671.116/67: Telegram

The Secretary of State to the Minister in Rumania ( Owsley )

13. Your telegram No. 6, April 20, 6 p.m., and mail despatches Nos. 256 and 257.15 Please communicate following note to the Minister for Foreign Affairs:16

  • “1. The Government of the United States has given careful consideration to Mr. Arion’s note of April 20, 1935.17
  • 2. Before entering into any discussion of the proposal made in that note the Government of the United States desires to express appreciation for the assurance given that the importation of American merchandise now in Customs or in transit will be authorized without restriction.
  • 3. The Government of the United States has also noted with gratification the expressed desire of the Rumanian Government to conserve the exchange of notes of August 20, 1930, by which the two Governments reciprocally grant most-favored-nation treatment in the matter of prohibitions and restrictions of imports and exports. In this connection it has noted the statement that the suspension of import permits has been without practical effect and that consequently American interests have not been adversely affected. The Government of the United States is therefore disposed to defer discussion of the difference of views which the two Governments appear to hold with respect to the meaning of Article 2 [3] of the exchange of notes of August 20, 1930.
  • 4. Mr. Arion’s exposition of the considerations underlying the decision of the Rumanian Government to suspend authorizations for the importation of the generality of American merchandise and the proposal [Page 677] of the Rumanian Government for an agreement, in the form of an annex to the existing exchange of notes of August 20, 1930, whereby the trade in the main between the two States would be balanced on a bilateral basis, implies a fundamental difference in the respective commercial policies of the two States.
  • 5. The commercial policy of the United States is designed to bring about mutual and reciprocal reductions in trade barriers. It is a policy calculated to further multilateral trade based upon an economical and mutually advantageous international division of production, as well as bilateral trade, it being the view of the Government of the United States that the practice of seeking to balance trade on a bilateral basis is inimical to a general restoration of trade.
  • 6. The keystone of this policy is the unconditional most-favored-nation principle. Under the Trade Agreements Act of June 12, 1934, the Government of the United States seeks by agreement with other countries to reduce trade barriers. The concessions thus established are extended to all countries that do not discriminate against American commerce or pursue policies which tend to defeat the purpose of the Act.
  • 7. It is a cause for gratification to the Government of the United States that in the application of this policy Rumania is to be found on the list of those countries to which these concessions, and notably those contained in the trade agreement with the Belgo-Luxemburg Economic Union,18 are extended. This fact is tangible evidence of the desire of the Government of the United States to approach the problem of the trade relations between Rumania and the United States in a friendly spirit and from a practical point of view, and to this end the Government of the United States is prepared to study such concrete proposals as the Rumanian Government may care to make in the light of the foregoing exposition of American commercial policy.”

From the foregoing you will perceive that in view of the conflict in the commercial policies of the two States the Department seeks to maintain the trade situation in a state of flux, hoping thereby to keep the door open to such American products as are now finding a market in Rumania until the views of the two Governments are sufficiently similar to provide a basis for negotiations. Because of considerations of policy and also in view of the practical difficulty of increasing American consumption of Rumanian products, the alternative would be to denounce the exchange of notes of August 20, 1930, and refuse to generalize trade concessions to Rumania. On the basis of the information now before it and especially because of the continued admittance of American products despite the announced suspension of import authorizations, the Department is not of the opinion that such a course would serve the best interest of the Government of the United States at this time.

Hull
[Page 678]

[No further significant developments occurred to improve trade relations between the United States and Rumania, and no basis for negotiations was attained. The American Chargé in Rumania, Frederick P. Hibbard, in his despatch No. 147 of September 9, 1936, reported a conversation with the Under Secretary of State for Foreign Affairs, Victor Bǎdulescu, to whom he complained of “the diminishing volume of our export trade to Rumania caused by the artificial barriers of clearing agreements, exchange restrictions and import quotas.” Mr. Bǎdulescu expressed his regrets for this condition, which he attributed simply to “the inability of the Rumanian Government to secure dollars.” (671.116/79)]

  1. Despatches not printed.
  2. The Chargé in Rumania reported in his despatch No. 280, June 27, that the Minister had handed the note to the Rumanian Foreign Minister on June 11, with only slight drafting changes (671.116/74).
  3. See telegram No. 6, April 20, 6 p.m., from the Minister in Rumania, p. 674.
  4. See pp. 102 ff. For text of the agreement signed on February 27, 1935, see Executive Agreement Series No. 75, or 49 Stat. 3680.