Papers relating to the foreign relations of the United States, 1928, Volume I

560.M3/18

The Secretary of State to the Minister in Switzerlamd (Wilson)

Washington, June 15, 1928.

No. 237

Sir: The President has instructed me to inform you of his desire that you represent the Government of the United States at the forthcoming Conference to be held at Geneva beginning July 3, 1928, to consider matters pertaining to the International Convention for the Abolition of Import and Export Prohibitions and Restrictions. You will be assisted by Charles E. Lyon, Commercial Attaché at Berne; Percy W. Bidwell, one of the European representatives of the Tariff Commission; and Mr. J. P. Moffat of the Legation. Mr. S. P. Tuck, American Consul at Geneva, will serve as Secretary of the delegation.

In connection with this Conference, reference is made to the Department’s instruction of October 6, 1927,²⁰ and to subsequent correspondence on this general subject.

The Conference is convened pursuant to the provisions of Article 17 of the Convention, which reads as follows:

[Here follows the text of article 17, printed on page 343.]

In this same connection, reference is made to Article 6, which reads as follows:

[Here follows the text of article 6, printed on page 339.]

The pertinent part of the Protocol to the Convention is sub-paragraph (ii), “Procedure”, of paragraph (d) of Section IV, which reads as follows: [Here follows text, printed on page 353.]

The exceptions claimed by the several governments and other observations in the premises are set forth in document C. I. A. P. 23 of February 10, 1928, and document C. I. A. P. 25 of May 7, 1928.

Examination of the subject matter of the forthcoming Conference indicates that the points of interest to the Government of the United States call for the following comment and instructions:

You will probably find it advisable at the beginning of the Conference to make for the record a formal statement of the general position of this Government. Such a statement might set forth inter alia the sincere regret felt by this Government at the tendency to claim exceptions contrary to the spirit and purpose of the Convention, and could reiterate and if necessary expand upon the considerations set forth in your communication of April 28, 1928, to the Secretary General.²²

It is obvious that discussions of the particular exceptions claimed by the various States may easily become unduly complicated and technical unless such exceptions are tested by the application of general criteria. The first criterion which might logically be applied is whether certain exceptions claimed are not already covered under the terms of the convention, and in particular under Articles 4 and 5 thereof. In case there should be agreement that certain exceptions claimed are already so covered, you may suggest that that fact might be recognized merely by its inclusion in the proces-verbal of the conference. Such recognition of the exceptions would of course always have force in the interpretation of the convention.

In addition to reducing the number of individual exceptions to be discussed by the Conference, and ultimately the number of specific restrictions recognized as admissible under the convention, this procedure would have the advantage of bringing into the open the particular objectives sought by the different countries in presenting their reservations, and obtaining either the withdrawal or the limitation of the application of exceptional restrictions to the purposes or circumstances for which they are recognized. This scrutinizing and winnowing process should tend to strengthen materially the agreement that finally results.

It would appear desirable, however, in recognizing such exceptions, to have it made entirely clear that such recognition is without prejudice to the future interpretation of the provisions of the instruments signed.

Specifically, examination of the exceptions claimed indicates that the following may be so covered:

Bulgaria

Importation of products used for the falsification of national products.

It appears that this exception might be covered under paragraph 7 of Article 4, or by internal regulations as to the marking of imported products to show origin and in special cases the nature and ingredients of the product.

Czechoslovakia

Importation of pink clover seed; sugar beet seed; seeds of conifers; shoots of forest trees.

Two courses of action other than specific reservations seem possible. If it is a question of the sanitary condition of these seeds or shoots, the exception is covered under paragraph 4 of Article 4; or if it is a question of quality standards, they are covered by paragraph 7 of Article 4. The second alternative is for the Czechoslovak Government to dispense with import restrictions on the above commodities by establishing internal regulations requiring the examination by Government experts of such products when offered for importation into Czechoslovakia, or for their identification by prescribed means; e. g. by the requirement that a certain proportion of seed be colored to indicate origin or quality. Such means of internal control are now applied on products of this character in the United States and other countries.

Importation of cattle and swine.

It is suggested that inquiry be made whether the object is the protection of public health or protection of domestic animals against disease, and if so the 4th paragraph of Article 4 would cover such a case.

Exportation of hop shoots.

