611.6131/551a: Telegram

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

73. Please ascertain the attitude of the responsible Soviet officials toward the renewal of the present commercial agreement with the United States as provided for in paragraph 3 of the 1937 agreement17 which was renewed in August 1938.

Unless you perceive objection you should state that in view of the additional trade-agreement concessions made in the past year which have been extended to Soviet products your Government feels that an upward adjustment of the guaranteed total purchases in the United States by the Soviet Union is warranted. In this connection you may point out that at the present time concessions made by the United States to other countries in trade agreements and extended to the Soviet products by virtue of the present commercial agreement affect products imports of which from the Soviet Union in 1937 amounted to $20,000,000, or 74 percent of our total imports from the Soviet Union in that year. Prior to the renewal of the present agreement such concessions affected only about 27 percent of our imports from the Soviet Union.

For your confidential information the Department is not prepared to insist on an increase in the amount of the guaranteed purchases and therefore does not desire you to request such an increase unless in your opinion there is likelihood that the Soviet Government would acquiesce therein. The Department under no circumstances would accept a reduction in the guaranteed purchase of $40,000,000 provided for in the present agreement.

Please endeavor to ascertain from the appropriate Soviet authorities the amount of orders placed in the United States since August 6, 1938, to date, and the amount which may be placed in the remaining [Page 815]period up to August 6, 1939. According to the Department of Commerce, exports to the Soviet Union for the period August 1938 to April 1939 amounted to approximately $43,000,000. Also for the record ascertain the amount of Soviet purchases in the United States during the year ended August 5, 1938.

If the Soviet authorities raise the question of concessions by the United States on products of interest to the Soviet Union or, more specifically, the negotiation of an agreement under the authority of the Trade Agreements Act of June 12, 1934, you may indicate that the matter will be referred to the Department for consideration. You should point out, however, that it is your understanding that the preparation for the negotiation of such an agreement includes the giving of public notice and because of the nature of our standard procedure involves delays which would make impossible in any event the conclusion of such an agreement before the present commercial agreement expires. Hence, in any case it would be necessary to go ahead with renewal of the present agreement, and leave for independent consideration the question of the possibilities for negotiating an agreement under the authority of the Trade Agreements Act.

In order to avoid technical procedural difficulties such as have arisen on previous occasions in the last minute rush to accomplish renewal of the agreement before expiration of the previous one, you should impress upon the Soviet authorities the desirability of having the negotiations concluded and the new agreement ready for proclamation by the President a full week before expiration of the old one.

Hull
  1. Effected by exchange of notes signed August 4, 1937. For correspondence regarding negotiations of the agreement, see pp. 405 ff.; for text, see Department of State Executive Agreement Series No. 105, or 50 Stat. 1619.