REMARKS ON APPLICATION OF MOROCCAN DECREE OF DECEMBER 30, 1948, TO UNITED STATES TRADE

The officially stated objective was to conserve dollars. The decree was applied in January 1949. United States exports to Morocco were 20.6 million dollars in the first half of 1949, against 13.6 million dollars for the last half of 1948, 28 million dollars for the entire year of 1948.

Automobiles were the principal "luxury" criticized among United States exports to Morocco. The decree absolutely prohibits them. United States exports of automobiles rose from $1,692,000 in the last half of 1948 to $1,752,000 in the first half of 1949. The Department of State has photostatic proof of authorization of imports of 70 passenger cars for resale, also of official refusals to allow American veterans either to import farm Jeeps for resale or to import a single car for personal use "because the law of December 30, 1948, prohibits these transactions."

Treaties between the United States and Morocco, ratified by France, and between the United States, France, and Morocco state that the United States will have most-favored-nation treatment and open door for her trade and "may buy and sell all sorts of merchandise but such as are prohibited to the other Christian nations." An example of how this is being ignored is that our textile exports to Morocco were $3,500,000 in 1948. They are now averaging $50,000 a month because of the decree. Meanwhile, the Moroccan market is flooded with imports from France, whose rights are identical with ours, and from Switzerland, Czechoslovakia, Poland, Hungary, and other nations who have no rights in Morocco.

Wage

This decree was applied while all other trade was being liberalized. restrictions, most rent restrictions, and gasoline rationing have been abandoned. Trade in coffee, sugar, and tea, controlled by political favorites of the Moroccan administration, has been liberalized. Dollar imports are at a peak, but the increases are in products controlled by selected importers.

Only independent American trade has been restricted-"to end competition by foreigners with Frenchmen."

Exports of Moroccan products, also guaranteed by treaties, are similarly prohibited.

The trade guaranteed by our treaties would lead to free economy in Morocco, activated by American initiative, energy, skills, and capital. Our stated objectives-practical exchange rates, balanced trade, acquisition of strategic raw materials, and development of backward areas with private American capital— can all be obtained by restoration of our treaties, which may not be waived legally except with Senate consent.

STATE DEPARTMENT HEARINGS ON MOROCCO-FRENCH PROPOSALS FOR CONTINUED SUPPRESSION OF INDEPENDENT AMERICAN BUSINESS

French proposals to set aside United States treaties in Morocco are part of a calculated campaign to end American competition, according to representatives of United States business interests who testified at a hearing held by the State Department on September 27. The meeting was presided over by Willard L. Thorp, Assistant Secretary of State. Thomas Wilson, of the Department of Commerce, and other State and Commerce Department officials, were in attendance. The American businessmen told of wholesale discrimination in favor of French political favorites in Morocco and of anti-American acts which included seizure of 50 percent of certain imports as well as high customs levies and special taxes imposed in violation of treaties which prescribe maximum duties of 121⁄2 percent.

Although treaties signed by both France and Morocco guarantee us an open door to Moroccan trade and most-favored-nation treatment, it was pointed out, our imports and exports are subject to embargoes and rigid controls which are not applied to other nations and the real purpose of which is to channel all profits to favored French interests. The free competition which existed in Morocco in 1948 limited imports to commercially sound products. Businesses run by independent Americans accustomed to meeting competition prospered, while those which depended on Government favors were losing power. With the suppression of free economy in January 1949, the criterion for imports again became Government choice instead of economic demand. This choice is exer

cised to assure profits to the cartels, syndicates, and monopolies which were at a disadvantage in a competitive market.

The excuse given by French authorities for a system of controls in direct violation of United States treaties is that it will conserve dollars for Morocco. The net result of the system has been a rise in Moroccan dollar imports from 13.6 million dollars during the last half of 1948 (28 million dollars for the entire year) to 20.6 million dollars for the first half of 1949. At the same time, Moroccan exports to the United States, which rose during 1948, have fallen 10 percent during the first half of 1949.

The principal controversy at the hearing concerned the Moroccan decree which initiated the present system. This decree was enforced against Americans during the first 5 months of 1949 despite State Department protest that it violated our treaties. American goods were seized and held in the port of Casablanca. Americans long established in business were suddenly deprived of all normal trade and even of essential maintenance equipment, suffering heavy losses. Restrictions were then lifted for a 3-week period, but on June 10 were reapplied, with State Department acquiescence, until September 10 and later until October 10. State Department officials explained that this period of acceptance was to permit bargaining with French officials as a basis for final decision on the decree.