If it is the maintenance of the reputed high quality of “Czechoslovak hops” which that Government desires to insure, that can be done by taking measures under the terms of the 7th paragraph of Article 4, and the corresponding provisions of the protocol, which are designed to cover quality standards. If the purpose sought is that presented by the Czechoslovak Government in its note to the Secretary General of February 14 (C. I. A. P. 23–Addendum), namely of preventing foreign competitors from misleading consumers as to the true origin of hops imported by them, it is difficult to see how a restriction on exportation from Czechoslovakia could prevent producers in another country from misrepresenting the products they ship into a third country. Protection in a common market against producers in a competing country would need to be secured rather by the methods employed to protect the use of other distinctly regional appellations, such as “champagne”, either by seeking protection under the Madrid Convention of 1891,²³ concerning “the repression of false indications of origin of merchandise” (to which Czechoslovakia, as a number of other countries, has adhered), or by bilateral agreements with the Governments of those common markets for protection or legal redress against such misrepresentations within their territory.

Importation of matches.

It could be recognized that the Czechoslovak Government correctly interprets this reservation as coming under paragraph 8 of Article 4 as a de facto State monopoly.

Estonia

Exportation of platinum, precious stones, etc.

Inquiry may be made whether the goods in question are national treasures such as would come under the terms of paragraph 5 of Article 4. If so, specific reservation is unnecessary.

Exportation of butter and eggs.

The Estonian regulations affecting these commodities indicate that the purpose is to maintain the standard of quality of such products going abroad. If so, they are covered under the protocol to paragraph 7 of Article 4.

Portugal

Importation of horses, mules and cattle.

Inquiry may be made whether the Portuguese Government has in mind sanitary considerations, and if so, the exception for these animals could be covered under the 4th paragraph of Article 4.

It may be noted at this point, with reference to certain of the aforementioned prohibitions or restrictions of a sanitary nature, that the Department fails to perceive how a general prohibition applicable to imports of whatever origin could be justified as a bona fide sanitary requirement. It is not believed that any country exists whose sanitary situation is such as to be endangered by imports of any commodity from every other part of the world. Nevertheless, the question should be raised and if sanitary grounds are alleged, the foregoing point may be made and effort may appropriately be made to persuade the countries noting such exceptions to withdraw or modify them.

As a second step in the application of the general criterion as to the necessity of reservations, the exceptions admitted at the time of signing the convention might similarly be examined with a view to determining whether they could be admitted as falling within the terms of Articles 4 and 5. Thus, in view of the dependence of the Japanese people upon rice as their staple article of food, the Japanese exception as to restriction on rice might be considered as coming within the terms of Article 5 which authorizes an exception in the case of “extraordinary and abnormal circumstances” in order to protect the “vital interests” of the country. It is, of course, understood that the Japanese Government does not wish permanently to maintain this restriction, but rather wishes to reserve the right to impose it from time to time. Recognition of any prohibitions or restrictions as coming under Article 5 should take due account of the fact that their duration “shall be restricted to that of the causes or circumstances from which they arise”.

The exception claimed by the United States as to the export of helium gas would doubtless be recognized as properly falling under the 3rd paragraph of Article 4 which relates to traffic in implements of war, and you are authorized to agree to its recognition as coming thereunder. Particularly since the exception of this commodity was agreed to at the time the convention was signed on November 8, 1927,²⁴ the Department assumes that no objection will be raised to granting that exception in favor of the United States. If, however, any questions should be raised as to this exception, you may state that the Government of the United States desires to maintain it, and that obviously it does not “prejudicially affect the trade of other countries” (see Article 6).

A further criterion by which the exceptions claimed under paragraph 2 of Article 6 may be tested is obviously found in the construction of the terms of that Article. It is therefore believed that the conference should examine carefully all such exceptions from that point of view. The Government of the United States considers that certain exceptions claimed under paragraph 2 are not properly admissible thereunder. In particular, reference is made to the claims for exception of raw materials, which appear to be essentially claims designed to effect economic protection by restrictions rather than by duties. Thus the Polish Government desires to restrict exportation of crude oil and the Czechoslovak Government of rounded timber.

The second paragraph of Article 6 of the convention only permits prohibitions or restrictions which “do not prejudicially affect the trade of other countries”. Restrictions on the exportation of such important raw materials as crude oil and rounded timber can not be justified in accord with that principle. It is considered that a large measure of liberty in the exportation of raw materials is in the general interest of all countries, and makes for the reduction of friction between countries. Such a freedom of exports is clearly contemplated by Articles 1 and 2 of the convention.

