In view of the statement contained in the first paragraph on page 7
of your despatch under reference, to the effect that the matter is
being considered for the Polish Government by the Minister of
Commerce and Industry and subordinate officials in his Ministry, the
Department suggests that the Embassy endeavor to arrange discussions
with those officials with a view to enlightening them with respect
to the
[Page 640]
policy of the
American Government and clarifying any points upon which they may
not be fully informed and desire additional information. The general
foreign trade policy now being pursued by this Government has been
set forth at length in numerous press releases and other material
which have been forwarded from time to time to the Embassy. It is
believed that the Embassy can, in that manner, assist materially in
bringing about a satisfactory conclusion to these discussions and
the Department hopes that it will endeavor to facilitate in every
appropriate manner complete understanding by the competent Polish
officials of the position of this Government.
The comments of the Embassy and memoranda of conversations with
Polish officials will be read with much interest in the
Department.
[Enclosure]
Draft Note for the Polish
Government
1. The Government of the United States has considered with the
greatest care the Note Verbale of the
Polish Government dated March 16, 1935, and observes with
satisfaction that the Polish Government is most willing to
proceed with the examination of the problems confronting
commerce between the United States and Poland which was
initiated by the American note of March 8.
2. The American Government desires to emphasize that the purpose
of its note of March 8 was to set forth frankly the general
foreign trade policy being pursued by it with a view to
enlisting the sympathetic and valuable cooperation of the Polish
Government in the promotion of a policy which has already won
the support of many other countries. It was not the intention of
that note only to point out the discriminatory features of the
policy now pursued by the Polish Government towards American
trade, but also to invite Poland to cooperate at once, or as
soon as it is in a position to do so, with the United States and
other countries in pursuit of a broad commercial policy
calculated to bring about a world-wide increase in international
trade. Since the American Government attaches great importance
to this matter, it now proposes to set forth in greater detail
the considerations which actuated it in presenting the note of
March 8 in the hope that this exchange of views will remove any
misunderstanding in that regard on the part of the Polish
Government.
3. Equality of opportunity and treatment is the keynote of the
foreign commercial policy of the Government of the United States
which neither seeks nor accords preferential discriminatory
treatment—it asks only that a foreign country treat American
commerce no less favorably than it treats the commerce of third
countries and,
[Page 641]
in
turn, accords equality of treatment to the commerce of foreign
countries. This policy is the opposite of discrimination and
retaliation. It is a policy of respectful and friendly approach
to all countries to cooperate in establishing equality of trade
opportunity and treatment throughout the world. This policy
reinforces and implements the unconditional most-favored-nation
principle, which is the most effective means of bringing about
rapidly a general reduction of trade barriers, of giving
elasticity to trade arrangements and of increasing international
trade throughout the world.
The reciprocal trade agreements program recently inaugurated by
the United States under the Trade Agreements Act of June 12,
1934,12
which provides that the duties proclaimed in consequence of
trade agreements entered into with foreign countries shall be
extended to all countries but also provides that those duties
may be confined to such countries as do not discriminate against
American commerce or pursue policies which tend to defeat the
purposes of the Act, is wholly in accord with the unconditional
most-favored-nation principle. The United States stands ready to
extend unconditionally the tariff concessions granted in its
trade agreements to all other countries which give American
commerce non-discriminatory treatment.
4. It is the carefully considered view of the Government of the
United States that the rule of no discrimination is the only
standard of international conduct sufficiently definite to be
applied fairly and with a minimum of international controversy
in connection with the extension of minimum tariff rates and the
administration of other forms of trade control measures. The
Government of the United States rejects the view that such
criteria as the relative balance of trade between countries, or
the absolute height of trade barriers, can be used as proper
guides as to whether a country is entitled to the enjoyment of
American minimum duties. The first of these rejected
criteria—the balance of merchandise trade—implies the desire to
bring about a bilateral balance of merchandise trade between
each pair of countries and leads to the impairment or
destruction of multilateral trade based upon an economical and
mutually advantageous international division of production. It
also fails to take into consideration other important factors in
the balance of payments between countries. Such factors are
particularly significant in American-Polish economic relations.
With respect to the second rejected criterion—the absolute
height of trade barriers—such wide differences of opinions must
necessarily exist and the question is, moreover, so complicated
by the characteristic structure of a nation’s industries, and by
historical and traditional considerations, that any definite
conclusions with regard to the application of such a criterion
must of necessity be arbitrary.
[Page 642]
Under the policy which the Government of
the United States is pursuing and in which it urges the
Government of Poland to cooperate, the United States does not
refuse generalization of minimum duties and equality of
treatment to a foreign country, irrespective of the degree to
which it is restricting trade, as long as American commerce is
offered equality of opportunity and accorded its fair and
equitable share of the permitted importations.
