The Secretary of State to the Minister in Denmark (Owen)

No. 66

Madam: Reference is made to your supplement to the Joint Report of the American Ministers to Denmark, Finland, Norway and Sweden, dated March 21, 1934,1 in which you reiterate the recommendation made in earlier despatches that a reciprocal trade agreement be concluded between the United States and Denmark at the earliest possible moment.

As you are doubtless aware, a tariff bargaining bill,2 having passed the House of Representatives, awaits action by the Senate. I am unable to say what action will be taken by the latter body. In view of lack of the authority which would be conferred by this law, we have seen fit to halt those conversations which had been begun and to desist from action which might arouse hopes in other nations that we were prepared to negotiate such agreements. Moreover, it has been felt in the Department that, even with authority to negotiate, accord with certain countries could be reached only with great difficulty, in view of the conflict of interests arising out of similarity of exportable surpluses.

Such appears to be true in the case of Denmark. Most of Denmark’s staple exports are primary products of which the United States is an important producer, and in some cases an exporter. Our exports to Denmark, when not competitive with articles produced in that country, compete with the products of other countries which in most cases buy more Danish goods than does the United States. [Page 125] In the past, this situation has caused no great difficulty, because of the plurilateral nature of world trade and the settlement of balances of payments along those lines, taking into account, of course, important invisible factors. During recent depression years, there has, however, been a tendency in many countries to seek visible trade balances with individual countries and, while this is manifestly an unsound approach to world trade, it is a factor which must be taken into account in our efforts to regain our trade position in Denmark.

To assist us in formulating our views, I should be glad to receive from you a strictly confidential report upon the possible bases of a trade agreement between the United States and Denmark.

Note has been taken of your suggestion that a three cornered arrangement might be the solution for protecting our market in Denmark. In this connection, I might say that in normal times the triangular or multicornered movement which you have in mind is a natural phenomenon guided, not by agreement, but by economic causes beyond such control. We have entertained the hope that a reversion to the old order would follow readjustments in the individual countries. We question the feasibility of triangular trade agreements.

I consider it essential that you make your investigations without approaching the Danish officials in any way.

Very truly yours,

For the Secretary of State:
Francis B. Sayre
  1. Not printed.
  2. Trade Agreements Act, approved June 12, 1934; 48 Stat. 943.