The same considerations apply to the reservations made at the time of the convention, under paragraph 2 of Article 6, by Italy on the exportation of iron ores, and by Rumania on the exportation of ores or iron, copper and manganese. The fact that the countries in question may not be predominant suppliers of the commodities concerned does not change the situation; once it has been recognized that a country under the convention may reserve the right to impose restrictions on the exportation of raw materials from its territory, it would be difficult to prevent the major producers of the same materials for the world’s markets from claiming the same privilege. In view of the position taken by Italian representatives in favor of freedom of access to raw materials at other international conferences, e. g., the Economic Conference of 1927,²⁵ it is possible that the Italian representatives may not insist on this exception.

The conditions under which Rumania’s reservation regarding crude oil was allowed to stand last November might be recalled. The subject came up as the conference was about to end; the delegates, eager to leave for home, are reported to have interposed no objection (with the exception of the representative of the United States), not because the reservation seemed warranted, but rather because a refusal of the request would re-open the whole controversy and prolong the sessions. The Polish request for a similar reservation was obviously encouraged by that decision. The necessity for acting upon the Polish reservation gives logical occasion for the re-consideration of the hasty and inconsistent decision last fall regarding Rumanian oil.

Referring now to the reservations presented under paragraph 1 of Article 6 of the convention, whereby various Governments desire to maintain import or export restrictions for a temporary period, it appears to the United States Government that a good many of these reservations represent essentially attempts to afford domestic industries economic protection by restrictions rather than by duties, and are therefore contrary to the spirit and purpose of the convention unless justifiable on the same grounds as led the delegates to accept the reservations regarding such products as scrap metals and synthetic dye stuffs at the time of the convention. While the American delegation should take its stand against all such economic restrictions on the fundamental principle involved, the following are of particular concern to its trade and those on which it is desired that every effort be made to prevent their acceptance by the convention:

Import Restrictions: On automobiles (presented by Czechoslovakia and Portugal); agricultural food products (presented in varying degrees by Italy, Japan, Norway and Portugal); and motion picture films. The question of films has been brought forward since last November by the action of France, although similar restrictions are found in Great Britain, Germany, Austria, Hungary and Italy. The fact that the restrictions on films are operated through rationing at time of the granting of licenses for exhibition, rather than at the customhouse, does not essentially change their nature nor exempt them from the application of the convention on any ground that they are internal measures. To refuse to grant licenses for the exhibition of foreign films or the films of a given foreign country is tantamount in practice to refusing their importation into the country. Your stand in opposition to the film quota restrictions should find support from the representatives of the German Government which, despite repeated requests from its domestic film industry, declared that it would not ask a reservation for films because of its inconsistency with the general objective of the convention.

The grounds for objecting to the acceptance of import restrictions on automobiles or staple food products are obvious and need no particular elaboration. The fact that particular countries desire to maintain such essentially economic restrictions, the purpose of which is fully served in other countries by import duties, as important bargaining considerations in forthcoming treaty negotiations, does not make them any less objectionable in the light of the ends sought by the convention.

Export Restrictions. The permanent restrictions on the exportation of crude oil desired by Poland and Rumania, and on metal ores by Italy and Rumania have already been dealt with. The problem of export restrictions on hides and skins appears to be on its way to solution through the special agreement on that subject recently concluded, but the attitude of this major conference against the acceptability of such restrictions should be unmistakable. In addition, the Portuguese desire to reserve restrictions on export of raw cork is of particular concern to American industries using that material, and the similar reservations desired by Czechoslovakia on rounded timber and by Finland on pulp wood are similarly objectionable to the United States. In the case of the reservations on lumber products, it is desirable that objection be maintained not primarily because the particular countries desiring these restrictions are important sources of supply, but because of the objectionable principle involved, which once recognized could be invoked also by other countries (as Canada in the case of pulp wood) and for other raw materials.

The Portuguese desire to reserve restrictions on other raw materials (wool, cocoons and pine resin) and on a range of staple food products (poultry, oil, vegetables, cereals, meat, etc.) as well as the Italian request for an exception on the exportation of “corn” (presumably an inexact translation for cereals) are of lesser direct importance to American trade, but should be equally objected to on the grounds of their obvious inconsistency with the basic principle upon which the convention is built. If accepted, these reservations, though apparently unimportant from the viewpoint of the volume of trade involved, would open the way to similar reservations on the part of other countries for these and other staple foods and raw materials for which they might desire a similar privilege of restricting their trade for economic purposes.