5. The President of the United States proclaimed on April 1 the
Trade Agreement with the Belgo-Luxemburg Economic Union.13 Concurrently with that action he
issued instructions to the Treasury Department regarding the
countries to which the tariff concessions made in that Agreement
will be extended.14 Poland is included in the third section of the
President’s instruction under the following qualification:
“3. In respect of the products of each country designated
under this item, the proclaimed duties shall be applied
so long as such duties remain in effect and this
direction is not modified in respect of such countries
[country].”
The Government of the United States is, consequently, continuing
to accord to Poland most-favored-nation treatment under the
provisions of the treaty of friendship, commerce, and consular
rights between the two countries. One purpose of the present
conversations is to ascertain the precise policy of the Polish
Government towards trade with the United States with a view to
determining whether Poland should be assured continued enjoyment
of the benefits of duties proclaimed under trade agreements. If
Poland continues to discriminate against trade with the United
States, consideration must under the law be given by the
American Government to the withdrawal of its minimum duties from
Poland, with due regard to obligations under the existing
treaty.
In his instruction to the Secretary of the Treasury, alluded to
above, the President also specified that minimum rates
proclaimed in the agreement with the Belgo-Luxemburg Economic
Union shall be applied to like articles originating in a number
of countries even though they are at present granting less
favorable treatment to American trade than to that of other
countries, until thirty days from the date on which he advises
the Treasury that the United States has ceased, or on a certain
day will cease, to be bound by provisions of existing treaties
or agreements. In the case of the countries in this group, it is
expected that notices of termination of existing treaties or
agreements will be given, in accordance with their terms, since
the treatment
[Page 643]
foreseen
in the applicable treaty or agreement is not being accorded to
American trade. The Government of the United States proposes to
follow this policy with respect to all countries discriminating
against trade with the United States with which
most-favored-nation treaties are in force.
6. While the American Government is not unmindful of the benefits
that the United States has enjoyed from its trade with Poland,
it is definitely of the opinion that Poland has likewise
benefited greatly from the financial and commercial transactions
that have taken place between the two countries since the
re-establishment of the Polish State. It feels, consequently,
that it must reiterate that the increasing difficulties
confronting American trade in Poland which have arisen from the
discriminatory measures applied since 1932 to imports of
numerous American products and from the definite intervention of
the Polish authorities into the field of American-Polish trade,
resulting in the restriction of imports front the United States
and the direction to other countries of the importation of
commodities formerly obtained from the United States, have
occasioned anxiety as to the course of future development of
American-Polish economic relations. The system employed by the
Polish Government to control imports from the United States has
operated to destroy the natural relative competitive position in
the Polish market of American products vis-à-vis similar
products from other countries and to withhold from American
commerce the treatment to which it is entitled under the
provisions of the treaty of friendship, commerce, and consular
rights between the United States and Poland. While the
Government of the United States appreciates the circumstances in
which the Polish Government has found it necessary to have
recourse to a system of controlling imports, it desires to
stress that the principle of fair treatment in international
trade and the most-favored-nation principle enjoin upon every
country making use of systems of limiting and controlling
imports to apply those systems so as to derange as little as
possible the natural relative competitive positions of the
various countries supplying the imports of the articles
affected. A policy of effecting through compensation trade, or
other administrative devices, a balance of the merchandise trade
between two countries is, in the opinion of the American
Government, in conflict with the most-favored-nation treatment
provided for in the treaty of friendship, commerce, and consular
rights between the United States and Poland. In this connection
it is desired to point out that Article VI of the treaty of
friendship, commerce, and consular rights between the two
countries provides, in part, as follows:
“Each of the High Contracting Parties binds itself
unconditionally to impose no higher or other duties or
charges, and no condition or
[Page 644]
prohibition on the importation of
any article, the growth, produce, or manufacture of the
territories of the other Party than are or shall be
imposed on the importation of any like article, the
growth, produce or manufacture of any other
country.…
. . . . . . . . . . . . . .
“Neither High Contracting Party shall establish or
maintain restrictions on imports from or exports to the
territories of the other Party which are not applied to
the import and export of any like article originating in
or destined for any other country. Any withdrawal of an
import or export restriction which is granted even
temporarily by one of the Parties in favor of the
articles of a third country shall be applied immediately
and unconditionally to like articles originating in or
destined for the other Contracting Party. In the event
of rations or quotas being established for the
importation or exportation of articles restricted or
prohibited, each of the High Contracting Parties agrees
to grant for the importation from or exportation to the
territories of the other Party an equitable share in the
allocation of the quantity of restricted goods which may
be authorized for importation or exportation.”
The Government of the United States cannot but regard the
continued effectuation of an import policy deliberately
calculated to divert to other countries the imports of
commodities formerly obtained from the United States and the
application of extra charges on imports of American origin as an
indication of an unfriendly attitude of the Polish Government
towards commercial and financial relations with the United
States.
7. In view of the considerations set forth above, the Government
of the United States must repeat the request made in its
previous note for information concerning the precise conditions
under which American products are admitted into Poland, since it
cannot accept the contention of the Polish Government, as made
in its note of March 16, that such information
“seems to be of a general character
having no connection with Polish-American economic
relations.”
