximately. M. de la Baume voiced his understanding of the situation and said that his Government would in no manner exert pressure on the Government at Washington to hasten the initiation of negotiations. The French authorities would remain quiet until such time as the American authorities indicated that they were prepared to proceed.
In the meanwhile, however, the interested members of the French Government would meet about the 20th of September, while M. Garreau-Dombasle is still here, to map out from the French angle a rough outline of a basis for the treaty. M. de la Baume said that he was not yet in a position to assert what the principal points asked by France would be but thought they would include, inter alia, tariff reductions on lace and wines. He also remarked that some quid pro quo might conceivably be asked in connection with purchases of tobacco in the United States by the French monopoly. He explained that the bulk of the tobacco used in France is bought in the United States instead of the more useful fields for French commercial expansion, the Near East. Greece in particular, he said confidentially, had offered to accord France almost anything it desired in return for placing large tobacco orders in that country. Under the circumstances it was difficult, without some direct benefit in return, to maintain the preponderance of tobacco purchases in the American market.
Dr. Feis turned the conversation to the unfortunate atmosphere which exists in the United States, in non-Government circles, with regard to France, sketching briefly some of the possible causes and hinting that anything that could be done by France to ameliorate the atmosphere might make the treaty negotiations easier. Secretary Williamson here remarked, in connection with the American Government’s disinclination to take into consideration any steps taken by France latterly or in the future to build up an artificial bargaining position prior to the opening of negotiations, that we hoped the French Government would in the interim maintain the status quo as regards the American position, particularly in the field of quotas, giving us as generous treatment as possible in fresh fruits, salmon, etcetera, without resort to quid pro quos. M. de la Baume assented in principle. He also promised to look into the distribution of fresh fruit licenses, which is criticized by exporters in the United States.
At the request of Dr. Feis, the Chief of Section said he would have a memorandum prepared concerning French wines, which would be of [Page 178] educational use to us in understanding the French wine industry and its desires.
M. de la Baume was induced to discuss French commercial policy and the handicaps inherent to the high production costs in France. He attributed the abnormal costs largely to the high salaries which came into being during the intensive industrialization of the war period and said that of course it is a delicate problem to reduce wages, though it must be gradually done. On account of this situation, trade difficulties here take on unusual political significance. He confidentially admitted that aside from the wage issue the policy with regard to exterior commerce needed ultimate liberalization since of course the quota system and other measures stifle free interchange of merchandise. The quota policy is one which was forced on France by dumping threats and it was never intended to be permanent. Nevertheless it cannot be abruptly abandoned, he asserted. It has been the aim not to give both quota protection and increased tariff protection on the same item, a quota being eliminated when tariffs are raised. He also implied that the recent trade agreements designed to affect bilateral trade balancing between France and another given State had resulted in harmful repercussions, retaliation, etc., and that they defied the sound principle of triangular trade. The liberalization of commercial policy is therefore to be desired but must be arrived at slowly and cautiously so as not to disturb domestic industry and agriculture.
M. de la Baume, during the course of the conversation, also mentioned, as illustrative of the protectionist trends in most States, the difficulty encountered in making the French Ministry of Agriculture accede to the wine-fresh fruit agreement last year. In this general connection he expressed some disappointment at the smallness of the amount of French sales of champagne to the United States during past months. He felt that one of the chief difficulties lies in the heavy taxes collected by our customs on champagne and hoped this might be remedied.
In closing, M. de la Baume affirmed that it is the genuine and unswerving intention of the French Government so to apply quotas that they may be actually used in their entirety by the beneficiaries. In the recent Franco-British trade agreement,28 written assurances to this effect were given and such assurances are likewise applicable in spirit to the United States.