Memorandum of Conversation, by Mr. John C. Ross of the Division of Trade Agreements
|Participants:||Dr. Halvdahn Koht, Foreign Minister of Norway|
|Also Present: Mr. Morgenstierne, Norwegian Minister to the U. S.|
|Mr. Cumming, European Division, and|
|Mr. Ross, Division of Trade Agreements.|
Mr. Sayre opened the conversation by indicating that this Government has been thinking for some time of the possibility of a trade agreement between Norway and the United States. He stated that for political as well as economic reasons it is thought that such a trade agreement would be desirable. This is particularly true in view of the closeness of relations between the Scandinavian peoples and the people of the United States. Mr. Sayre said that as a result of preliminary studies which have been made there would appear to be an economic basis for a trade agreement between the two countries and that it was thought that this basis would exist even if whale oil were not considered.[Page 521]
Dr. Koht said that, of course, the Norwegian Government had been primarily interested in the possibility of a trade agreement from the point of view of a possible concession on whale oil, and that the Norwegian Government had been particularly interested in the possibility of securing the removal of the excise tax on whale oil by Congressional action. He expressed his disappointment that this had not proved to be possible.
Mr. Sayre said that the attitude of this Government with regard to the excise tax on whale oil was well known to the Norwegian Government and that the Department of State had exerted itself to the utmost to secure the removal of the tax. Since this has proved to be impossible, this Government shares the disappointment of the Norwegian Government. Mr. Sayre then stated that it might be possible for this Government to reduce the duty and tax on whale oil in a trade agreement to an extent which would tend to bring that commodity into a more favorable competitive position with the principal foreign fats and oils, such as palm oil and tallow. Mr. Sayre referred to the fact that the tax on palm oil now amounts to 3¢ per pound, the duty and tax on tallow amount to 3.5¢ per pound, while the duty and tax on whale oil amount to 3.8¢ per pound.
Dr. Koht said that his Government was aware of the efforts that had been made by the Department of State to have the excise tax on whale oil repealed and that these efforts were appreciated. He went on to say that the effects of any reduction on whale oil in terms of the competitive position of that commodity with other foreign fats and oils depended to a large extent upon the price relationships between these fats and oils and, indeed, of all fats and oils generally.
Mr. Sayre pointed out that while, of course, this is true to a certain extent, nevertheless it may be considered that palm oil and tallow are the principal competitors of whale oil for use in making soap. He went on to say that in considering a possible reduction on whale oil in a trade agreement, consideration might be given to the fact that whale oil is subject to the hydrogenation process which, of course, increases the cost of that commodity.
Dr. Koht then stated that he believed that there were no commodities of which the United States is the principal supplier to Norway. He stated that in the past the United States had been the principal supplier of automobiles, but that importations of American-make automobiles from assembly plants in Denmark far exceeded importations of automobiles from the United States. He suggested for possible future consideration the possibility of establishing assembly plants in Norway for American-make cars.
At this point, Mr. Sayre referred to certain political aspects and implications of the American trade agreements program. He stated that in his opinion there may be considered to be two conflicting economic [Page 522] policies in the world, namely, the policy of equality of treatment characterized by the American trade agreements program and the policy of narrow bilateralism characterized by preferential arrangements and compensation agreements. The first, it is believed by this Government, is the necessary basis for peace. The second could only lead ultimately to war. It would seem desirable, therefore, for democratic countries animated by a sincere desire to maintain peace, to cooperate in the policy of commercial equality. In this connection it was brought out in general conversation that the United States has already concluded trade agreements with four of the signatories of the Oslo Convention,8 namely, Finland, Sweden, Belgium, and the Netherlands, and Mr. Sayre stated that this Government would be very glad to have Norway also included in this group.
Mr. Sayre then went on to say that active discussions were being pursued with regard to the possibility of a trade agreement with the United Kingdom9 and that this Government hoped that it would be possible to conclude such an agreement. Dr. Koht interjected that, of course, his Government was aware of these discussions and believed that if a trade agreement with the United Kingdom proved to be the result, it would be a good thing for the world.
Dr. Koht then inquired as to the procedure under which trade agreements were negotiated. Mr. Sayre explained to the Minister the procedure of preliminary discussions, public notice and hearings, and the negotiations as such, and then referred once more to the belief of this Government that an economic basis for a broad trade agreement exists. Mr. Sayre then showed to Dr. Koht and Mr. Morgenstierne the “List of Commodities of which Norway was the Principal Supplier of Imports”, prepared by the Tariff Commission, and indicated that the items on this list, which accounted for 61% of the total imports into the United States from Norway in 1936, appeared to provide a good basis for an agreement. Dr. Koht evinced considerable interest in this list and indicated that while, of course, he could not make any commitment to enter into trade agreement discussions, it was his intention to take up the subject with his colleagues in the Government immediately upon his return to Norway. He stated that he thought it might be possible for the Norwegian Government to be prepared fairly soon to enter into preliminary discussions.
Before the conversation closed Mr. Morgenstierne mentioned the anti-dumping duties levied on Norwegian matches and asked if it might be possible to consider such questions in trade agreement negotiations. Mr. Sayre replied that under certain conditions of fact the Treasury was required by law to impose anti-dumping duties, and that such questions could not be considered during trade agreement negotiations. [Page 523] Mr. Sayre added that this Government would be very glad, however, to consider the problem as a separate matter if the Norwegian Government so desired. Dr. Koht stated that the sales policy of an international match cartel in which Norwegian producers participated is an important factor in the situation and that it is not certain that this subject is one which should be considered officially by the two Governments.