611.5431/197⅔

Memorandum by Mr. David Williamson of the Division of Western European Affairs

Memorandum of Sixth Meeting with Swiss Negotiators, Thursday, June 13, 1935, at 3:00 p.m.

  • Those present
    • For Switzerland:
      • Mr. Stucki,
      • Mr. Micheli,
      • Mr. Nef.
    • For the United States:
      • Mr. Grady,
      • Mr. Culbertson,
      • Mr. Williamson,
      • Mr. Barker,
      • Mr. Hunt,
      • Mr. Hawkins (later).

Before the conversations began Mr. Stucki asked if copies of the minutes of these meetings might be supplied to him, a request to which Mr. Culbertson acceded.

At the outset of the meeting Mr. Grady informed the Swiss delegates that the President’s approval of our proposed watch concessions had been secured. He said that the President, however, was deeply concerned with the smuggling situation. A bill has been introduced into Congress which provides for certain administrative measures to be taken against watch smuggling,18 in particular authorizing the destruction of smuggled watches rather than their resale in the United States. If this bill is passed legitimate Swiss interests will benefit as much as legitimate American interests. Therefore, the American authorities hoped for Swiss cooperation in this matter. Mr. Culbertson then read our concessions and supplied a copy of them to the Swiss gentleman. He pointed out, however, that these concessions were offered with certain provisos, (1) that the imports of watches with bushings (bouchons) would cease; (2) that both Governments should cooperate in eliminating smuggling. Although smuggling is a domestic problem, watch movements are particularly easy to smuggle, and it was felt that this field offered an opportunity for international cooperation. According to the customs figures, smuggled watches amount to more than one-third of legitimate imports; the watch industry thinks that it amounts to one-half. It was suggested that one effective method of checking smuggling would be to number serially watch movements manufactured in Switzerland. (3) That if smuggling does not cease, the tariff concessions offered to the Swiss in watch schedules would have to be withdrawn or even possibly the agreement terminated. In this connection Mr. Culbertson mentioned that we would try to do away with the requirement that unadjusted movements be marked “unadjusted”.

(At this point Mr. Stucki left the room to see the Secretary so that conversations were interrupted for an hour.) Upon his return Mr. Stucki started by saying that at first glance he did not see how it was possible to accept the watch concessions offered. The American tariff on watches offered a typical case of what the present administration [Page 757] had so often inveighed against, namely, the artificial protection of an uneconomic industry. Six thousand persons were employed in making watches in the United States, but more than sixty thousand were so employed in Switzerland in an industry over two hundred years old. As to smuggling, the Swiss policy had always been to refuse cooperation with other Governments in smuggling matters. The best weapon against smuggling, he found, were low tariffs. Nevertheless, he was willing to recommend to his Government that the established Swiss policy be altered on condition that the American tariffs on watches be greatly lowered. He suggested that we submit a written proposition on this subject and that it be made the subject of a special negotiation.

Mr. Stucki then drew attention to the suggestion that a direct relation be made between the cessation of smuggling and the denunciation of the agreement. He does not think that this proviso is a just one. First of all, the responsibility for controlling smuggling lies with the importing nation, and he intimated that if we could not control our own smuggling problem, it was unfair to penalize Swiss commerce therefor. Switzerland was prepared to cooperate insofar as it could in assisting us to curb smuggling, but he could not accept the principle of denunciation in case smuggling did not cease. He suggested that the six months clause which will be written into the general provisions would adequately take care of the President’s desires in this matter.

In reply to Mr. Grady’s question as to how the Swiss cooperate with the Germans in smuggling matters, Mr. Stucki stated that since both countries operate under the quota system, control was relatively easy. To conclude the discussion, Mr. Stucki expressed himself as being willing to examine the matter further.

Mr. Culbertson then took up the Swiss concessions to us. Since this was to be the last meeting, he felt it would be misleading if he did not stress the point that we have held back nothing but have laid all our cards on the table. Although we were happy to reexamine certain points of minor importance in our proposed concessions to the Swiss, there can, in general, be very little flexibility in our attitude and that on the majority of items nothing further can be granted. On the other hand he wished to make it clear that we must maintain certain of our requests which the Swiss have denied. Mr. Stucki replied to this that the Swiss Government may not be ready to continue negotiations on this basis. He estimated the value of the Swiss concessions offered to us as an increase of 51,000,000 francs in quota increases and of 16,000,000 francs in tariff consolidations. This represented an increase of 80 per cent in our exports to Switzerland. Mr. Culbertson then gave our preliminary reactions to the Swiss offers. We were ready to accept their proposals except in the following items:

[Page 758]

[The discussion of individual items is omitted.]

In discussing the general provisions, Mr. Hawkins adverted to Article 7 in the Swiss counter proposal and asked whether that Article meant that no monopoly would be established on the products listed in the schedules. Mr. Stucki replied that that was by no means the case. The Swiss retain the right to establish monopolies on any products, but the general provisions provided that American commerce would receive equitable and fair treatment if a monopoly were to be set up. He said that most European States have monopolies, especially on tobacco, and although the Swiss Government does not contemplate instituting a monopoly system, it might be forced to do so in the future. To take care of such an eventuality he would not refuse to include in the general provisions an assurance of equitable treatment to American products.

Mr. Grady then remarked that we hoped that the agreement might be ready for signature soon, perhaps next month. Mr. Stucki replied that it would be scarcely possible for him to sign before September, but that he hoped that during the summer the questions still at issue would be ironed out. He then thanked Mr. Grady for the friendly and frank way in which the negotiations had been carried out and he expressed himself as being very pleased to have come to the United States for these conversations. Mr. Grady replied in a few well-chosen words and the meeting ended.

  1. H. R. 8624, Congressional Record, vol. 80, pt. 1, p. 108.