The Department desires you to deliver at an early date to the
Estonian Minister for Foreign Affairs a signed note along the lines
of the draft contained in the first enclosure to this instruction.
In presenting this note you should point out orally that under
American constitutional procedure the modification of a treaty
requires approval of the Senate and that it is hoped that an
agreement with respect to the revision of the treaty can be reached
without undue delay, in order that the treaty embodying the
modifications agreed upon may be submitted [Page 189] to, and approved by, the Senate
before the expiration of the existing treaty.
The Department hopes that it will be possible during the course of
the forthcoming negotiations to come to an agreement with the
Estonian Government which will ensure most-favored-nation treatment
for American trade in Estonia. In order that the Estonian Government
may be fully informed with respect to the general foreign trade
policy of this Government, you should hand a copy of the memorandum
transmitted herewith as enclosure No. 2 to the Estonian Minister for
Foreign Affairs during the course of your interview, stating that
you believe that an explanation of the general foreign trade policy
of the Government of the United States would be of interest to the
Estonian Government in connection with the forthcoming
negotiations.
The Department suggests that the Legation endeavor to arrange
discussions with the Estonian officials directly charged with the
negotiations with a view to enlightening them with respect to the
foreign trade policy of the American Government and to clarifying
any points upon which they may not be fully informed and concerning
which they may desire additional information. The general foreign
trade policy of this Government has been set forth at length in the
numerous press releases and other material which has been forwarded
from time to time to the Legation. It is believed that the Legation
can, in this manner, assist materially in bringing about a
satisfactory conclusion to these negotiations, and the Department is
confident that it will endeavor to facilitate in every appropriate
manner complete understanding by the competent Estonian authorities
of the position of this Government.
A complete report of your action should be submitted promptly to the
Department. The comments of the Legation and memoranda of
conversations with Estonian officials will be read with much
interest. The modifications proposed by the Estonian Government
should be forwarded to the Department as soon as the Legation
receives them. An appropriate reference to this instruction should
be made in all your correspondence with the Department on this
matter.
[Enclosure 2]
Memorandum to the Estonian Minister for
Foreign Affairs
1. The Government of the United States has been considering with
the greatest care the problems confronting commerce between the
United States and Estonia as discussed in the memorandum dated
January 3, 1935, which was left with the Estonian Minister for
Foreign Affairs by the American Chargé d’Affaires ad interim at
Tallinn, and in the Estonian note dated January 23, 1935, in
reply thereto,23 and the supplementary memorandum which was
presented to Minister MacMurray by Mr. Wirgo at Tallinn on
February 27, 1935.24 It is hoped that a solution can be
found for these problems during the course of the forthcoming
negotiations for the modification of the existing Treaty of
Friendship, Commerce, and Consular Eights between the United
States and Estonia; and the Government of the United States,
with a view to facilitating those negotiations, desires to set
forth herein, for the information of the Estonian Government,
its general foreign trade policy.
2. Equality of opportunity and treatment is the keynote of the
foreign commercial policy of the American Government, which
neither seeks nor accords preferential discriminatory treatment;
it asks only that a foreign country treat American commerce no
less favorably than it treats the commerce of third countries
and, in turn, accords equality of treatment to the commerce of
foreign countries. This policy is the opposite of discrimination
and retaliation. It is a policy of respectful and friendly
approach to all countries to cooperate in establishing equality
of trade opportunity and treatment throughout the world. This
policy reinforces and implements the most-favored-nation
principle, which is the most effective means of bringing about
rapidly a general reduction of trade barriers, of giving
elasticity to trade arrangements, and of increasing
international trade throughout the world.
The reciprocal trade agreements program recently inaugurated by
the United States under the Trade Agreements Act of June 12,
1934,25
[Page 191] which provides that
the duties proclaimed in consequence of agreements entered into
with foreign countries shall be extended to all countries but
also provides that those duties may be confined to such
countries as do not discriminate against American commerce or
pursue policies which tend to defeat the purpose of the Act, is
wholly in accord with the unconditional most-favored-nation
principle. The United States stands ready to extend
unconditionally the tariff concessions granted in its trade
agreements to all other countries which give American commerce
non-discriminatory treatment. Equality of opportunity and
treatment in the American market is, consequently, willingly
offered to the countries of the world.
3. It is the carefully considered view of the Government of the
United States that the rule of no discrimination is the only
standard of international conduct sufficiently definite to be
applied fairly and with a minimum of international controversy
in connection with the extension of minimum tariff rates and the
administration of other forms of trade control measures. The
Government of the United States rejects the view that such
criteria as the relative balance of merchandise trade between
countries, or the absolute height of trade barriers, can be used
as proper guides as to whether a country is entitled to the
enjoyment of American minimum duties. The first of these
rejected criteria—the balance of merchandise trade—implies the
desire to bring about a bilateral balance of merchandise trade
between each pair of countries and leads to the impairment or
destruction of multilateral trade based upon an economical and
mutually advantageous international division of production. It
also fails to take into consideration other important factors in
the balance of payments between countries. With respect to the
second rejected criteria—the absolute height of trade
barriers—such wide differences of opinions must necessarily
exist and the question is, moreover, so complicated by the
characteristic structure of a nation’s industries, and by
historical and traditional considerations, that any definite
conclusions with regard to the application of such a criterion
must of necessity be arbitrary. Under the policy which the
Government of the United States is pursuing, and in which it
urges the Government of Estonia to cooperate, the United States
does not refuse generalization of minimum duties and equality of
treatment to a foreign country, irrespective of the degree to
which that country is restricting trade, as long as American
commerce is offered equality of opportunity and accorded its
fair and equitable share of the permitted importations and the
means of payment therefor.
