The Chargé in Estonia (Leonard) to the Secretary of State

No. 359

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After receiving the Department’s instruction under acknowledgment,2 and its enclosures, a careful study was made thereof, and on January 12th, I called on Dr. Fr. Akel, Estonian Minister for Foreign Affairs, and handed him a Note, a copy of which is enclosed.3 Inasmuch as Dr. Akel does not speak English, and the Note handed to him was in that language, I explained it to him in German. He expressed keen interest in my remarks and stated that the Estonian Government was very pleased to have the opportunity to discuss further preliminaries in connection with a possible trade agreement, and he wished to be of any possible assistance in facilitating the conversations, for he hoped it would be found practicable to negotiate finally a treaty. He said that Estonia wished to have a broader basis for its foreign trade and be less dependent upon England and Germany than at present.

Dr. Akel asked me whether a new treaty would make possible the expansion of Estonia’s trade in the United States’ market, and in that way more nearly than at present balance the trade between the two countries, which is now greatly in favor of the United States.

In reply to the above, I pointed out to Dr. Akel that the United States had no quota, exchange, or other restrictions intended to decrease the trade from Estonia into the United States, while Estonia bad such restrictions, which at present militated against the importation of American goods into Estonia. I informed Dr. Akel that I [Page 246]realized its position in being forced by economic reasons to have certain safeguards at present, chiefly in the form of an import license system and in exchange restrictions. However, the United States requested that these restrictions should not be applied in such a manner as to operate discriminatingly against the trade of the United States. Further, I explained that the proposed trade agreements negotiated between the United States and other countries were not based upon the principle of bi-lateral trade but were intended to do away as much as possible, with the barriers on both sides so that trade could expand more freely. In other words, my Government negotiated treaties on the basis of multilateral rather than bi-lateral trade relations. For instance, I stated, the favorable balance of trade for Estonia with Great Britain should enable foreign exchange to be used for the purchase of American goods even if the imports from the United States were considerably greater than the Estonian exports to the United States. Dr. Akel stated that pressure was being brought to bear upon Estonia to purchase British goods in view of Britain’s large purchases of Estonian products, and in that connection he referred to British automobiles which, he said, had not proved as satisfactory as American automobiles in the Estonian market. Dr. Akel stated that he would be glad to talk with me again after I had discussed the details with Mr. Wirgo,4 Mr. Mickwitz, and others in the Foreign Office, as well as in other Departments.

In my conversations with Mr. Wirgo and Mr. Mickwitz (Chief of the Treaty Division) we attempted to clear up a few doubtful points, but we agreed that the most important point was now to find some method of preventing discrimination against American goods, and that unless such an agreement could be reached there would be in reality no basis for a trade agreement. I informed both Mr. Wirgo and Mr. Mickwitz that no official announcement would be made in Washington recommending formal negotiations of a trade agreement between Estonia and the United States, until a satisfactory agreement could be reached upon the principles of non-discriminatory treatment of American goods in the administration of import-license and exchange control on the part of Estonia.

I may remark that I had occasion to see the Minister for Economic Affairs (Mr. K. Selter), for a few moments, and he stated that he would be glad to talk with me more fully. He remarked that he had seen in the press that the United States intended to negotiate a trade agreement with Great Britain.5 He said that Great Britain was a big factor in discussing Estonian trade relations with the United [Page 247]States, particularly in view of the large market in Great Britain for Estonian goods and the pressure being brought to bear by the British on Estonian authorities to purchase their goods.

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Respectfully yours,

Walter A. Leonard
  1. Instruction No. 26, December 22, 1937, ibid., p. 271.
  2. Not printed.
  3. Edward Wirgo, Director of the Foreign Trade Department of the Estonian Foreign Office.
  4. Department of State, Press Releases, January 8, 1938, p. 45.