You are accordingly requested to seek an early interview with the
Latvian Minister for Foreign Affairs,7 during which, after
pointing out that this Government is viewing with anxiety the
increasing difficulties which American trade is encountering in
Latvia, you should present to him a copy of the attached draft note
setting forth in detail the position of the American Government in
the premises. You will observe from the contents of this draft note
that it is designed to acquaint the Latvian Government with the
foreign trade policy pursued by this Government, to point out
certain practices of the Latvian authorities which are regarded as
discriminating against American trade, to obtain from the Latvian
Government an authoritative statement setting forth the precise
conditions under which American goods are admitted into Latvia and
the terms under which Latvian importers can purchase foreign
exchange to pay for American products, and to invite the Latvian
Government to cooperate with the United States and other governments
in pursuit of a liberal commercial policy calculated to bring about
a world-wide increase in international trade.
You should make special efforts to impress upon the Minister for
Foreign Affairs the importance which the American Government
attaches to this matter and its earnest desire to continue to
generalize fully to Latvia all tariff and other concessions made in
reciprocal trade agreements with a view to maintaining for Latvia
equality of trade treatment and opportunity, thereby affording
increased markets for Latvian goods in the United States. You
should, in particular, emphasize that this Government desires to
obtain from the Latvian Government the authoritative statement
mentioned in paragraph six of the draft note, in order that it may
be in a position to determine whether Latvia can be assured
continued enjoyment of the benefits of reduced duties proclaimed
under trade agreements.
[Enclosure]
Draft of a Note to the Latvian Minister for
Foreign Affairs
1. The Government of the United States, in connection with the
trade agreements which are now in effect or being negotiated
with several countries, is examining the treatment accorded by
Latvia to American trade in the hope of bringing about an early
solution of the problems confronting commerce between the United
States and Latvia; and proposes to set forth fully herein the
general foreign
[Page 556]
trade
policy being pursued by it with a view to enlisting the
sympathetic and valuable cooperation of the Latvian Government
in the promotion of a policy which has already won the support
of many other countries.
[Points 2 and 3 here omitted are identical with the same points
in the draft memorandum to the Estonian Minister for Foreign
Affairs printed on page 190.
The first paragraph of point 4, also here omitted, is the same,
mutatis mutandis, as the first
paragraph of point 4 of the draft memorandum to the Estonian
Minister for Foreign Affairs printed on page 190.]
The Government of the United States is, consequently, continuing
to accord to Latvia most-favored-nation treatment under the
provisions of the treaty of friendship, commerce, and consular
rights between the two countries. One purpose of the present
note is to ascertain the precise policy of the Latvian
Government towards trade with the United States, with a view to
determining whether Latvia should be assured continued enjoyment
of the benefits of the duties proclaimed under trade agreements.
If Latvia does not accord nondiscriminatory treatment to trade
with the United States, consideration must under the law be
given by the American Government to the withdrawal of minimum
duties from Latvia, with due regard to obligations under the
existing treaty.
In his instruction to the Secretary of the Treasury,8
alluded 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
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. The treatment accorded to American trade by Latvia has
seriously disturbed the Government of the United States; and the
increasing
[Page 557]
difficulties confronting that trade which have arisen from the
discriminatory measures applied in recent years to imports of
numerous American products and from the definite intervention of
the Latvian authorities into the field of American-Latvian
trade, resulting in the restriction of imports from the United
States and the direction to other countries of the importation
of commodities formerly obtained from the United States and
which Latvian importers desire to obtain from the United States,
have occasioned anxiety as to the future course of
American-Latvian economic relations. The system employed by the
Latvian Government to control imports from the United States has
apparently operated to destroy the natural relative competitive
position in the Latvian market of American products vis-à-vis
similar products from other countries and to withhold from
American commerce the treatment to which it is entitled under
the provisions of the treaty of friendship, commerce, and
consular rights between the United States and Latvia. While the
Government of the United States appreciates the circumstances in
which the Latvian Government has found it necessary to have
recourse to a system of controlling imports, 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 systems of limiting and controlling
imports to apply those systems so as to derange as little as
possible the natural relative competitive positions of the
various countries supplying the imports of the articles
affected. A policy of effecting a balance of the merchandise
trade between the United States and Latvia through a system of
compensation trade, the administration of foreign exchange
controls, or other administrative devices is, in the opinion of
the American Government, in conflict with the
most-favored-nation treatment specified in the treaty of
friendship, commerce, and consular rights between the United
States and Latvia. In this connection, it is desired to point
out that Article VII of that treaty provides, in part, as
follows:
“Each of the High Contracting Parties binds itself
unconditionally to impose no higher or other duties or
conditions and no prohibition on the importation of any
article, the growth, produce, or manufacture, of the
territories of the other than are or shall be imposed on
the importation of any like article, the growth,
produce, or manufacture of any other foreign
country.