4. The President of the United States on July 9 [8] proclaimed a Trade Agreement with
Sweden.26 Concurrently with
that action [Page 192] he issued
instructions to the Treasury Department27
regarding the countries to which tariff concessions made in that
agreement and in previous agreements with the Republic of
Haiti28 and the
Belgo-Luxemburg Economic Union29 are being
extended. Estonia is included in the third section of the
President’s instruction under the following qualification:
“3. In respect of the products of each country designated
in this section, the proclaimed duties shall be applied
so long as such duties remain in effect and this
direction is not modified in respect of such
country.”
The Government of the United States is, consequently, continuing
to accord to Estonia most-favored-nation treatment under the
provisions of the Treaty of Friendship, Commerce, and Consular
Rights between the two countries. Such treatment under the law
can only be maintained for Estonia in the event that Estonia
accords non-discriminatory treatment to the United States.
In his instruction to the Secretary of the Treasury, referred to
above, the President also specified that minimum duty rates
proclaimed in the agreements with Haiti, the Belgo-Luxemburg
Economic Union, and Sweden shall be applied to like articles
originating in a number of countries even though they are at
present granting less favorable treatment to American trade than
to that of other countries, until thirty days from the date on
which he advises the Treasury that the United States has ceased,
or on a certain day will cease, to be bound by provisions of a
treaty or agreement providing for most-favored-nation treatment
in respect of customs duties. In view of the forthcoming
negotiations for the modification of the existing treaty,
Estonia will not, pending the outcome thereof, be placed in this
group of countries.
In the case of the countries now in this group or placed in this
group at some future date, it is expected that notices of
termination of existing treaties or agreements will be given, in
accordance with their terms, since the treatment foreseen in the
applicable treaty or agreement is not being accorded to American
trade. The Government of the United States proposes to follow
this policy with respect to all countries discriminating against
trade with the United States with which most-favored-nation
treaties are in force.
5. Estonia is now receiving the benefit of tariff and other
concessions made in trade agreements with other countries. An
examination [Page 193] of the
schedules attached to the trade agreements with Haiti, the
Belgo-Luxemburg Economic Union, and Sweden will show that the
United States has already made concessions on several of the
commodities in which Estonia expressed an interest in the
memorandum presented at Tallinn to Minister MacMurray by Mr.
Wirgo on February 26 [27], 1935. It is
believed that concessions will likewise be made on additional
commodities contained in Mr. Wirgo’s list during the course of
the negotiations with those countries which are the chief or
important sources of importation of the individual commodities.
Such concessions will be generalized to countries with which the
United States has most-favored-nation treaties. They will,
consequently, be willingly extended to Estonia as long as
most-favored-nation treatment is maintained for American trade
in that country. Copies of the trade agreements mentioned above
are attached hereto, for the information of the Estonian
Government.
There is likewise attached hereto a copy of specimen provisions
for inclusion in American trade agreements.30 These
provisions illustrate the nature of the efforts made by the
American Government in trade agreements to reduce trade barriers
and to eliminate discriminatory trade controls. In the opinion
of the American Government, these provisions operate to
reinforce and implement the most-favored-nation clause. Such
provisions have been incorporated in the trade agreements
negotiated recently by the United States.
6. The great objective of the American Government, in its trade
agreement program, is to bring about a healthy expansion of
international trade; and to accomplish this result partly by the
reciprocal reduction of tariff duties and other obstacles to
trade, and partly by the removal, as rapidly as possible, of the
numerous trade discriminatory practices which currently operate
to prevent countries from having access on equal terms to
foreign markets. The reduction of trade barriers by all
governments, and the lessening of those trade controls which put
trade necessarily on a basis of discrimination and which force
and compress it within the limits of bilateral exchange, seem to
the American Government essential to permit world trade to
expand.
The effect of new forms of trade control and interferences
practiced by many countries has become increasingly evident. The
world is producing and consuming far less than it did prior to
the depression. Employment of both labor and capital has
suffered and declined. Current trade control measures have even
become major factors in international relations and affect world
problems of political stability, disarmament, and international
understanding.
World trade in quantity has advanced little, if at all, from the
low point of 1932 and this fact is not unrelated to the network
of discriminations [Page 194]
which have characterized the trade policies of many countries
during recent years. Estonian trade itself has suffered severely
under the actual functioning of this artificial structure
designed to give temporary relief.
It was amidst the increasingly difficult international conditions
that the Government of the United States first offered its trade
agreement program based upon the principle of equality of trade
treatment and opportunity and upon the policy of fair and
friendly trade methods and practices. Encouragement in support
of this program has been afforded by the public utterances of
responsible statesmen throughout the world. It is hoped that the
forthcoming negotiations between the American Government and the
Estonian Government will be productive of beneficial results in
promoting commerce between the two countries and will contribute
to the revival of world trade and prosperity. The Government of
the United States is convinced that the prospects of success
will be materially improved by the adherence of Estonia to the
policy set forth hereinbefore.
