660C.116/167
The Ambassador in Poland (Cudahy) to the Secretary of State
[Received April 4.]
Sir: With reference to my telegram No. 21, March 19, 1935,6 I have the honor to enclose herewith a copy of Note Verbale No. P.II.SZ.57/20/35, dated March 16, 1935, from the Ministry of Foreign Affairs, in reply to the representations that I made to the Minister on March 8, 1935, in compliance with telegraphic instruction No. 10, February 27, 1935; a translation thereof, and a memorandum prepared by the American Consulate General in Warsaw under date of March 18, 1935,7 on the subject of the treatment accorded in Poland to imports from the United States.
[Here follows the substance of the Polish note verbale of March 16, 1935, printed on page 635.]
In its argument that the United States could not have enjoyed over a period of eleven years so favorable a balance in its trade with Poland had not the Polish Government tended to facilitate trade between the two countries, the Polish note gives no consideration to the circumstance that the greater part of American exports to Poland ever has been raw materials which Poland has purchased from the United [Page 633] States not because the Polish Government has desired to make a gracious gesture to American trade but for the reason that these commodities could be bought either solely or more advantageously in the United States.
. . . . . . . . . . . . . .
This Embassy has several times, and notably in my telegram No. 76, November 23, 1933, and in my despatch No. 86, November 18, 1933,8 brought to the attention of the Department the contention of the Polish Government that it is essential to Polish economy that the Government balance its foreign trade. To this end there have been introduced quotas and the requirement that if and when the importation of certain commodities is permitted, it is only upon the condition that Polish products of at least equal value be exported in compensation thereof. The Chief of the Legal and Consular Section of the Ministry of Foreign Affairs has gone as far as to say to a member of my staff that Poland’s entire commercial policy would have to be reconstituted and its commercial treaties rewritten if Poland were to abandon the restrictions which it now imposes for the purpose of reducing the adverse trade balances which it has with certain countries.
It is the misfortune of imports from the United States that they originate in a country with which Poland has a heavily adverse trade balance. It is for this reason, and this reason alone, as far as any evidence that has come to my attention would indicate, that imports from the United States are not accorded in Poland the treatment that is accorded to imports from a country with which Poland has a favorable trade balance; from Great Britain, to cite only one example. In other words, the less favorable treatment that is accorded in Poland to imports from the United States does not result from the circumstance that they are imported from a country against which Poland desires for some ulterior purpose to discriminate, but from the circumstance that they originate in a country against which the policy vital, in the opinion of the competent Polish authorities, for preserving Poland’s foreign trade balance requires that it discriminate. I propose now to discuss the form that this less favorable treatment takes, and its practical importance to American trade. For the reason that no data has been furnished by the Polish Government I shall base my brief discussion on the Consulate General’s memorandum of March 18, 1935, which constitutes enclosure No. 3 to this despatch.
In accordance with Polish commercial policy with respect to countries with which Poland has an adverse trade balance, imports from the United States fall into one of the following categories, and the category into which they fall determines the treatment that is accorded them by the Polish authorities: [Page 634]
1. Unrestricted goods.
These goods may enter Poland freely. They are subject to neither compensatory exports nor to quotas. Within this classification fall such imports from the United States as raw cotton, scrap iron, raw tobacco, rags for paper, cotton waste, and exposed motion picture film. As is set forth in enclosure No. 3 to this despatch, imports from the United States in the calendar year 1934 of commodities on the list of unrestricted goods were valued at 109,166,000 zlotys and comprised 90 per cent.* by value of the imports into Poland of American goods in that year.
2. Goods subject to quotas.
On paper, goods subject to quotas are on the restricted list that is maintained by the Polish Government. Merchandise included on this list may be imported into Poland only upon compliance by the importer with certain requirements laid down by the Ministry of Industry and Commerce. In practice, however, no restriction is placed upon the importation of merchandise for which a quota has been allotted,† provided the quantity imported does not exceed the quantity for which a specific quota was granted. Importation in a quantity in excess of the quota that was allotted is, however, permitted upon the condition that compensatory exports be made for the excess quantity. In enclosure No. 3 to this despatch the Consulate General has estimated that in 1934 the value of American imports into Poland under quotas (that is to say, imports that were not penalized by the Polish Government provided the volume of the imports of each commodity was kept within the quota that had been allotted to it) was 3,962,000 zlotys, which represents 3.25 per cent, of the value of total imports into Poland of American goods in that year. It thus will be seen that in practice no restrictions were imposed upon something in excess of 93 per cent.‡ by value of American imports into Poland in 1934, although in theory 3.25 per cent, by value of such imports were liable to restrictive measures.
3. Goods subject to compensatory exports.
Commodities subject to compensatory exports are commodities which appear on the list of restricted commodities and which may be admitted into Poland only under the condition that in compensation for their admittance Polish products of at least equivalent value shall be exported. These imported commodities are, of course, definitely restricted and this restriction affects chiefly the following commodities from the United States: dried prunes, leather, fresh apples, raisins, office machines, raw furs, rosin, oranges, photographic films and rasorite. But the value of imports from the United States that are subject to the compensation requirement totaled in 1934 only 7,957,444 zlotys, or 6.5 per cent, by value of total imports from the United States into Poland in that year. It thus is apparent that the incidence on total American trade in 1934 of the compensation [Page 635] requirement was not in practice particularly burdensome or damaging. The nature of the fees that are imposed upon imports subject to compensation and the disposition of these fees is set forth on the final page of enclosure No. 3.
In view of the circumstance that on March 14, 1935, quotas for American goods were abolished by the Polish authorities, what I have said with regard to the quota system has no present application in a discussion of American trade with Poland. The value and volume of American imports that will be affected by the compensation requirement is bound to undergo change in the future, since the commodities that formerly were under quotas now are admitted only against compensation. Both the Embassy and the Consulate General are following the development that was communicated to the Department by the latter’s telegram of March 19, 1935,9 and as soon as the situation has been clarified a further report will be made.
As I stated in my telegram No. 21, March 19, 1935,9 I possess no evidence that there exists in Poland discrimination against imports from the United States on any ground other than that of the national policy of protecting Poland’s trade balance. There is no reason to believe that the situation that confronts American imports in this country would exist were Poland’s trade balance with the United States favorable to Poland. I desire to say again that, having in mind the commercial policy to which the Polish Government is firmly committed, I believe that American imports receive in Poland treatment as favorable as we can expect.
Respectfully yours,
- Not printed.↩
- Memorandum not printed.↩
- Neither printed.↩
- Actually 90.25 per cent. [Footnote in the original.]↩
- Imports in an amount within the quota that has been allotted are not on a compensation basis. [Footnote in the original.]↩
- i. e., the sum of unrestricted imports pins imports made under quotas. [Footnote in the original.]↩
- Not printed.↩
- Not printed.↩
- Not printed.↩
- Obviously referring to the absence of restrictions on foreign exchange transactions. [Footnote in the original.]↩