611.6131/516: Telegram
The Chargé in the Soviet Union (Kirk) to the Secretary of State
[Received July 31—8:15 p.m.]
211. Department’s 118, July 30, 2 p.m. The conference referred to in my 209, July 30, 10 a.m., took place at the Foreign Office this afternoon at which Weinberg and Vinogradov of the Foreign Office and two officials of the Commissariat for Foreign Trade were present.
Weinberg stated that his Government’s chief concern was the large excess of Soviet purchases in the United States over Soviet exports to the United States and that the purpose of the prolonged study in which the Commissariat for Foreign Trade had been recently engaged was to devise some means whereby concessions might be accorded Soviet imports into the United States in order to increase the amount of those imports. He produced a memorandum outlining certain facilities [Page 612] which the Soviet Government desired to attain for specified Soviet export to be included in the new commercial agreement and which he emphasized as representing a minimum requirement. This memorandum sets forth the following demands:
- (1)
- A reduction of the existing 30% ad valorem duty on dyed caracul to 20%.
- (2)
- A reduction of the existing 35% ad valorem on squirrel furs to 20%.
- (3)
- The establishment of a single duty of 30% ad valorem on flax manufacturers (linen napkins, tablecloths, et cetera) instead of the existing duties which vary from 30 to 50%.
- (4)
- Exemption from duty on sturgeon caviar.
- (5)
- Exemption from duty on sturgeon beluga.
- (6)
- The reduction of the existing duty of 2¢ per pound on frozen salmon to 1¢ per pound.
The memorandum concludes with a statement of which the following is a translation:
“It is desired to obtain a promise from the United States Government that in the purchase of foreign manganese ore for governmental needs preference will be given to Soviet manganese ore.”
Mr. Weinberg was informed that, without entering into any detailed analysis of the various items set forth in the memorandum, duty reductions could be granted by the United States only by the negotiation of a trade agreement with the Soviet Union, and that accordingly there was no possibility of giving effect to these desiderata in the framework of a commercial agreement. It was also pointed out incidentally that Trade Agreements Act contains no provision for placing articles on the free list and that from information available to the Embassy it would appear that certain of the reductions in duty referred to in the memorandum had already been provided for either in trade agreements already concluded or were under discussion in Washington in connection with pending trade agreement negotiations. With reference to the request for a promise to give preference to Soviet manganese Weinberg was informed inter alia that it was believed that any such procedure would be contrary to the policy and practices of the United States Government. Weinberg thereupon argued at length on the possibility of prolonging the present agreement pending a consideration of the negotiation of a trade agreement. In reply he was informed that the difficulties in the way of negotiating trade agreement with his Government seemed almost insurmountable; that at any rate negotiations under the Trade Agreements Act might well cover period equal to the duration of a new commercial agreement; that accordingly any mere prolongation of the present agreement was excluded and that if the present agreement [Page 613] was allowed to lapse by the failure to sign a new accord by August 4th the specific benefits accruing to Soviet trade under the agreement would also lapse. In spite however of the foregoing assurances which it was stated the Embassy believed to be the views of the Department, Weinberg and his colleagues urged that the list of concessions requested by the Soviet authorities be communicated to the Department in the hope that some means might be devised to give them effect under the new commercial agreement.
The discussion was then directed to a consideration of the procedure to be followed in the event that, as the Embassy believed, favorable consideration could not be given to the foregoing concessions. Weinberg finally proposed that, in that event, there seemed to be no other alternative than to sign a new agreement in the exact terms of the present agreement. A prolonged argument followed on the question of registering in the new agreement an upward adjustment of the minimum guarantee of Soviet purchases and every possible observation in support of such an increase was adduced. Mr. Weinberg, however, insisted that unless some means be devised to accord a concrete benefit to Soviet export trade to the United States along the lines of the concessions outlined above, the Soviet Government would not be in a position [to] raise the amount of the minimum purchases by the Soviet Union in the United States to be guaranteed in the new agreement.
I have nothing on which to base a conjecture as to whether [to account for?] the refusal on the part of the Foreign Office to agree to mark [make?] in an agreement for the next 12 months an upward adjustment of the minimum guarantee of Soviet purchases in the act and [or?] as to whether an insistence on that point would result in a refusal to sign an agreement. The Foreign Office, however, expects to receive from me as soon as possible either a confirmation of the statements which I have already made on the basis of the Department’s telegrams numbers 116 and 11826 or some further observations which Weinberg appears to consider that his proposals warrant. I should, of course, repeat the arguments in support of an upward adjustment but in the event that the present position of the Soviet Government is maintained I shall be glad to be informed if I should notify the Foreign Office that my Government agrees to a renewal of the agreement by an exchange of communications in the identic terms of those governing the present agreement.
I should appreciate receiving the Department’s views as to any press release that might be contemplated.