Papers Relating to the Foreign Relations of the United States, 1926, Volume II

711.342/a

The Secretary of State to the Minister in Paraguay (Kreeck)

Washington, August 26, 1926.

No. 332

Sir: This Government has, as you are aware, entered upon the policy of negotiating with other countries general treaties of friendship, commerce and consular rights, of which the central principle in respect of commerce is an unconditional most-favored-nation clause governing customs and related matters.¹ This policy was inaugurated pursuant to the principles underlying Section 317 of the Tariff Act of 1922;² it seeks assurances that equality of treatment for American commerce will be maintained in all countries. Besides the provisions relating to commerce these treaties include provisions relating to rights of nationals of each country in the other country, protection of property, and rights and immunities of consuls. This Government now desires to enter into such a treaty with Paraguay.

The first treaty to become effective expressing the present policy of this Government was the Treaty of Friendship, Commerce and Consular Rights with Germany, signed December 8, 1923,³ ratifications of which were exchanged October 14, 1925. Similar treaties have been signed by the United States with Hungary, Esthonia⁴ and Salvador,⁵ of which the one with Esthonia has been brought into force by exchange of ratifications.

Treaties containing the unconditional most-favored-nation clause were signed with Turkey on August 6, 1923,⁶ and with Panama on July 28, 1926.⁷ Several others are in process of negotiation. Modi vivendi based upon the same principle, entered into with the following countries, are in force—Brazil, Czechoslovakia, Dominican Republic, Finland,⁸ Greece, Guatemala,⁹ Latvia,¹⁰ Lithuania, Nicaragua, Poland (including Danzig),¹¹ Rumania and Turkey.¹² A similar agreement entered into with Haiti on July 8, 1926, becomes by its terms operative October 1, 1926.¹³

Two copies of the treaty of December 8, 1923, with Germany are enclosed. You are requested, unless you perceive objection, to inquire whether it would be agreeable to the Government of Paraguay to proceed to the negotiation with the United States of a similar treaty. A special draft will, of course, be prepared for presentation to Paraguay if this proposal is acceptable to the Paraguayan Government. It is not unlikely that certain departures from the text of the German treaty should be made either in the special text to be submitted to the Government of Paraguay or, on behalf of either party, during the course of negotiations. It is probable that the provisions of Article II of the Treaty of Friendship, Commerce and Navigation concluded by the United States and Paraguay on February 4, 1859,¹⁴ relating to navigation of the rivers Paraguay and Parana, should be incorporated into the proposed new treaty. Articles XIV and XV of the treaty with Germany should be omitted from a treaty with Paraguay in view of the Convention Facilitating the Work of Traveling Salesmen, signed October 20, 1919,¹⁵ and now in force between the United States and Paraguay.

It may be useful for you to bear in mind that in adopting the unconditional in place of the conditional most-favored-nation clause the United States has brought its commercial policy into accord with that prevailing among important commercial countries. It would be gratifying if, among its early treaties embodying this principle, the United States could celebrate a general commercial treaty with Paraguay. The treaty of 1859 is now out of date in important respects and this Government hopes that a comprehensive modern agreement may now be entered into. You will of course keep particularly in mind in this connection that a most-favored-nation clause with a condition, such as that contained in Article III of the treaty of 1859, would not now be acceptable to the United States.

Though the Department, in proposing a treaty with Paraguay is influenced chiefly by its policy of concluding with other countries generally treaties containing the unconditional most-favored-nation clause, you are nevertheless desired to use especial diligence in seeking a favorable response from the Paraguayan Government for the purpose of forestalling any efforts that other countries may be planning to make in order to interpose in South America arrangements based upon special privilege—a policy wholly antagonistic to the policy of equality of treatment which the United States is undertaking to promote. You may recall in this connection that in 1923 this Government renounced the preferential customs treatment which certain American products had been receiving in Brazil and requested instead a pledge of equal footing with other countries in the Brazilian market.

For your strictly confidential information and guidance the Department has been informed of a movement on the part of Spain to seek from the countries of Latin America special commercial concessions in return for certain advantages to be accorded to their commerce in Spain. In this connection see the Department’s circular instruction dated April 19, 1926.¹⁶

The Department either has transmitted or expects at an early date to transmit instructions, similar to the present instruction, to the American missions in the other South American capitals except that of Panama, with which country as stated a treaty has recently been signed, and that of Ecuador, the political regime now functioning in which is not recognized by the United States.

I am [etc.]

For the Secretary of State:

Joseph C. Grew

1. See Foreign Relations, 1923, vol. i, pp. 121 ff.
2. 42 Stat. 858, 944.
3. Foreign Relations, 1923, vol. ii, p. 29.
4. Ibid., 1925, vol. ii, pp. 341 and 70, respectively.
5. Post, p. 931.
6. Foreign Relations, 1923, vol. ii, p. 1153.
7. Ante, p. 833. The treaty of July 28, 1926, with Panama does not contain the unconditional most-favored-nation clause.
8. See Foreign Relations, 1923, vol. i, pp. 453 ff.; ibid., 1924, vol. i, pp. 615 ff. and 666 ff.; and ibid., 1925, vol. ii. pp. 86 ff.
9. See ibid.,1924, vol. ii, pp. 273 ff. and pp. 290 ff.
10. See pp. 500 ff.
11. See Foreign Relations, 1925, vol. ii, pp. 500 ff.; ibid., 1924, vol. ii, pp. 510 ff.; and ibid., 1925, vol. ii, pp. 692 ff., respectively.
12. See pp. 900 and pp. 1000 ff.
13. See pp. 405 ff.
14. Malloy, Treaties, 1776–1909, vol. ii, p. 1364.
15. See Foreign Relations, 1919, vol. i, p. 45, footnote 47.
16. Not printed.