Trade Accord

Negotiations that have been proceeding intermittently for two years were last week brought to a successful conclusion and a commercial treaty was signed between France and Germany to the satisfaction of both countries.

Stipulations. Although the terms of the treaty were not published, it became known that the principle of most-favored-nation treatment* had been conceded by both nations for a large number of imports. Germany granted a minimum tariff on French wines, perfumes, soaps, woolens, porcelains and several manufactured articles, while France agreed to admit at minimum rates German electrical, chemical, mechanical and other manufactured products. Furthermore, in December, 1928, discrimination against certain classes of German goods by France will cease and the lowest French tariff rate will be applied uniformly to all classes of German imports.

Morocco. German trading rights in Morocco, a snag in the negotiations up to the eleventh hour, were definitely settled by France conceding full facilities for trade in all her colonies and protectorates, of which Morocco is the principal. Mindful, undoubtedly, of the attempts of Kaiser Wilhelm to create trouble in Morocco, exploits since dignified as the "incidents of Tangier and Agadir," the French refused to permit German nationals to reside in the protectorate. The assent of the Reich was obtained only after the French had agreed to suppress the 12% supertax on all German products sold to Morocco.

Significance. The mere fact that the trade treaty was hailed in Paris and Berlin as signifying an improvement of political relations and as giving a new impetus to the prosperity of each, speaks volumes for the distance the two onetime enemies have traveled since the War. Up to 1914, trade between the two countries was regulated by the Treaty of Frankfort, which ended the war of 1870-71. Since the World War, there has been no well-defined commercial accord, trade being subject to a general agreement, except in the case of specific articles, on the basis of the customs laws of both nations, which has been governed in turn by certain provisions of the Versailles Treaty.

The practical results, however, are virtually to create new markets for the two countries in the territories of the other. France scores by finding a greater outlet for the commodities of which she has a superabundance and at the same time facilitating the entry of products that are badly needed, a fact that goes far to favor the Franco-German industrial cartel. Germany wins several points: 1) She secured a much needed outlet for her industrial products. 2) She obtained equal trade treatment, which she did not expect. 3) She forced the French to reaffirm their renunciation, made at the time of the London Conference (TIME, Sept. 1, 8, 1924), of their right (Versailles Treaty, Article XVIII) to seize German private property in the event of the Reich defaulting on reparation payments.

The accord is not without deep concern to the U. S. There is now every prospect that the duties fixed for German goods in several hundred different categories will soon be applied to U. S. products, and will therefore have an adverse influence on French imports from the U. S. on account of higher U. S. prices and the great shipment distances involved. U. S. businessmen in France were accordingly hopeful that the Franco-German Treaty will have the effect of hastening the conclusion of a U. S.-French treaty, which they feel is badly needed to protect their legitimate interests.

* The most-favored-nation principle obliges governments not to grant to any country more favorable trade terms than those already in force in treaties with other foreign governments, or to make more favorable terms, if granted, generally applicable.