660c.11212/35: Telegram

The Secretary of State to the Minister in Poland (Stetson)

[Paraphrase]

50. Legation’s No. 49, July 2, 4 p.m., and despatch No. 1808, June 21.3

(1)
It is the understanding of the Department that indirect shipments are subject to the following difficulties under present Polish regulations. Because of the lack of suitable provisions for certificates of origin, American goods shipped into Poland from stocks in bonded warehouses, free ports or elsewhere in a third country are subject to general tariff rates. Moreover, the importation from stocks in Germany of goods covered by the decrees of June 17 and July 11, 1925, is allowed only against a special permit, and goods now generally subject to import restrictions under the decree of February 10, 1928, cannot be imported from stocks in Germany against permit for the United States, or even transshipped between carriers in the ports of Germany.
(2)
Briefly, the grounds for objection to the foregoing regulations are: American trade with Poland and other eastern European countries can be handled most economically and effectually via western European centers of distribution. The large proportion of American exports which spontaneously seek such channels sufficiently indicates this fact. The Department of Commerce estimates that some four-fifths of American trade with the Baltic countries, and as much as three-fourths of American trade with Poland, is carried on in this manner. Since American exporters depend to such an extent upon the facilities of third countries, the imposition of any penalties in consequence of the use of these facilities, places them at a distinct disadvantage in comparison with European competitors, who for obvious geographic reasons do not need to rely so largely thereon. Therefore, regulations by Poland which impose higher duties and even piohibitions on goods imported by way of third countries defeat the intent and purpose of the modus vivendi. The foregoing considerations should again be emphasized by you, and you should endeavor in every proper way to persuade the authorities of Poland to remove completely the obstacles to indirect trade now existing.
(3)
After having fully considered the matter, the Government of the United States is unable to accept the proposals set forth in the second point of Legation’s telegram No. 49. It is not unsympathetic with Poland’s desire to develop national distributing agencies nor antagonistic toward the principle of direct trade, provided the means used to these ends do not preclude the interests of commerce itself. [Page 928]But the United States cannot acquiesce in measures by which Poland seeks to obstruct in an artificial manner the economical channels of trade and force it from its natural avenues to the advantage of particular ports and distributing agencies. Furthermore, the acceptance of this precept would necessitate consistent adherence to it in accordance with the desires of any other governments. Since conducting successful American trade with all countries of eastern Europe depends at the present time so largely upon the use of distributing facilities in Germany and other countries, such acceptance would have unfortunate and far-reaching consequences for the United States.
(4)
Nor can the desired exception regarding shipments via Germany be recognized by the Government of the United States. The estimate of the Department of Commerce, which shows that about one-third of the total exports of the United States to the Baltic countries consists of indirect shipments via Germany, indicates the importance of German distributing centers to our trade with eastern Europe. Were it not for the artificial obstacles which Poland has interposed, it is probable that these centers would be advantageously used to a corresponding extent in trade with Poland. Since any limitation on the use of such facilities operates to the material disadvantage of the trade of the United States, this Government is unable to accept the Polish proposal which amounts to a request that the United States voluntarily sacrifice the interests of its own exporters in order that Poland may secure from Germany certain benefits for itself. Moreover, our concurrence in the maintenance of these restrictions on our trade through Germany presents a difficulty of explanation to that country, which should be emphasized. The United States would be placing itself in the position of opposing Germany’s interests, even to the extent of sacrificing its own, in a controversy to which it is not a party.
(5)
Should the Polish authorities be disposed to make the acceptance of the proposals in point (1) of Legation’s telegram No. 49 conditional upon the carrying out of those covered in point (2), you may say in substance that since this constitutes merely an offer partially to grant to the United States privileges to which, in its opinion, it is already entitled as a matter of right, Poland offers no real consideration for the concessions desired from the United States. Should the authorities of Poland contend that because of the general application of the indirect trade regulations in question there is no discrimination against the United States within the meaning of the modus vivendi, you may point out the fact that Poland has concluded a treaty with at least one country by which shipments originating in that country and imported into Poland via any third country apparently would be accorded the same customs treatment as if imported direct. There is no doubt but that the imposing of the regular tariff rates on indirect [Page 929]shipments from the United States constitutes a violation of the letter of the modus vivendi. (See protocol and article 5 of the Japanese Treaty of Commerce and Navigation, signed December 7, 1922.)4
It may be useful in this connection to note that treaties between Poland and some other countries provide in substance that goods originating in a third country and imported by way of a country party to such treaty shall receive as favorable treatment as if shipped direct. Those countries are: Austria, by treaty of September 25, 1922, article 8;5 Denmark, March 22, 1924, article 3;6 Finland, November 10, 1923, article 11;7 Sweden, December 2, 1924, article 6.8 You may desire to consult your colleagues to ascertain whether any action has been taken under the above treaties, or is contemplated.
(6)
Legation’s despatch No. 1648, April 2.9 If the authorities of Poland make reference to our customs duty on cement” imported from Poland with regard to the most-favored-nation clause of the modus vivendi, you may say informally that the Department is giving careful attention to the questions involved. However, you may indicate that the interests of Poland involved in this instance are obviously of relatively small significance to that country compared with American interests affected by the indirect shipment regulations of Poland. In the former case only one item of Poland’s trade is involved, less than one percent of Poland’s total exports, whereas in the latter case the greater part of American exports to Poland are affected.
(7)
The Department in consultation with the Department of Commerce has carefully studied the Polish proposals and is unable to make any material concessions regarding indirect shipments. The Department hopes, however, that the foregoing explanation of the position of the Government of the United States will be understood by the authorities of Poland. The Department recognizes, of course, the practical value to American trade of the proposed removal of existing difficulties to shipments via third countries other than Germany, and it desires you to make every effort at least to insure the modification of the regulations to this extent.

If the authorities of Poland make the acceptance of the exception regarding Germany a condition for the granting of such concession, you should cable a further report to the Department and await instructions.

Kellogg
  1. Latter not printed.
  2. League of Nations Treaty Series, vol. xxxii, p. 61.
  3. Ibid., vol. lix, p. 307.
  4. Ibid., vol. xxxi, p. 13.
  5. Ibid., vol. xxix, p. 229.
  6. Ibid., vol. xxxvi, p. 299.
  7. Not printed.