The Acting Secretary of State to the Chargé in Estonia ( Carlson )

No. 21

Sir: The Department has examined carefully the data contained in consular report No. 43 of October 6, 1934, entitled “Present Treatment by the Estonian Authorities of American Trade” submitted by your office in reply to instruction No. 12 of July 24, 1934, and is seriously disturbed at the treatment being accorded to American trade under the foreign trade policy and practices of the Estonian authorities set forth therein.

You are accordingly requested to seek an early interview with the Estonian Minister for Foreign Affairs during which you should point out to him that this Government is viewing with anxiety the increasing difficulties which American trade is encountering in Estonia. The Government of the United States does not have in mind those difficulties which arise out of the decreased purchasing power of the Estonian people brought on by the economic depression or those which result from restrictive measures deemed necessary under present conditions to safeguard the Estonian financial system, but rather the difficulties which are encountered in connection with the direct intervention of the Estonian authorities in the field of American-Estonian trade with a view to restricting trade from the United States and directing to other countries, particularly Great Britain, the importation of commodities formerly obtained from the United States. This Government views with concern the policy and practices pursued by the Estonian Government to discriminate against imports from the United States in the administration of the import license and foreign exchange restrictions.

In this connection, the American Government is seriously disturbed at the possible unfavorable effects on American-Estonian trade of the operation of Part I–1 of the Protocol4 attached to the Commercial [Page 132] Agreement between the United Kingdom and Estonia, signed at London on July 11, 1934, which obligates the Estonian Government to “encourage and promote by all means at their disposal the importation into Estonia of goods produced or manufactured in the United Kingdom”.

As the Estonian Government is aware, the Government of the United States has left its markets open on the basis of equality to the commerce of all countries, including Estonia, and it is the firm policy of this Government to endeavor to reduce to a minimum the barriers to the free flow of international trade. While the Government of the United States appreciates the circumstances in which the Estonian Government has found it necessary to have recourse to foreign exchange and import restrictions, it desires to stress that the principle of fair treatment in international trade and the most-favored-nation principle enjoin upon every country making use of such systems for limiting and controlling imports, to apply those systems in actual practice so as to derange as little as possible the natural relative competitive positions of the various countries supplying the imports of the commodities affected. A policy of effecting by means of import license or foreign exchange restrictions, or other administrative devices, a balance of the foreign trade accounts between the two countries is in conflict with the most-favored-nation treatment provided for in the treaty of friendship, commerce and consular rights between the United States and Estonia.5 The continued application of discriminatory measures to imports of American origin would be particularly deplored by the Government of the United States which is animated by a desire to facilitate and increase the trade and commercial relations between the two countries.

You should leave with the Minister for Foreign Affairs a memorandum embodying the remarks contained in the preceding two paragraphs. The Department further desires that, in concluding your interview with the Minister, you emphasize orally that this Government is seriously disturbed by the discriminatory policy now pursued by the Estonian authorities with respect to American trade and that you express your confidence to him that the Estonian Government, not being unfriendly disposed towards American trade, will discontinue these discriminatory practices and restore to American trade the equitable treatment to which it is entitled under the provisions of Article VII of the treaty of friendship, commerce and consular rights. You may add that, in the event that these discriminatory practices are continued, the American Government will be forced to give prompt consideration to the situation created by the denial to our trade of the treatment stipulated in the treaty.

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In order that you may be informed as to the present attitude of this Government with respect to the means to be employed in bringing about the restoration of normal international trade, there are inclosed herewith (1) an excerpt from a memorandum of a departmental press conference dated September 17, 1934,6 (2) a departmental press release dated October 29, 1934,7 and (3) a departmental press release dated November 22, 1934.8 Your attention is specially invited to the sections of these documents which contain statements regarding the most-favored-nations principle in international commerce. It is believed that this background material will be helpful to you in any informal conversations which you may have with Estonian officials with respect to the interpretation of the treaty of friendship, commerce and consular rights between the United States and Estonia.

A copy of this instruction is being forwarded to the American Legation at Riga, for the information and guidance of Mr. Mac-Murray, American Minister to Estonia.

A complete report of your action and the reply of the Estonian Government to your representations should be submitted promptly to the Department. An appropriate reference to this instruction should be made in all your correspondence with the Department in this matter.

Very truly yours,

William Phillips
  1. Ibid., p. 139.
  2. Signed December 23, 1925, Foreign Relations, 1925, vol. ii, p. 70.
  3. Not printed.
  4. Department of State, Commercial Policy Series No. 3: International Trade and Domestic Prosperity, Address by Cordell Hull, Secretary of State, Before the National Foreign Trade Council, New York City, November 1, 1934 (Washington, Government Printing Office, 1934).
  5. Department of State, Press Releases, November 24, 1934, p. 321.