The Norwegian Legation to the Department of State
In the official American trade statistics importation of whale oil figures as an important item in the American imports from Norway. From 1923 till 1931 the figures were:
|Total imports of whale oil:||Imports from Norway:|
The Norwegian Statistics do not contain this item in their figures concerning exportation from Norway to the United States, and for the following reason:
Though the whale oil must certainly be considered, from an American point of view, as an item of importation, the oil is not exported from Norway. The oil is the produce of the Norwegian whaling ships, which operate mainly in the Antarctic Ocean, and only a small part of the oil ever reaches Norway. The main produce is delivered direct from the floating factories etc. to the importers in the United States and other countries.
Before going into further details concerning the importation of whale oil to the United States it may be of interest to consider the importance of the Norwegian American trade.
During the years 1929–1931, according to Norwegian statistics, the trade between the two countries show the following figures (in millions of Norwegian Kroners)
|U.S.A.’s imports from Norway||Norway’s imports from U.S.A.|
As will be seen from these figures the United States had a favorable balance of trade during these years. (As regards the discrepancies between Norwegian and American statistics these have been explained in the Norwegian Legation’s Note Verbale of November 30, 1932).3 During the year 1932, according to American statistics, there was a favorable balance for Norway, whereas Norwegian statistics show a favorable balance for the United States. (The discrepancy in this case is partly explained by the fact that a large quantity of wheat shipped from the United States via Canadian ports does not figure in American statistics as exported to Norway.) Though the question of the balance of trade in 1932 may be doubtful, statistics show that Norway generally imports for her own consumption from the United States considerably more than the United States imports from Norway. The following figures show the value of importation from the United States during the years mentioned of some outstanding commodities:
|Flour of wheat||“||10.974700||“||6.818.200||“||3.658.200|
|Apples and pears||“||2.369.100||“||1.739.300||“||2.035.900|
These figures show a considerable importation, especially when the [Page 626] population of Norway is considered. With a population of 2.800.000 inhabitants Norway imported in 1930—a normal year—American articles for 102 millions, i.e. approximately 36 kroner or $9.60 per inhabitant. With a population of about 123 million inhabitants the United States the same year imported from Norway merchandise for about 55 million kroners, i.e. approximately kroner 0.45 or $0.13 per inhabitant.
The above figures show that the trade between Norway and the United States, profitable, of course, to both countries, is certainly advantageous to the United States. It would therefore seem to be in the interest of the United States to increase their importation from Norway in order to enable Norwegian importers to carry on and further develop their purchases in the United States.
As regards the whale oil imported by the United States, it is used mainly, and probably entirely, for technical purposes, especially for the manufacturing of soap.
Importation of whale oil on a somewhat larger scale started in 1921, and reached its climax in 1931. Since then the importation has decreased as a result of the general depression.
Whereas in Europe whale oil is used to a great extent in the manufacturing of margarine, this does not seem to be the practice in the United States, probably because of the legislation ruling the manufacturing of margarine in this country. Consequently, it stands to reason that there is actually no competition between the whale oil and the edible oils produced in the United States and used in the production of margarine and other edible fat-stuffs in this country.
On the other hand a competition exists between whale oil and other oils imported into the United States for the manufacture of soap. Whale oil is thus subject to competition from palm oil and palm kernel oil. Whereas a duty of $0.06 per gallon (corresponding to $17.52 per long ton) is imposed on whale oil, palm oil enters free of duty, and palm kernel oil for technical purposes is also duty-free. The latter commodity when imported to the United States for technical purposes (Manufacturing of soap) is denatured under supervision of the Customs authorities.
It would be of great interest to the Norwegian whaling industry to obtain duty-free entry of whale oil to the United States, or at least, a substantial reduction of the existent duty. In case duty-free entry, or reduction of the import duty on whale oil for edible purposes, could not be obtained, it would be of interest to examine whether a substantial reduction of the duty on whale oil imported for technical purposes and denatured under the provisions of paragraph 1732 of the Tariff Act of [Page 627] 1930,4 so as not to be used for edible purposes, might not constitute an advantage both for the United States and for the whaling industry.
In this connection a memorandum furnished by the Norwegian firm Bull Øvrevik & Co., Bergen, which provides the whale oil imported to the United States, may be of interest:
“The produce of the season just terminated amounts to about 2, 5 million barrels or about 400,000 tons, which has already been sold for delivery in Europe. It is not probable that next year’s produce will exceed 400,000 tons, and it seems probable that the main part of this produce will be delivered in Europe during the season of 1934, as in previous years. It has proved that even with America on the gold standard Europe has bought the main part of the whale oil produce. Since 1931 practically all whale oil produced has been sold in Europe and even oil which has been stored in America has been reexported to Europe.—The reason is that in Europe whale oil is mainly used as edible oil, as a raw material in the manufacturing of margarine, whereas in America it is used as cheaper grease for technical use, the result being that whale oil in Europe is supplanting the more valuable American edible fats which previously were used for manufacturing margarine, such as cotton-seed oil, oleo oil, Premier Jus etc.
It is probable, however, that if whale oil for technical purposes were duty-free in America, an increased importation of whale oil for such purposes would result and there would consequently be less whale oil available for consumption in Europe. This would cause a lack of edible fats in Europe and the result would be that American raw materials for the manufacturing of margarine would be sold in Europe in greater quantities and at better price than before.”
As regards the possibility of denaturing the whale oil the memorandum states:
“It may be noted that palm kernel oil is subject to an import duty of 1 c. per. lb., but is free when the oil is denatured in the port of importation. A precedent is thus established.
It is a fact that whale oil is only used for technical purposes in America, and it would be neither too difficult nor too expensive to denature the oil in the port of importation, under the control of the Customs authorities, in such way as to render it inapplicable for edible purposes but without decreasing its value as a raw material for the manufacturing of soap.”
According to the memorandum whale oil has during recent years to a great extent supplanted such American oils as oleo oil, cotton seed oil and Premier Jus as a raw material for the manufacturing of margarine in Europe. The following extract of American trade statistics relating to exportation of crude cotton seed oil, refined cotton seed oil, and oleo oil from the United States during the years 1923–1931, shows a considerable decrease: [Page 628]
|Cotton seed oil crude||Cotton seed oil refined||Oleo oil|
If the import duty on whale oil to the United States were abolished or substantially reduced this would of course increase the importation of this commodity. As the production of whale oil is limited, by mutual agreement within the whaling industry, to a certain amount for every season—for the season 1933–34 about to 2,4 million barrels—an increase of the American importation would lead to reduced importation of whale oil in Europe. Manufacturers of margarine in Europe would consequently be obliged to seek other raw materials, and American exporters of edible oils—such as oleo oil, cotton seed oil and Premier Jus—would probably benefit from the increased demand for edible oils in Europe. It will be of interest in this connection that oils and fats sold for edible purposes bring a considerably higher price than those sold for soap making usage.
It would thus seem that whereas abolishment of the import duty on whale oil or a substantial reduction of the duty would not cause any disadvantage to the producers of edible oils in the United States—there being no competition between the commodities in question—it would help to increase American exports to Europe of the American edible oils mentioned above.