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

No. 514

Sir: I have the honor to refer to my despatch No. 458 of June 2, 1938, and previous despatches concerning the status of possible negotiations of a Trade Agreement with Estonia, and to report that on August 31, 1938, I called on Mr. Georg Meri, the new Director of the Foreign Trade Department of the Estonian Foreign Office, who has succeeded the late Mr. Edward Wirgo. Mr. Meri had announced on August 30, 1938, his assumption of official duties.

In my brief conversation with Mr. Meri, he informed me that he had only a cursory knowledge of the trade relations with the United States, but that he hoped within a month or so to become better acquainted with the possibilities of negotiations for a Trade Agreement with the United States. He further stated that his first duties would be to concentrate on treaties expiring shortly, particularly those with Latvia, Germany and the Soviet Union. Mr. Meri informed me that his duties, as chief of Estonia’s trade delegation, would probably require him shortly to visit Riga as well as Berlin. He stated that treaty negotiations with Latvia would have to be concluded by October 1, 1938, otherwise there would be no commercial treaty between Estonia and Latvia. Further, he stated that negotiations have already been started with Germany and the Soviet-Union, since the annual trade arrangements with these countries would expire at the end of the year.

Mr. Meri stated that the difficulty in trade relations with the United States was the obvious lack of an American market for Estonian goods.

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I remarked to Mr. Meri that the treaty basis for any negotiations with the United States would be the reciprocal lowering of customs duties and removal of other trade barriers, rather than any attempt to [Page 255] balance the trade between the two countries. Mr. Meri stated that he appreciated this, but that Estonia did not have foreign exchange with which to make its purchases unless it could increase its trade with countries like the United States, which had free exchange.

As indicated in my despatch of June 2, 1938, it was not anticipated that any conversations could take place during the summer months, particularly in view of the many official leaves and further on account of the recent reorganization of the personnel of the Estonian Government. However, from my conversation with Mr. Meri, and other informal talks I have had, it is evident that no essential change has taken place in the attitude of the Estonian authorities from that reported by me in despatch No. 387 of February 19, 1938.

Respectfully yours,

Walter A. Leonard