811.114 Liquor/1223
The Secretary of State to the Secretary of the Treasury (Morgenthau)
My Dear Mr. Secretary: It is understood that some time last fall, the Federal Alcohol Administration held hearings on the question of continuing the present temporary authorization of the use under certain restrictions of the word “Cognac” in labeling brandies produced in this country. In so far as I have been informed, no final decision has yet been reached in the matter by the Federal Alcohol Administrator.14
The French Embassy has again expressed to me the anxiety of its Government over the possibility of the continuance of the use of the designation “Cognac” on brandies produced in the United States.
I feel, therefore, that in his consideration of this question it might be of value to the Federal Alcohol Administrator to know that a decision permitting the continuance of the use of the word “Cognac” in labeling domestic brandy would have an adverse effect upon our Trade Agreement15 with France.
At the time of the signature of the Franco-American Trade Agreement, the regulations of the Federal Alcohol Administration prohibited the use of the words “Cognac” or “Cognac brandy” except for brandies distilled in the Cognac region of France, thus effectively preventing the use of those designations for domestic brandies.
While those regulations were in force we accorded to France in the Trade Agreement a reduction in the import duty on brandies of French origin. The French Government considers that this duty reduction is one of the most important of the concessions to France included in the Agreement. This concession was part of the consideration in return for which it was possible for this Government to obtain from France duty and quota concessions on a number of products of importance to American industry and agriculture.
Among those American products which have benefited by the Trade Agreement may be mentioned fresh grapefruit and oranges, dried prunes, peaches, apricots, apples and pears, raisins, motion picture films, preserved salmon and sardines, fresh apples and pears, and canned asparagus.
The French Government feels, however, that the benefits to which it is entitled under the Trade Agreement have been materially and [Page 345] adversely affected by the provisional regulations permitting the use of the word “Cognac” on domestic brandies, and that a continuing and increasingly adverse effect would result if the provisional regulations were made permanent. The French Government cannot see how the interests of the consumer will be served by permitting domestic distillers to use a French geographical name on their labels, and it feels that the present regulations, therefore, permit unfair competition which effectively deprives France of a part of the benefit to which it is entitled under the Trade Agreement.
In consequence, the French Government has been giving consideration to the provisions of the third paragraph of Article 11 of the Franco-American Trade Agreement which provides that in the event either Government adopts a measure which, although it does not conflict with the terms of the Agreement, should, nevertheless, be considered by the other country to have the effect of nullifying or materially impairing any important object of the Agreement, such other Government shall be free to propose negotiations for the modification of the Agreement. In the event an agreement is not reached, the Government making the proposal may terminate the Agreement in its entirety on thirty days’ notice.
I need not stress the importance of the many advantages which American interests have obtained as a result of the Trade Agreement with France, and which would be lost in the event that the French Government found it necessary to terminate the Agreement.
I hope, therefore, that pending the coming into effect or the amendment of Section 506 of the Liquor Tax Administration Act, the Federal Alcohol Administrator will not find himself under the necessity of taking any action which might prejudice our Trade Agreement program.
Sincerely yours,
- W. S. Alexander.↩
- Signed at Washington, May 6, 1936. For text, see Department of State Executive Agreement Series No. 146: Reciprocal Trade Agreement and Protocol of Signature Between the United States of America and France, and Related Notes; for correspondence, see Foreign Relations, 1936, vol. ii, pp. 85 ff.↩