Papers Relating to the Foreign Relations of the United States, 1925, Volume I

500.A 4 e/412: Telegram

The Secretary of State to the Minister in China (MacMurray)

[Paraphrase]

Washington, October 23, 1925—7 p.m.

303. Your telegram 449 of October 17, 7 p.m., fifth paragraph.

1. It seems to me most important that as far as possible the principles governing future tariff relations between China and other countries be worked out before detailed rates that might be applied under tariff autonomy are considered. So many points of controversy are involved in the question of detailed rate schedules that the possibility of agreement on anything would be endangered should such discussions be entered upon, even informally, in connection with the conference. You may take such action as you think advisable to impress this view upon the interested parties.

2. Unconditional most-favored-nation treatment is a vital underlying principle, as indicated in our telegram 282, October 5, 1 p.m., paragraph 4 (b). Refer in this connection to the seventh article of the treaty with Germany which became effective this month⁷¹ (see Congressional Record for February 10, 1925, page 3482⁷²). Express assurance should be given that there will be no discrimination and that when any benefit is granted to any one country the other countries shall receive it unconditionally without request.

3. The possibility of disadvantageous treatment of American trade will remain, as you suggest, even with provisions accepted for most-favored-nation treatment. This might result either from restrictions upon imports and exports, rate schedules, or classification of goods. The following comments are offered regarding these points:

(a) Obviously it will be very difficult to devise any tariff system that will affect equally the Chinese trade of the several foreign countries. The Department feels that if China in good faith applies reasonable principles in tariff-making, no country can with reason object. It is reasonable, for example, that necessities should not bear as high a tax as luxuries. Our Government would not object in principle if higher rates were placed on American luxuries, provided like products from other countries were taxed proportionally. As suggested in paragraph 1 of this telegram, it is important, of course, pending agreement in principle to avoid bickering over such matters. For the protection of American interests it is also important that there shall be no deals between the Chinese and powers not in the conference that under any new tariff would place American trade at an unfair disadvantage.

It is difficult for the Department to instruct you further on this point until it receives further advices regarding developments. Follow this question closely and keep us fully informed.

(b) Probably the question of restrictions on imports or exports will not come up. The following is, however, mentioned for your guidance: The position which the Department has taken is that such restrictions, for example licensing or prohibitions, if maintained, shall provide that with respect to commodities, valuations, and quantities the United States shall receive as favorable treatment as is given to any other country. In this connection see recent modi vivendi, such as the exchange of notes with Greece,⁷³ printed as Treaty Series No. 706.

(c) The Department has hesitated to include provisions regarding discrimination through classification of commodities in our treaties, as with the American practice of tariff-making it is doubtful whether it is practical to give assurance that our legislation would not through inadvertence contravene such provisions. It would, however, lessen the danger of discrimination by classification if a provision were included to the effect that the principles of most-favored-nation treatment shall be liberally interpreted and that neither customs rates nor classifications shall be used by either of the contracting parties as a means of discrimination against the commerce of the other.

4. The Department believes that agreement with respect to most-favored-nation treatment should be reciprocal, that China should be given such treatment as well as granting it to others.

5. Telegraph to the Department for instructions if any question as to national treatment of shipping is presented.

As the situation develops you will be given more specific instructions.

Kellogg

71. Treaty of Dec. 8, 1923, Foreign Relations, 1923, vol. ii, p. 29.
72. Vol. 66, pt. 4, p. 3385 in bound edition.
73. See Foreign Relations, 1924, vol. ii, pp. 273 ff.