C1 ST.A.] FRANC:E--MUTIT'AL AID SETTLEMENT-MAY 28, 1046 tomarily arranged for on peacetime commercial exports, but the ad- mini-strative requirements could not be complied with in the case of tliele -hllilpments, and the allowances are therefore not reflected in the pr,-snit billings. The claim is allowed; the Modus Vivendi account slhlouil be reduced by $7.4 million and the 3(c) account by $0.1 million. 10. Price of Locomotives. Seven hundred locomotives were trans- ferred to France under Schedule II of the 3(c) Agreement, and are billed at a price of approximately $120,700 each, f.a.s. New York. The French contended that this charge was excessive, as they had purchased substantially similar locomotives privately for $110,500 each, f.o .b. plant. The U.S . side explained the computation of the charge, as follows (in approximate figures): Cost of locomotives under War Department Contract - $110, 000 Army Transportation Corps charge for services, inspec- tion, etc. (5%)- 5,500 War Department charge for handling, inland freight, etc. (10%) - 11,550 127,050 Less 5% discount under 3(c) Agreement- 6,350 Price billed to French - $120, 700 The U.S . side further stated that the War Department charges of 5 and 10 percent were specifically imposed by War Department regu- lation. Upon this explanation, the French withdrew this claim. 11. Excise Taxes. There have been transferred to France, on cash reimbursement and on credit terms, goods subject to U.S . excise tax on domestic sales. These excise taxes are not payable on sales for export, but it was administratively impossible to follow the procedure prescribed by Treasury Department regulations for establishing the exemptions. However, as the fact of export is undisputed, France has requested that the excise tax be eliminated where it appears on the face of the invoice. The claim appears just in principle and the U.S. and French figures are in substantial agreement. The claim is ap- proved for deduction of $0.13 million from Modus Vivendi account and $0.37 million from 3 (c) account. 12. Petroleum Billing Procedure in North Africa. Petroleum de- livered to the French in North Africa up to the middle of 1943 was billed on the basis of proceeds of sale. It was contemplated that after June 30, 1943, billings would be based on landed cost, and this was in fact done for products other than petroleum. However, petroleum has been billed on a proceeds-of-sale basis until September 30, 1943. The French contend that the three-month extension of this procedure for petroleum alone is without present justification, and claim $1.2 million as the difference in cost to them under the two methods. The claim is allowed at $1.2 million, to be deducted from Modus Vivendi and charged to straight lend-lease. 13. Price of Petroleum in North Africa. The French claim that the prices billed them for petroleum in North Africa from October 1, 1943, were well above current world prices. Explanation of the prices 4187
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