The Secretary of State to the Minister in Uruguay (Grant-Smith)
Sir: By your despatch No. 315 of October 19, 1926, you reported against the advisability of initiating negotiations for the conclusion of a Treaty of Friendship, Commerce and Consular Rights between the United States and Uruguay at that time. In the despatch you asked for suggestions as to arguments which might aid in demonstrating the benefits which would accrue to Uruguay through the adoption of such a treaty as that which it is proposed to negotiate.
The advantages which would accrue to Uruguay are, in general, those which flow from the policy of equality of treatment of foreign countries adopted by the United States. The enclosed copy of a memorandum prepared for the use of the American members of the International Economic Conference held at Geneva last month points out the advantages of the principle of equal treatment.5 It is believed that the memorandum will be of assistance to you in presenting the question to Uruguayan officials. As you are aware, the outstanding benefit of the unconditional most favored nation stipulation is the assurance that the products of no country will have an advantage in a particular market, in this case the United States, over the products of the country which would enjoy the benefit of the stipulation, in this case Uruguay. Should Uruguay receive the promise of the United States that the latter will accord its products unconditional most favored nation treatment, no other country could obtain favorable rates in the American customs tariff that would not forthwith be extended to similar products from Uruguay.
You stated that doubtless Uruguay would insist on the inclusion of reservations with regard to trade with Brazil, Argentina, and Paraguay similar to that relating to Cuba in the Treaty of the United States with Germany.
In the Treaty of Friendship, Commerce and Consular Rights, concluded by the United States with Estonia in 1925, exceptions from the most favored nation treatment were made in respect of commercial benefits accorded by Estonia to Finland, Latvia, Lithuania and Russia (Treaty Series No. 736, Article VII), and in the [Page 818]Treaty signed by the United States with Salvador in 1926, exceptions were made in respect of treatment accorded by Salvador to other Central American countries. (Congressional Record, May 28, 1926, page 10241, Article VII). This Government has therefore recognized exceptions of regional groups.
While the Department is not in a position to indicate at this time whether this Government would agree in a treaty with Uruguay to exceptions in respect of the trade of the three countries mentioned in your despatch with Uruguay, there is no objection to your intimating to Uruguayan officials that suggestions in regard to such exceptions as Uruguay would consider necessary to propose would be given sympathetic consideration by this Government.
In connection with Dr. Brum’s characterization of treaties containing the unconditional most favored nation provision as “antiquated,” you are, of course, aware that in recent years this policy has been adopted and put into practice by almost all commercial nations, including nations which formerly adhered to a policy of special reciprocity treaties and particular advantages. The International Economic Conference, which has recently adjourned at Geneva, and at which practically all countries were represented, adopted resolutions recommending the general use of the unconditional most favored nation clause.
You stated that Dr. Brum referred to diplomatic intervention by foreign Powers on the basis of treaty rights in questions of a contractual nature between the Uruguayan Government and foreigners. The Treaty of 1923 between the United States and Germany does not contain any provision relating to contracts of either Government with nationals of the other country. The only reference in that Treaty to diplomatic interposition is in Article XXI, which recognizes the right of consular officers to address the authorities within their consular districts for the purpose of protecting their countrymen in the enjoyment of their rights accruing by treaty or otherwise, and provides that upon failure of the proper authorities to grant redress or accord protection in such instances, interposition through the diplomatic channel may be justified. These are also the only provisions in regard to diplomatic interposition which this Government would propose for inclusion in a Treaty with Uruguay. These provisions are but a recognition of powers inherent in the consular and diplomatic offices independently of treaty. When rights of the nationals of a country, arising under contracts between such nationals and the Government of another country, have been infringed by the latter, they may, of course, properly be espoused by the Government of such nationals, even in the absence of a Treaty.
The draft which this Government would submit would, of course, contain the provision in the fourth paragraph of Article I of the [Page 819]Treaty with Germany that property shall not be taken without due process of law and without payment of just compensation. This Government has long taken the position that appropriation of property contrary to these two principles furnishes grounds for diplomatic intervention under general principles of international law whether or not a treaty containing such stipulations is in force between the United States and the country making the appropriation. It is not believed that the Government of Uruguay would adopt a different attitude in instances in which a foreign Government might appropriate property belonging to Uruguayan nationals.
In view of the foregoing statements it would appear that in a large measure the opposition to the negotiation of a treaty on the part of Uruguay is unjustified. You may call to the attention of the proper Uruguayan officials so much of the substance of this instruction and the enclosure as in your discretion you deem wise and ascertain informally the attitude of that Government toward undertaking negotiations at this time. The Department would be pleased to learn whether in your opinion the time is now propitious for initiating the negotiations.
I am [etc.]