The Polish Government, it is hoped, will
appreciate the desire of the Government of the United States to
have accurate and authoritative information with respect to the
attitude of the Polish Government towards, and the treatment now
being accorded to, American trade in Poland, in order that there
may be no possibility of its coming to a decision which, as a
result of inadequate or inaccurate information in the premises,
might not be fair to Poland. But apart from this special
consideration, the Government of the United States holds the
sincere conviction that this request is fully justified on the
grounds of the friendly relations which have always existed
between the two countries. The American Government,
consequently, would appreciate receiving from the Polish
Government a statement setting
[Page 645]
forth the restrictions now imposed or that
are to be imposed on imports from the United States. It is
particularly desirable that this statement contain full details
with respect to the following points:
- 1.
- The application to American imports of:
- (a)
- contingents, quotas, or licenses,
- (b)
- the system of compensation exports.
- 2.
- An explanation of the nature, purpose, amount, and
disposition of the special fees levied or charged on
American imports subjected to restrictions.
8. In this connection, it has been noted that, coincident with
the coming into force of the new Anglo-Polish trade
agreement,15 the Polish
Government canceled quotas on certain American commodities and
placed the commodities affected under the Polish compensation
system, thus subjecting another important group of American
products upon importation into Poland to additional high charges
which are not levied on similar goods imported from other
countries. The Government of the United States naturally feels
justified in calling attention to the constantly widening
discriminatory measures applied to American imports and in
seeking definite remedial action.
9. The Government of the United States desires to advance the
following views with respect to the two questions raised in the
final paragraph of the Polish note of March 16:
With respect to the first question relating to the
American-Polish treaty of friendship, commerce, and consular
rights, it is the view of the American Government that the
treaty envisages equality of treatment in each country for the
trade of the other which is the only basis upon which enduring
and mutually beneficial trade relations can be developed between
countries. The Government of the United States cannot in any
circumstances agree that the treaty is to its advantage because
merchandise exports from the United States to Poland have
exceeded Polish merchandise exports to the United States.
Furthermore it considers that attempts to balance the
merchandise trade between two countries by artificial means are
highly detrimental to the fundamental economic well-being of the
countries concerned and to the development of world trade. The
American Government is not in complete accord with various
observations and figures presented by the Polish Government in
regard to American-Polish trade, but it does not desire to enter
into detailed discussion in view of the larger issue. It is of
the opinion that the Polish Government overemphasizes the
influence of the balance of merchandise trade which is but a
single factor in the balance of payments and is frequently
counter-balanced by other factors of special significance in
American-Polish economic relations. The treaty was intended to
regulate and promote the whole range of the economic relations
between the United
[Page 646]
States and Poland. The incorporation therein of the
most-favored-nation principle with respect to merchandise trade
was to ensure the same equality of opportunity and treatment for
that trade in both countries as the United States willingly
extends to Poland in connection with all transactions concerned
with other financial and economic intercourse between the two
countries. Allusion has been made earlier in this note to the
views of the American Government with respect to the purpose and
value of the most-favored-nation principle in regulating
international merchandise trade. It is hoped that those
statements will serve to enlighten the Polish Government as to
the attitude of the American Government in the premises and to
enlist its cooperation in opposing the tendency displayed by
some governments to endeavor to equalize on a bilateral basis
the balance of merchandise trade between countries and thus to
decrease the normal volume of international trade.
With respect to the second question relating to the increases of
Polish exports to the United States, the American Government is
happy to state that it views with favor the increase of Polish
exports to the United States. It earnestly desires to continue
generalizing fully to Poland all tariff and other concessions
made in reciprocal trade agreements with a view to maintaining
for Poland equality of trade opportunity and trade treatment,
thereby affording increased markets for Polish goods in the
United States. One purpose of the present discussions with
respect to the attitude of the Polish Government towards
American trade is to enable the Government of the United States
to generalize to Poland concessions accorded to other countries
in the expectation that the duty reductions thus extended to
Polish goods will result in increased exports to the United
States.
10. The Government of the United States trusts that the full
statement of its foreign trade policy which it has now made will
indicate clearly the basis of the present conversations, namely,
its profound conviction that the normal flow of international
trade can only be restored through the adoption by the important
countries of a liberalized commercial policy resting upon the
doctrine of equality of trade treatment and opportunity. It
hopes that the present discussions between the Polish Government
and itself upon the question of American-Polish economic
relations will be productive of beneficial results in promoting
commerce between the two countries and thus will contribute
substantially to the revival of world trade and prosperity. The
Government of the United States is convinced that the prospects
of success will be materially improved by the adherence of
Poland to the policy set forth hereinbefore, and it is prepared
to discuss with Poland ways and means of increasing the
merchandise trade between the two countries on the basis of
equality of opportunity and treatment for the trade of each
country in the territory of the other.