The French proposals which have resulted from this 4-month period of bargaining were presented by Mr. Thorp at the hearing. American businessmen who were present claim that they constitute a complete sacrifice of independent American interests with nothing in compensation. The proposals have been classified by Mr. Thorp as "confidential," preventing their publication even in part, but they contain no provisions to alter the disastrous effects of the decree on individual businesses and on all normal trade between the United States and Morocco. Some of the specific effects were outlined by those present.

A representative of the Interstate Drug Exchange in Brooklyn told how his firm had built up an organization and created consumer demand for and confidence in United States pharmaceuticals. This business is ended by the antiAmerican campaign in Morocco.

Arthur Stanton, of the New York firm of Craig, Stanton & Co., told how his firm has spent $150,000 in developing a manganese mine. They now have 1,500 tons of high-grade ore ready for shipment but are told that they must ship it to France, although treaties specifically prohibit this requirement. Meanwhile, Stanton claims, France is shipping similar ore to the United States, thus depriving Morocco of its dollar earnings. Stanton also described the way in which licensing manipulation affects sugar imports, which represent a considerable part of all dollar imports to Morocco. He said that present controls are designed to maintain prices so high as to cause hardship to the masses of the population while assuring exorbitant profits to the sugar monopoly. One of the regulations requires American importers to turn 50 percent of their cargoes over to the syndicate at a substantial loss. He testified also that French authorities had arbitrarily held drugs imported by his firm for a critically ill employee. He cited many documented cases of discrimination and illegal anti-American actions by Moroccan officials.

A representative of Neuss-Hesslein, textile merchants and exporters, stated that a potential sale of 6,000,000 yards of American textiles monthly was blocked by a Moroccan embargo. He stated that Moorish men's costumes requires an average of 35 yards of cloth each; women's costumes, an average of 27 yards. Robert Emmet Rodes, president of the American Trade Association of Morocco and commander of the Morocco Post of the American Legion, spoke on behalf of more than 30 independent American businessmen whom he represents. He quoted the figures which prove the adverse effect of the decree on Morocco's dollar trade balance and explained this increase by showing photostatic copies of licenses granted to import American goods specifically prohibited by the decree, also photostats of license refusals to Americans during the same period for imports which the decree permits. He said that Morocco, although producing twice as much as in 1938, is importing almost as much from the United States as from all sources before the war, with selection manipulated to give maximum benefit to French political favorites. He stated that most criticism had been against imports of American automobiles, but even these had increased since the decree was issued.

He claimed that the real reason for the decree was explained by a French official who stated publicly that it would "end competition by foreigners with Frenchmen in Morocco" which he had "always considered very vexing" and that

this policy and French fear that Moroccan free economy would discredit regimentation elsewhere in the empire were the only reasons for the present restrictions.

He took exception to Mr. Thorp's opening statement that the discussion was to be limited to terms on which Moroccan restrictions would be accepted but would exclude possibility of nonacceptance, quoting a letter by Assistant Secretary Gross to members of the Senate Foreign Relations Committee which stated that decision to continue or withhold consent would be based on evidence given at the meeting. Confronted with this, Mr. Thorp decided that consideration would be given to the basic merits of the question. He declined, however, to comment on specific recommendations in a prepared statement which Rodes had presented. Rodes further claimed that the Department had promised last March to recover money illegally collected from Americans and to redress other grievances before considering application of the decree but had not carried these promises out, giving as an excuse "heavy French pressure." He pointed out that acceptance of the decree was continued in the face of these grievances and of documentary proof of additional recent anti-American acts. He challenged the State Department's legal right to set aside a treaty without Senate approval.

Albert Mevi, of 30 Church Street, New York, told how he had tried to establish a chemical plant using Moroccan raw materials but had been prevented, first, by a decree prohibiting foreign investments, which remained in force until rendered useless by another which prevented imports of supplies and equipment. Moroccan officials told him they might let him operate if he joined a cartel but positively would not permit him to compete freely.

Robert Dinger, assistant director of the American Legion's national economic commission, was present as an observer. The Legion is investigating Moroccan treaty violations as a result of the report of its foreign relations committee, adopted by the national convention in Philadelphia.

John Quirk, of the National Foreign Trade Council, Inc., stated that the Department of State should reach some conclusion about its treaties and trade agreements and should advance its negotiations with France.

Moroccan treaty violations were the subject of debates in the Senate when ECA legislation and appropriations were voted. An amendment, withholding funds from France if she permitted the violations to continue, lost by a narrow margin after a Senate majority had reversed the Vice President's ruling that it was out of order.