. . . . . . . . . . . . . .
“Any advantage of whatsoever kind which either High
Contracting Party may extend to any article, the growth,
produce, or manufacture of any other foreign country
shall simultaneously and unconditionally, without
request and without compensation, be extended to the
like article, the growth, produce, or manufacture of the
[other] High Contracting Party.”
[Page 558]
In compliance with the above provisions, the Government of the
United States is willingly extending its minimum duties
specified in trade agreements with other foreign countries to
articles of Latvian origin. It cannot but regard, however, the
continued effectuation by the Latvian authorities of an import
policy deliberately calculated to divert to other countries the
imports of commodities formerly obtained from the United States,
and the application of extra and additional charges on the sale
of foreign exchange to be used to make payments for imported
American goods, as an indication of an unfriendly attitude
towards commercial and financial relations with the United
States.
6. In view of the considerations set forth above, it is hoped
that the Latvian Government will appreciate the desire of the
Government of the United States to have accurate and
authoritative information with respect to the attitude of the
Latvian Government towards, and with respect to the treatment
now being accorded in practice to, American trade in Latvia. The
American Government, consequently, would appreciate receiving
from the Latvian Government a statement setting forth the
restrictions that are now imposed, or that may in the future be
imposed, on imports from the United States and on the purchase
or transmission of funds in payment thereof. It is particularly
desirable that this statement contain full details with respect
to the following points:
- 1.
- The restrictions, other than customs duties and
sanitary regulations of general application, placed upon
the importation into Latvia of American products.
- a.
- Administrative measures such as embargoes,
quotas, contingents, licenses, compensatory
exports, et cetera, applied equally to similar
imports from all other countries.
- b.
- Administrative measures as above not applied
to imports from all other countries in the same
manner in which they are applied to American
imports.
- 2.
- The restrictions placed on the sale of foreign
exchange intended for use in payment for goods to be
imported from the United States or for remittance to the
United States in payment of imported American
goods.
- 3.
- An explanation of the nature, purpose, amount, and
disposition of any additional fees levied or charged on
American imports subjected to restrictions or on the
means of payment for imported American goods.
The American Government earnestly desires to continue
generalizing to Latvia all tariff and other concessions made in
reciprocal trade agreements with a view to maintaining for
Latvia equality of trade opportunity and trade treatment, thus
affording increased markets for Latvian goods in the United
States, One purpose of the present
[Page 559]
discussions is to obtain assurances from
the Latvian Government that American trade will receive
most-favored-nation treatment in Latvia, in order that the
Government of the United States may be in a position to
generalize fully to Latvia concessions accorded to other
countries.
7. The Government of the United States trusts that the full
statement of its foreign trade policy which it has made herein
will indicate clearly its profound conviction that the normal
flow of international trade can only be restored by the adoption
throughout the world of a liberalized commercial policy resting
upon the doctrine of equality of trade treatment and
opportunity. It hopes that the present discussions between the
Latvian Government and itself 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
Latvia to the policy set forth hereinbefore.
