660P.116/40
The Chargé in Latvia (Cole) to the Secretary of State
[Received September 25.]
Sir: I have the honor to refer to the Department’s instruction of August 16, 1935 (No. 160), and to this Legation’s telegram No. 55 of September 11, 4 p.m.,9 both in regard to the delivery of a note to the Minister for Foreign Affairs concerning the treatment accorded in Latvia to American trade. A draft was enclosed in the instruction under reference.
The President of the Council of Ministers and Minister for Foreign Affairs, Mr. Ulmanis, returned from a vacation in the country on Monday, September 9th, and I obtained an interview with him on the morning of September 11th, and the note was delivered as received from the Department. A copy is enclosed.10
It was very evident from the moment when I explained to him the purpose of my visit that the note was a considerable and perhaps disagreeable surprise. This is understandable inasmuch as previous oral discussions of the difficulties of American trade in Latvia by Minister MacMurray and other members of the staff of this Legation, with the one exception reported in this Legation’s telegram of May 6, 1935 (No. 40),11 have been with other members of the staff of the Ministry [Page 560] for Foreign Affairs. After his first surprise, the entire interview was, perhaps intentionally, conducted by the Prime Minister in the very best of good humors except for one short passage which will be mentioned below.
His first reply after hearing my explanation of the nature and purpose of the note was to state that “of course the Latvian Government has had to adopt trade restrictions” as a result of the pressure put upon it by the “big powers,” its largest and absolutely indispensable customers. However, he stated, he had not been aware that in this regrettable but necessary process of restricting imports there had been any discrimination against any country. His attitude was that of surprise and regret that the United States should feel that there had been.
The question of the suspicion of dumping raised against Latvian butter imports into the United States and the consequent application of American tariff acts and customs regulations was brought up by the Prime Minister with considerable force. This subject has now become a sort of bête noire around which any discussions concerning American trade with Latvian officials of any rank must inevitably revolve. In his interview with Mr. MacMurray reported in the telegram referred to, Mr. Ulmanis was very emphatic that there could be no imports of American automobiles if no Latvian butter could be sold in the United States, and he repeated this to me day before yesterday. This contrasted rather forcibly with the statement made almost in the following sentence that of course Latvia was not much interested in American purchases of Latvian butter since they were of insignificant amount in Latvia’s total trade and furthermore that Latvia was now able to obtain better prices in Europe.
Since Mr. Ulmanis seemed inclined to advance the alleged discrimination against Latvian butter as a justificatory tu quoque, I endeavored to put it to him in the correct light. I explained that the initiative in raising the dumping question came entirely either from importers from other countries into the United States or from customs officials acting under mandatory provisions of law. The law concerning these matters has been on the statute books for some time.12 The private individual only had to put the machinery of the law in motion by filing an appropriate complaint after which the application of the law must be automatic on the part of the customs officials. I also pointed out that the application of the law was none the less automatic if started by the appraiser since he was obligated by the law to take specific action when certain facts showed themselves on the face of the documents. [Page 561] I added that the investigation having been once put in motion could not be stopped by the State Department but must take its usual course under the law and rules. It seems to me of great psychological importance that the Latvian officials should, if possible, fully understand the modus operandi of our customs laws and regulations. It is very hard to explain these matters to them since they always have been accustomed, and particularly after the introduction of the authoritarian regime over a year ago, to a government which is far more one of administrative decision and action rather than of rigid adherence to laws and rules. It seems very important that everything be done to prevent the idea from becoming fixed in the minds of the officials in Riga that the butter difficulties were a deliberate act of restriction or retaliation on the part of the United States Government. This might lead to a series of reprisals and counter-reprisals—something resembling a useless and injurious trade war.
My explanation to Mr. Ulmanis that it was the special desire of the United States Government to obtain the authoritative statement mentioned in the note to assist in determining whether Latvia can be assured continued enjoyment of reduced trade agreement duties with an ultimate view to increasing the trade exchange between the United States and Latvia, was interrupted by Mr. Ulmanis’ two sallies concerning butter. I thereupon endeavored to give very brief oral mentions of some of the particular actions which the United States Government regards as discriminatory in the Latvian treatment of American trade. There would have been little purpose in elaborating on these matters since Mr. Ulmanis has little exact knowledge of their details and backgrounds. He has had very little to do in detail with such matters, being very much absorbed by problems of internal administration and European political matters in his dual capacity as Prime Minister and Minister for Foreign Affairs. At the same time I endeavored to suggest to him the view that not all international trade can be divided into water-tight compartments of bilateral exchange between two countries only and mentioned, as an illustration, the fact that in 1933 the United States bought more raw flax by volume from Belgium than the entire export of raw flax and tow from Latvia to Belgium. Mr. Ulmanis said this might well be true but that such situations were of minor importance compared with the compelling necessities of Latvia’s two great bilateral trades.
Interviews with other leading and key officials in trade matters, both in the Ministry for Foreign Affairs and elsewhere, are being arranged and will be reported as they take place.
Respectfully yours,