In this connection, attention is again called to the formal statement presented to the League on behalf of the United States on April 28 emphasizing the importance of considering specific exceptions by particular countries “not merely in relation to the foreign commerce of those countries in the articles in question but rather in the light of the possible effect of the general application of such exceptions by other countries as well”.

Recognizing that it may not be possible to bring about the withdrawal or non-acceptance of all the reservations mentioned above, which the Department considers deleterious in principle, it appears that a practical means of compromise in case of need would be the granting of the reservation but subject to a definite time limit upon the periods which these temporary exceptions may be maintained. If possible it would be preferable that the time of termination of a given temporary reservation should take the form of a specified date rather than a given period from the coming into force of the convention. Thus, instead of agreeing to certain restrictions being enforceable for a period for example of a year after the coming into force of the convention or the date of ratification by the particular country, it might be preferable to fix upon a definite date such as July 1, 1929 or January 1, 1930. At present the setting of such a date would appear to give a longer period for the maintenance of a restriction, but it has the important advantage of definiteness of termination upon which commercial interests can count. You may insist upon some such limitation as essential to our agreement to the exceptions desired by the various Governments.

The Department considers in principle that if it is not possible to have the above mentioned reservations ruled out altogether, but if a satisfactory agreement can be reached to abolish the objectionable exceptions within a given period in the near future, it would be preferable not to destroy the chances of agreement on the basis of the draft convention by inflexible insistence on their withdrawal, but rather to vote to carry it into effect, even with a number of temporary reservations, because of the moral effect to be derived.

Article 17, which is quoted above, provides that the conference shall determine:

• “(b) The conditions required for the coming into force of the Convention and, in particular, the number and, if necessary, the names of the Members of the League and of non-Member States, whether they are signatories or not, whose ratification or accession must first be secured;
• “(c) The last date on which the ratifications may be deposited and the date on which the Convention shall come into force if the conditions required under the preceding paragraph are fulfilled.”

Inasmuch as the Government of the United States is broadly interested in the effecting of a suitable agreement on this subject, which will have considerable moral force as condemning recourse to prohibitions and restrictions, the Department would consider it unfortunate if conditions were stipulated which would make unduly difficult the coming into effect of the convention. Inasmuch as the decision of the conference on this head, however, will depend to a considerable extent upon the attitude of the European Governments, the Department does not give you precise instructions on the point at this time but suggests that you discuss the situation informally with your colleagues at the earliest practicable opportunity and report the situation with your recommendations and a request for instructions.

It may be suggested that the United States should be one of the parties whose adherence to the convention would be requisite for its entering into force. Should this question be raised, you might informally point out that the United States does not apply prohibitions or restrictions of the character that would be prohibited by the convention and that accordingly it would seem unnecessary to stipulate that the adherence of the United States should be prerequisite to the convention coming into effect. Nevertheless, if your colleagues feel definitely that the United States should be mentioned, the Department sees no ground on which objection to such a course could be maintained.

With respect to paragraph (c), the Department would be glad to see the convention come into force at the earliest practicable date inasmuch as its object is to remove burdensome and arbitrary interferences with commerce. As has already been suggested, any compromise that may be found necessary might take the form of fixation of a date until which temporary restrictions might be continued under the first paragraph of Article 6. Such date should be the earliest practicable date.

During the course of the conference you will, of course, keep the Department closely informed of important developments. The Department will endeavor to instruct you promptly in relation to matters that may be presented.

Before signing any agreement, you will, of course, report the full text to the Department for consideration.

I am [etc.]

Frank B. Kellogg

20. Foreign Relations, 1927, vol. i, p. 254.
22. See telegram No. 47, Apr. 27, 6 p.m., to the Minister of Switzerland, p. 371.
23. Signed Apr. 14, 1891: British and Foreign State Papers, vol. xcvi, p. 837. Revised at Washington, June 2, 1911; ibid., vol. civ, p. 137.
24. See annex to art. 6, p. 345.
25. For correspondence concerning the Economic Conference, see Foreign Relations, 1927, vol. i, pp. 238 ff.