660P.116/35
The Chargé in Latvia (Cole) to the Secretary of State
[Received March 28.]
Sir: I have the honor to refer to the Department’s telegram No. 55, of December 5, 5 p.m., 1934,2 instructing this Legation to prepare a comprehensive report on the present treatment of American trade in Latvia. There is enclosed herewith a Memorandum entitled, “Present Status of American Trade in Latvia,”4 prepared by Third Secretary of Legation George M. Abbott, with the considerable and valuable assistance of the Consulate in this city, and based on careful study of Latvian trade statistics and interviews with importers.
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The results of the detailed investigation and the analyses of the trade figures on which the Memorandum is based reveal, first, that Latvian foreign trade statistics are in many cases misleading and [Page 553] must be carefully analyzed if used as a basis for an estimate of the present status of American trade.
In addition, two rather unexpected facts have come to light,
- 1.
- The greater part of American imports into Latvia are not being restricted, and
- 2.
- Although the Latvian Government, through the Currency Commission, is making certain efforts to reduce imports of certain commodities from the United States, these efforts were without serious result up to November 1, 1934.
The principal conclusion from the investigation would therefore seem to be that the United States Government would be in an essentially weak position were it to take the stand at the moment that there now exists “discrimination” against American trade in Latvia. The two facts just mentioned reinforce the line taken by Minister Mac-Murray in his despatch No. 611, of January 31, 1935.5
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The Department’s telegram, No. 10, of February 6, 5 p.m., 1935, emphasized that a report was desired which would show definitely whether American trade is now receiving “most-favored-nation” treatment in Latvia, and if not, precisely wherein such treatment is being denied. It is very much regretted but such a report can not be made without taking into consideration what is meant by “most-favored-nation treatment.” It is believed that in connection with Latvian-American trade the words “most-favored-nation” are words of art and to be taken specifically in relation to Article VII of the Treaty of Friendship, Commerce and Consular Rights of July 25, 1928,6 which primarily mentions “higher” or “other” “duties,” i. e. customs duties. The sentence goes on to mention “conditions” but it is not clear in just what sense these “conditions” which may be “imposed” on “importation” are to be taken. It is believed that the efforts of the Latvian authorities to reduce American trade, which have so far been mostly unsuccessful, cannot be brought within any field of ideas circumscribed by the words and conceptions of the Treaty. This could be done only if the entire apparatus of currency control, licenses, and quotas, nowhere specifically envisaged in the Treaty, can be brought into the logical classification established by the words “higher or other … conditions … on the importation of any article … etc.” It would seem that currency transfer restrictions, which are the chief form in which the attempted discrimination is being exercised, are logically conditions on payments and transfers rather than on “importations.” Other modes of limiting imports from specific countries, such as refusals to grant import licenses to certain firms or [Page 554] individuals, or for government monopolies to buy in certain countries or from certain foreign dealers, could probably be explained on grounds lying wholly within the competence of the national authorities and based on economic or political grounds entirely without the scope of the treaty.
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This despatch would not be complete without some mention of what is perhaps the most perplexing element in the entire Latvian-American trade situation, at least insofar as the import of American goods into Latvia is concerned. Just what are “American goods?” This raises the old and, so far as the writer is aware, very moot and never definitely settled question of so-called “expatriated American capital.”
Are the following “American goods:” sewing machines made in Scotland; kerosene and gasoline from the wells and refineries of a great American corporation in Rumania; automobiles assembled, but not entirely from American parts, in Denmark? These latter, the automobiles, are of particular interest as the Legation is informed that these cars come in under a Danish certificate of origin obtained upon a showing of 51 percent value added in Copenhagen. Are agricultural machines manufactured, it is believed 100 percent, in Sweden American goods? The same may be asked concerning automobile tires sold in Latvia under prominent American trade names but manufactured in Great Britain.
Respectfully yours,
- Ibid., p. 616.↩
- Not printed.↩
- Ante, p. 183.↩
- Signed at Riga, April 20, 1928, Foreign Relations, 1928, vol. iii, p. 208.↩