Foreign Relations of the United States Diplomatic Papers, 1940, The British Commonwealth, The Soviet Union, The Near East and Africa, Volume III

611.6131/586a: Telegram

The Secretary of State to the Chargé in the Soviet Union (Thurston)

Washington, July 10, 1940—6 p.m.

360. The question of a possible renewal of the Commercial Agreement of 1937, as extended to expire August 6 of this year, is receiving consideration in the Department at the present time. In order to facilitate the Department’s consideration of this matter, you are instructed at the earliest opportunity to obtain an expression of the views of the Soviet Government concerning the renewal of the Agreement in its present form. In your discussions with the officials you may indicate that while a further extension of the Agreement would be entirely agreeable to this Government, it is nevertheless recognized that the adoption of certain measures by this Government for the purpose of insuring the national defense, and in particular the Act of Congress signed July 2, 1940 authorizing the President in the interests of national defense to prohibit or curtail the export of certain material or equipment, may have an adverse effect on the availability for export of certain types of commodities and equipment which have heretofore entered into Soviet purchases in this country. The Department realizes, therefore, that in the circumstances the Soviet Government may desire to make certain suggestions with respect to the commitments which it may care to make for the coming year. You are accordingly instructed to inform the appropriate officials that this Government is prepared to give careful consideration to any suggestions which they may care to offer.

For your information. The Soviet Government, particularly through the Ambassador here,⁵¹ has on various occasions charged discrimination on the part of the United States against Soviet trade. In a formal note dated June 12, 1940⁵² the Soviet Ambassador referred to a number of cases of alleged discrimination against Soviet trade and alleged that the measures adopted by the United States Government were incompatible with the principle of unconditional and unrestricted most-favored-nation treatment embodied in the commercial agreement. In my reply of July 1, 1940⁵³ the Soviet Ambassador was informed that this Government was of the opinion that it had taken no measures and pursued no policies incompatible with any of its agreements with the Soviet Union, and in this connection cited the seventh paragraph of Section 1 of the agreement of August 4, 1937^53a which permits this Government to take such measures as it may see fit with respect to the control of the export or sale for export of arms, ammunition, et cetera.

For your guidance in the event that the subject of discrimination and alleged violation of the most-favored-nation principle is raised by the Soviet officials, the following portion of my note of July 1 is quoted.

[Here follows quotation of the third and fourth paragraphs of the note of July 1, printed on page 323.]

Hull

51. Konstantin Alexandrovich Umansky.
52. Ante, p. 319.
53. Ante, p. 323.
54. Department of State Executive Agreement Series No. 105, or 50 Stat. (pt. 2) 1619.