SEPTEMBER 7, 1949.

The Honorable the SECRETARY OF STATE,

Washington, D. C.

MY DEAR MR. SECRETARY: This confirms recent conversations with Messrs. Moose and Ritchey in your Africa Division.

Your temporary acceptance of a Moroccan decree banning independent American commerce was because your commercial policy personnel supported French claims that Moroccan dollar imports were increased by the free economy begun in March 1948 and ended by the decree.

United States exports to Morocco fell from $36,000,000 in 1947 to $27,000,000 in 1948. The last quarter of 1948 $6,200,000 was the postwar low. The decree was effective in January 1949. Our Moroccan exports for the first 6 months of 1949 were $20,600,000, a postwar peak.

I welcome increased American exports, but resent their resulting from supplanting our normal competition by graft-ridden regimentation, especially when dollar conservation is the excuse for the change. The patent speciousness of this excuse should cause your Department to restore the unrestricted commerce guaranteed by our treaties.

The official who announced this decree stated that it would "remedy competition by foreigners with Frenchmen," which he had "always considered very vexing." I wrote you about this on February 17, 1949:

"He means that the former illegal methods of withholding licenses from Americans and of making exceptions to any law for his protégés now can be resumed. This is the only way in which the law can change the competitive situation."

Like most American manufactured goods, the decree excludes automobiles. It permits tractors and farm equipment. I showed Mr. Moose Moroccan licenses authorizing imports of 70 passenger automobiles. One, for 20 cars, was approved

at the same time that an American veteran's license for importing 10 farm jeeps with farm-work accessories was disapproved.

This flagrant disregard of the agreement under which you temporarily accepted the decree in question is ample grounds for rescinding its acceptance.

Yours very truly,

ROBERT EMMET RODES.

RECOMMENDED TERMS FOR NEGOTIATION RELATIVE TO CONCESSIONS REQUESTED BY FRENCH OFFICIALS IN MOROCCO

1. As a prerequisite to all further negotiation :

(a) The Moroccan Government will confirm that:

(1) Treaties between the United States and Morocco remain in full force as they were ratified by the Senate and appropriate Moroccan authority.

(2) Legitimate questions as to the interpretation of terms will be resolved by accepting the interpretation that prevailed in June 1939.

(3) All deviations from the terms of the treaties as they are written and were understood in June 1939 are the result of written temporary voluntary concessions by the United States, or are illegal.

(4) The temporary concessions may be withdrawn at any time, and such withdrawal shall invalidate immediately all legislation or regulations based on the concessions.

(5) The United States is the final judge as to the intent and interpretation of its voluntary concessions.

(6) The United States cannot be expected to continue concessions that give additional power over its citizens to persons who have abused the power they already hold, who have been guilty of illegal acts against its citizens, or who have given proof of anti-American bias.

(7) United States aid or credits will not be administered or distributed in a manner that will give persons competing with United States citizens a competitive advantage they would not enjoy had not the aid or credits been granted.

(8) In general, concessions made to help France or the Allied cause during the war or postwar emergency will not be used to lessen American rights in Morocco or for other purposes not compatible with the spirit in which they were granted. (b) The Moroccan Government will:

(1) Promulgate, rescind, or amend decrees and regulations so that those remaining in force will be consistent with paragraph (a) (3);

(2) Take necessary steps to implement other subparagraphs of paragraph (a); (3) Refund taxes and customs duties collected from United States citizens pursuant to decrees or regulations inconsistent with (a) (3), and already protested by the Department of State;

(4) Take appropriate measures for liquidating all legitimate claims of United States citizens for seizures and losses inconsistent with (a) (3).

2. When the foregoing has been accomplished, negotiations will be resumed, along the following lines:

(a) Minor changes in laws and regulations, not inconsistent with treaty terms, may be accepted after full hearings;

(b) Such acceptance will reserve the United States citizens' right to court review, and will not be cited as defense by Moroccan authorities in suits challenging their legality;

(c) Relinquishment, alteration, or waiver of treaty rights may be accomplished only by renegotiation of the treaty in question, with advice and consent of the Senate.

Mr. WILLARD THORP,

TARTARIC RAW MATERIALS, INC., New York, N. Y., September 30, 1949.

Assistant Secretary, Department of State,

Washington, D. C.

DEAR MR. THORP: With reference to the meeting on Tuesday afternoon, September 27, between the State Department and some representatives of American firms interested in business with French Morocco, I gladly take the opportunity to follow your request and repeat the following in writing: