654.116 Lard/17
The Chargé in Switzerland ( Bigelow ) to the Secretary of State
[Received August 28.]
Sir: I have the honor to refer to instruction No. 3660 of August 7, 1936, setting forth the Department’s point of view with regard to the conditions under which lard is imported by Switzerland from the United States.
I have noted in this connection that the Department believes that it would not be advisable at this time to make this matter the subject of a formal protest to the Swiss authorities, but that nevertheless, if the Legation saw fit, it might be taken up informally in such a way as to point out to the Swiss authorities that the United States Government is not satisfied with the measures which have been taken by Switzerland to control lard imports and that it reserves its full rights under the terms of the Trade Agreement to protest in the event that it is determined that the situation is working out to the disadvantage of American interests.
Believing that it would be altogether desirable to let the Department’s dissatisfaction in regard to this matter be known to the Swiss authorities, especially in view of the connection of the equalization tax on lard imports with the principle involved in the matter of the four percent tax on payments of customs duties, I called this morning by appointment on Dr. Walter Stucki, the Federal Council’s Delegate for Foreign Trade,—the official primarily competent to discuss and adjust such matters.
I found that Dr. Stucki had already had referred to him the Legation’s note of August 12, 1936, addressed to the Commercial Division [Page 811] of the Federal Department of Public Economy, concerning the matter of the four percent tax on payments of customs duties, a copy of which accompanied my despatch No. 4528 of August 14th.
In the beginning of our conversation I mentioned that a number of other questions had arisen also involving apparent violation of provisions of the Trade Agreement and that apart from the legal aspects involved it was certainly desirable that no unnecessary obstacles be placed in the way of American export trade with Switzerland which had so far, I said, derived little benefit from the Trade Agreement, while there had been a very marked increase since the first of the year in sales in the United States of Swiss products.
I then took up the specific question of control of lard imports and referred both to the method employed in the granting of import permits for lard and to the levying of the elastic tax on quota licenses for such imports. I spoke of the dissatisfaction of the Department with these measures and its opinion that neither one is in conformity with the provisions of the Trade Agreement, adding that I was of course aware that the Swiss Government had permitted greater quantities of lard to be imported from the United States in 1936 than in 1935 and that 100%, instead of 90% stipulated in the Agreement, of the importations allowed were granted to the United States.
The relationship between the equalization tax (or license fee on lard quota allotments) and the four percent stamp tax on duties was mentioned, and I expressed the hope that it would be possible soon to receive a favorable answer to the Legation’s note of August 12, 1936, regarding the latter question.
For his convenience in studying the matter of the regulations on lard imports, I handed Dr. Stucki an informal letter embodying the parts of the Department’s instruction No. 3660 of August 7, 1936, which I thought could properly be brought to the attention of the Swiss authorities at this time.
Following what I believed would be the Department’s wishes in the matter, I stated in my letter that “the United States was reserving its full rights under the terms of the Trade Agreement to protest in the event that it is determined that the situation is working to the disadvantage of American interests”, and I emphasized particularly the desirability of finding a solution of the four percent tax question. A copy of this letter, which is dated August 19th, is enclosed.17
Dr. Stucki stated that he had not had time since his return from his vacation to study the four percent tax matter and that in a few days’ time he would examine it in connection with my observations relative to lard imports.
[Page 812]Commenting on the four percent tax, he said that it had been adopted “without his having been consulted in the matter and that he had no responsibility for its imposition”; that he foresaw an “immense difficulty”, for fiscal reasons, in meeting the United States Government’s wishes in regard thereto; and that while the removal of the tax so far as the United States alone is concerned would not involve a large loss of revenue, it would be quite another matter when taken from the same classes of products from other countries.
Since the question, in these circumstances, will undoubtedly be submitted to the Federal Council, and in particular to Mr. Obrecht, Federal Councillor, in charge of the Department of Public Economy, and to Mr. Meyer, Federal Councillor (President of the Confederation), in charge of the Department of Finance and Customs, it is anticipated that a considerable length of time may elapse before the Legation is informed of the decision reached by the Swiss Government in this matter.
The Legation will promptly report further developments as soon as it is in a position to do so.
Respectfully yours,
- Not printed.↩