611.6131/461: Telegram
The Secretary of State to the Ambassador in the Soviet Union (Davies)
104. Your 180, July 20, 3 p.m. References are to your numbered sections.
1. The Department cannot agree to the inclusion of the proposed sentence qualifying the exceptions to the exportation clause as given in Section b of the Department’s 103, July 19, 7 p.m. You should point out that this paragraph relating to exceptions in regard to the export of arms, etcetera, appears without any such qualifying sentence in the Netherlands and French agreements and also in all trade agreements which contain an exportation clause,76 concluded under the authority of the Trade Agreements Act.77 The Department perceives no reason [Page 432] why an exception of this character should be made in favor of the Soviet Union.
The exceptions relating to the export of arms, et cetera, were of course included in our trade agreements with a view to the possible application of the Neutrality Act. Any such qualification as that proposed by the Soviet officials might possibly be construed as a limitation upon the operation of that Act since application of the Act would almost inevitably be considered discriminatory by the countries to which it might be applied.
Your 2. The Department is not disposed to agree to any reservations in regard to the purchase figure of $40,000,000 which would permit the Soviet Government to reduce this figure in the event of possible adverse action by the courts in regard to the exemption from the coal tax. The Department had considered this question disposed of by the inclusion of the termination clause under which the Soviet Union would be fully protected against this contingency for the first 6 months of the agreement. In view of the limitation on exports of Soviet coal to the United States, it is considered, as a matter of fact, very improbable that any court action would be initiated at all, and even less likely that it would be taken within the limited period of the last 6 months of the agreement.
- In telegram No. 114, July 26, 1937, 7 p.m., the Department authorized the Ambassador to make such appropriate corrections to Soviet officials as might be required, because the 16 trade agreements that had so far been concluded had all contained an exportation clause with no reservation in respect of the export of arms, except in the agreement with Colombia. This agreement had been concluded on September 13, 1935, before the policy had become definitely established. (611.6131/463) For text of the agreement, see Department of State Executive Agreement Series No. 89, or 49 Stat. 3875.↩
- Approved June 12, 1934, as extended March 1, 1937; 48 Stat. 943, 50 Stat. 24.↩