your telegram No. 482, it should be pointed out that the modus vivendi of 1927 with France is merely an executive agreement, and as such does not become a part of the law of the land. Only definitive treaties which have received the approval of the Senate would have sufficient force to override a statutory provision such as the provisions in Section 601 of the Revenue Act of 1932. Very truly yours, For the Secretary of State: EFFORTS TO ARRIVE AT "QUID PRO QUO" ARRANGEMENTS WITH FRANCE REGARDING FRENCH TURNOVER TAX AND PROTECTION IN AMERICAN MARKETS FOR NAMES OF ORIGIN OF FRENCH WINES " 811.114 Liquor/757: Telegram The Chargé in France (Marriner) to the Secretary of State PARIS, August 22, 1934-10 a. m. [Received August 22-7: 34 a. m.] 619. Press today reports under Washington date line that Federal Alcohol Administration has issued ruling prohibiting use of names of places of origin on wines and liquors not originating in such places instead of [as] Burgundy. Since, if true, it would be useful to Embassy to be able to inform Foreign Office of this important ruling, telegraphic advice would be appreciated concerning alcoholic beverages to which applicable and other pertinent details. MARRINER 811.114 Liquor/757: Telegram The Acting Secretary of State to the Chargé in France (Marriner) WASHINGTON, August 22, 1934—6 p. m. 343. Your No. 619, August 22, 10 a. m. Federal Alcohol Control Administration promulgated August 10 regulations relating to: (1) Standards of identity for distilled spirits: "Class 8. Geographical and Distinctive Designations: (a) Geographical Names.-The name for distilled spirits (1) which have a geographical name, or (2) which are distinctive products of a particular place or country, shall not be given the product of any other place or country, unless such product in fact conforms to such distilled spirits except as to age, and unless such name includes the word 'type', or an adjective, such as American or the like, clearly indicating the true place of production. This paragraph shall not apply to designations which by usage and common knowledge have lost their geo For previous related correspondence, see Foreign Relations, 1933, vol. II, pp. 155 ff. graphical significance to such an extent that they have become generic, provided the approval of the Administration is obtained prior to using such designation." (2) Labeling of distilled spirits: "Section 12(g). Geographical Brand Names: The word 'Brand' shall be stated in direct conjunction with a brand name containing a geographical name or adjective as a part thereof, in type at least one-half the size of the type in which such geographical name or adjective is printed on the label, unless such distilled spirits were in fact produced in such place." Copies being mailed. Hearings on tentative draft of wine regulations proposing similar provisions will be held at Washington September 17. French Embassy is being notified. PHILLIPS 811.114 Liquor/762: Telegram The Ambassador in France (Straus) to the Secretary of State PARIS, August 30, 1934-5 p. m. [Received August 30-2 p. m.] 645. For Phillips. Referring to the Embassy's telegram No. 619, and the Department's reply 343, August 23 [22], 6 p. m. Embassy would like to use proposed regulations concerning geographic names for champagnes and other sparkling wines, still wines, brandy and "other liqueurs and spirit cordials" in an endeavor to secure removal of [restrictions] as for instance application of 2, 4 and 6 percent import turnover tax. To do so it would be necessary to be assured that Federal Alcohol Control Administration will defer decision if domestic situation permits pending termination Embassy's conversations on the subject. We might take the stand that while as known [an?] amendment of the regulations is contemplated in such a manner as to give satisfaction to long sought desire of French for protection of geographic names there is considerable opposition to the move and that a quid pro quo in way of turnover tax would assist in overcoming objections. If the Department approves this effort which was indorsed by Dr. Feis 52 prior to his departure I should appreciate being informed telegraphically concerning general outline of regulations as contemplated and whether all of the above described French alcoholic beverages would be affected. For goodness sakes give us opportunity to trade; possibly we can get something. "Herbert Feis, Economic Adviser, Department of State. STRAUS 811.114 Liquor/762: Telegram The Acting Secretary of State to the Ambassador in France (Straus) WASHINGTON, August 31, 1934—6 p. m. 355. Your 645, August 30, 5 p. m. We are delighted that you have found an opportunity to put pressure upon the French, particularly in the matter of the turnover tax. We have been in touch with Federal Alcohol Control Administration this morning. As far as the regulations concerning geographic names for brandy and spirits is concerned, there is nothing to be done as the orders have been promulgated and are in effect. In so far, however, as wines are concerned, the regulations relating (1) to standards of identity and quality for wine, (2) to standards of fill for wine, and (3) to the labeling of wine, have only been tentatively drafted and are to be discussed at two hearings, the first now being held in California, the second scheduled to be held at Washington on September 17. In practice it takes approximately 2 weeks after the hearings for the evidence presented to be sifted and acted upon. There is no doubt but that there is considerable opposition on behalf of the wine growers in California, New York and Ohio, who feel that their rights vis-à-vis the importers are not being sufficiently preserved. There is reason to assume that this point of view will have to be given careful consideration. Following these hearings the Federal Alcohol Control Administration will draw up in a more definite form the regulations in question but has undertaken not to promulgate these without a careful study with the State Department of their effect on our trade with foreign countries. I may add confidentially that in this study the attitude of the State Department will undoubtedly be more favorable if a quid pro quo can be shown. Texts of regulations forwarded by pouch August 28th.53 PHILLIPS 811.114 Liquor/771 The American Embassy in France to the French Ministry for Foreign Affairs 54 AIDE-MÉMOIRE In a note of April 3, 1934,55 the Embassy recalled the existing discrimination against American exports to France in the matter of the 5 Instruction No. 544, not printed. 