611.7131/65

The Minister in Rumania (Culbertson) to the Secretary of State

No. 397

Sir: I have the honor to transmit herewith a note (enclosure No. 1) which I have sent to the Rumanian Government concerning the status of our most-favored nation understanding with Rumania [Page 633](Treaty Series No. 733). I also transmit other information relating to the proposed new commercial treaty policy of Rumania.

In enclosures Nos. 2, 3, 4 and 55 will be found typical press comments on the new tariff and treaty situation. The vague character of these comments is in part due to the fact that the new tariff law has not been made public and that official statements concerning the new treaties have been far from clear. Enclosure No. 6,5 for example, is a statement issued by the Ministry of Finance, but several readings of it will leave the reader still in doubt on some points of major importance. Mr. Palmer, Consul General at Bucharest, in his report of April 1, 1927, entitled “The New Rumanian Import Regime”,5 has restated and analyzed the provisions of this government’s statement.

I have discussed the proposed policy with Mr. Manoilescu, Undersecretary of Finance, who is now virtually the head of the Ministry of Finance, and who is regarded as the author of this new policy. He is following French and Italian precedents. The objective appears to be the negotiation of a series of treaties similar to the convention between Italy and Hungary of July 20, 1925 (Roma, Ministero Delle Finanze, Bollettino Ufficiale, Anno 1925, Vol. LXV—155).6 For some months Rumania and Italy have been discussing a commercial convention. Great secrecy has been maintained concerning its provisions.

The high rates on certain products in the new tariff are directed primarily against Poland, Czechoslovakia, Austria and perhaps other neighboring states whose industries are presenting severe competition to the new and inefficient industries of Rumania. Against these countries on certain articles higher rates are deemed to be necessary than in the case of other countries. To meet this situation and also to make possible tariff favors to certain countries, for political reasons, for example to Italy, Rumania appears to be entering upon a commercial policy which has the following features:

1)
A higher tariff level;
2)
a régime of special tariff bargaining based upon maximum and minimum tariff schedules fixed by parliament;
3)
on certain so-called reserved articles rates may be changed by royal decree—this provision is in the nature of anti-dumping legislation;
4)
no general blanket most-favored nation guarantees will be given any treaties, but most-favored nation treatment will be limited to those articles specified in lists attached to treaties negotiated with respective countries.

It is proposed to embody in every commercial treaty two lists of articles. List A will contain articles on which Rumania grants [Page 634]either the minimum tariff rate, or a special rate fixed by bargaining lower than her maximum tariff rate. If, subsequently, on articles specified in List A in a treaty with one country a lower rate is granted in a treaty with another country, the first country will receive with respect to that article most-favored nation treatment. It is specifically provided, however, that certain articles of special interest to Rumanian producers shall never be included in any List A (see enclosure No. 6).7

It is further proposed to have in commercial treaties a List B which will include those articles on which Rumania is willing to grant her minimum tariff. Most-favored nation treatment will also be granted to each country that concludes a treaty with Rumania with respect to all items listed in the lists B in the treaties of all other countries.

If a country in its negotiations with Rumania cannot get an article into List A or B of its treaty, it may find itself with respect to that article without most-favored nation treatment.

Delay in putting in force the new tariff would seem to indicate that other departments of the government are not willing to accept without modification the new commercial policy announced by the treasury. It is generally recognized that, however logical in theory, this new policy is extremely difficult of application and is likely to lead to serious complications.

From the standpoint of our announced policy, that is, general unconditional most-favored nation treatment, the most significant statement in the Finance Ministry’s new commercial treaty declaration is that in no case will the most-favored nation clause be granted with respect to the whole customs tariff. Mr. Manoilescu explained that their policy of reserving certain items from the operation of the most-favored nation clause was directed against neighboring countries whose competition is feared in the case of particular items, and that in the case of the United States, any item in which we are interested would be included either in List A or List B; in other words, he proposes to give us most-favored nation treatment in fact although not in theory.

In an effort to protect American interests, I sent to the Foreign Office on the day the new commercial policy was announced a note which is transmitted herewith as enclosure No. 1. I requested that our present most-favored nation treatment understanding with Rumania continue in force for a reasonable time until a new commercial convention could be concluded. I followed this note up with conversations at the Ministry for Foreign Affairs and at the Treasury. It brought immediately to the attention of the Rumanian Government a possible complication arising out of the proposed new policy.

[Page 635]

Prophecies are dangerous, particularly in Rumania. However, by having brought the matter to the attention of the Rumanian Government before the question of general policy had been passed on finally by the Council of Ministers and by Parliament, I hope that I may be able to obtain assurances that will fully protect Amercian interests and perhaps even obtain a guarantee that American goods will pay only the minimum rates of the new tariff.

I have [etc.]

W. S. Culbertson
[Enclosure]

The American Minister (Culbertson) to the Rumanian Minister of Foreign Affairs (Mitilineu)

No. 16

Mr. Minister: I have read today in the press the memorandum, just issued, announcing the new customs tariff of Your Excellency’s government and setting forth the principles which will guide in its application. The statement that the most-favored nation clauses in commercial agreements with foreign states will be cancelled is disquieting. In this connection I beg to repeat what I have said to Your Excellency on a number of occasions: that the commercial policy of the United States is not only to grant to all countries equal or most-favored nation treatment, but, at the same time, to insist that equal or most-favored nation treatment be granted by other nations to the products of the United States. The minimum tariff of the United States is applicable alike to products from whatever country they may come, provided only, that, in case of discrimination against the United States, the President may, by virtue of Section 317 of the Tariff Act of 1922,8 impose additional duties on products coming from any country refusing equal treatment to the products of the United States. Under our law it is immaterial how a discrimination is created, whether by legislative act, by special commercial agreement, or by executive decree.

As Your Excellency knows, there is in force between Rumania and the United States an exchange of notes dated February 26, 1926, by virtue of which a régime of most-favored nation treatment is established between our two countries. In an informal conversation today with Mr. Manoilescu, he assured me that this agreement would continue in force for a reasonable time until superseded by a general commercial treaty between the United States and Rumania. I shall be grateful to Your Excellency if you will confirm this statement to me in writing as the official position of your government.

I avail myself [etc.]

[File copy not signed]
  1. Not printed.
  2. Not printed.
  3. Not printed.
  4. League of Nations Treaty Series, vol. xlv, p. 39.
  5. Not printed.
  6. 42 Stat. 858, 944.