54 Transmitted to the Department by the Ambassador in France in his despatch No. 1198, September 11; received September 20. application of the 2, 4 and 6 per cent import turnover tax which arises from the circumstance that France has suppressed the higher rates of the tax in favor of Belgian and Italian products and the products of certain other countries. While citing the point of view of the American Government that the removal of this discrimination should not depend upon the granting to France of what might be considered compensating advantages the Embassy pointed out that in actual fact its Government did accord to France as a quid pro quo for the removal of the discriminatory tax on copper the elimination of the restrictions on French samples of women's wearing apparel entering the United States, this advantage having been given without waiting for the French Government to make the necessary adjustment with regard to copper which had orally been promised. As the Ministry for Foreign Affairs is aware, the satisfaction sought by the United States in regard to copper was never given. The Ministry for Foreign Affairs replied to the Embassy's note in a note dated May 7, 1934.56 In the last paragraph the Ministry stated that it might reexamine the whole question when circumstances permit. It is believed that as stated somewhat further below, conditions have now so shaped themselves as to render it advantageous to the French Government to give further and serious consideration to the matter. It may be remembered that the Embassy, in a note of May 16, 1933,57 asked the removal of the discriminations inherent to the present application of the import turnover tax as concerns all products imported from the United States. The Ministry for Foreign Affairs responded under date of May 20, 1933,58 stating that a bill had been laid before the French Chambers authorizing the French Government to reduce the import turnover tax to 2% "en ce qui concerne tout ou partie des produits originaires des divers pays étrangers dont la production est grevée de charges fiscales équivalentes à celles que supporte la production française ou qui auront conclu avec la France des arrangements spéciaux à cet effet"." The Ministry's note continues, "Dès que cette loi sera votée et mise en vigueur, ce qui ne saurait tarder, le Ministère des Affaires Etrangères se mettra en rapport avec l'Ambassade pour examiner la question avec elle".60 (It is interesting to observe that "Not printed. "Note No. 2386 from the Chargé in France to the French Minister for Foreign Affairs, Foreign Relations, 1933, vol. II, p. 156. "See telegram No. 234, May 22, 1933, 4 p. m., from the Chargé in France, ibid., p. 157. Translation: "with regard to all or part of the products of origin in the several foreign countries on the production of which taxes are levied equivalent to those placed on French production, or which will have concluded with France special arrangements to this effect." Translation: "As soon as this law is passed and put into effect, which will not be long, the Ministry for Foreign Affairs will get in touch with the Embassy in order to examine the question with it." the Ministry's note coupled with this question the desire of the French Government to secure protection in the United States for French wines as regards the use of geographic names of origin.) While the bill cited by the Ministry was not approved by Parliament last year an analogous law was later approved by Parliament and signed by the President of the Republic on March 10, 1934. This law affords the French Government the authority, up to November 15, 1934, to effect by decree the reduction of the higher rates of the import turnover tax in favor of the products of another country. It would appear therefore that the French Government has at its disposal the means for affording relief to American products as regards the import turnover tax. While the Embassy, in reply to the Ministry's note of May 7, 1934, must reaffirm that the American Government is still of the mind that the discriminations in the application of the import turnover tax should be gratuitously removed and in particular that the oral understanding relative to a reclassification of copper should be fulfilled, it is at the same time mindful of the mutual interest of both Governments in improving commercial relations. It therefore invites attention to developments in the United States which may possibly be turned to the advantage of France. The French Government has long sought protection of geographic names of origin of French wines. On August 10, 1934 the Federal Alcohol Control Administration promulgated regulations, which it is believed will prove satisfactory to foreign interests, which would provide protection for geographic names employed for distilled spirits. Of particular interest to France is the protection henceforth afforded to brandy or cognac. The Embassy is now informed that hearings will very shortly be held regarding the granting of analogous protection to geographic names of wines. It is, however, learned that considerable opposition to the proposed wine regulations has developed in the United States, notably among the wine growers in California, New York and Ohio. Further, prior to the promulgation of the regulations concerning geographic and distinctive designations of wines, the regulations will be referred to the Department of State at Washington for consideration in the light of their effect on American foreign commerce etcetera. The Embassy realizes that the French Government has for long considered that the adoption of such regulations as those now contemplated is of the utmost importance to the French wine trade. In fact protection of the nature was one of the demands made by the French Government during the course of the commercial treaty negotiations two years ago, a declaration in that regard having been suggested as an annex to the draft treaty. In consequence, it is felt 61 01 See Foreign Relations, 1932, vol. I, pp. 195 ff. |