711.632/27
The Minister in Austria (Washburn) to the Secretary of State
[Received July 25.]
Sir: I have the honor to report the practical termination of the negotiations of a treaty of Friendship, Commerce and Consular Rights with Austria. I have heretofore taken the precaution of pointing out to the Government that my agreement with Dr. Schüller were necessarily tentative, but that I felt confident that he would in the main be able to override his colleagues in plenary session if the necessity therefor should arise. I am happy to be able to now say that Dr. Schüller has stood loyally by his understanding with me. He notified me in advance confidentially that there would be various objections raised in the plenary sessions, but that he would do his best “to kill them” so far as he consistently could.
I now review as concisely as possible the chief articles which were the subject of the most controversy. Only Articles VII, XI and XII will require further consideration by the Department:
Article I. Right to enter, engage in business, lease land etc. The Austrian negotiators came back to paragraphs (A), (B) and (C) set forth on page 3 of my despatch No. 374 of December 18, 1923, and referred to on page 1 of the Department’s Instruction No. 556 of February 24, 1927. They were for a time reluctant to abandon these provisions, but finally did so upon a rehearsal of the arguments I had hitherto employed with Dr. Schüller as recapitulated briefly on page 2 of the Instruction last under reference.
The Austrian proposal providing for the leasing and owning of agricultural lands caused more difficulty. In the initial sessions Schüller and his colleagues were inclined to think that this difficulty might be cured by an exchange of notes, as authorized on page 6 of Instruction 556, based on the tabulation of State laws regarding alien ownership of real property transmitted with this Instruction. There was a disposition to agree that substantial reciprocity existed, but on further reflection the legal experts of the Foreign Office reached the conclusion that under such an arrangement, under Austrian judicial procedure the courts would insist upon examining each [Page 975] case arising here on its merits, a procedure which would prove clumsy, and perhaps embarrassing. In the end, therefore, it was decided to adopt the proposal for the substitution of the three paragraphs set forth on pages 6 and 7 of Instruction 556. In the revised draft which accompanies this despatch92 these three paragraphs appear in lieu of the former first paragraph of Article I.
The main difficulty was, however, regarding the inclusion of the final paragraph providing that nothing in the treaty shall be considered to affect existing immigration statutes or the right of either party to enact such statutes. There was a very strong preference expressed by Schüller’s colleagues for the procedure followed in the cases of the treaties with Germany and Hungary, namely for the omission of the paragraph, the Senate reservation and the exchange of notes. I pointed out that the German and Hungarian treaties were negotiated before the Senate acted, but it having acted, the Department would feel that it was inviting adverse criticism if it should submit a future treaty without such a corresponding provision. The fact that such a provision was incorporated in the subsequent treaty with Esthonia made no impression on the Austrian negotiators. They cared nothing for Esthonia but attached much importance to the German and Hungarian precedents; they finally receded however, but I was warned that the inclusion of this final paragraph would lead to a parliamentary attack when the treaty came up for ratification—perhaps from representatives of all parties, inasmuch as the very small Austrian quota affects this country adversely. The separation of families consequent upon the operation of the immigration law is the subject of much complaint to which cabinet ministers and deputies have constantly to pay heed. It was the opinion of the negotiators that a Senatorial reservation and an exchange of notes would not attract so much attention.
As to this Article, therefore, the American proposals are all accepted.
Article VI. Compulsory military service. This provision stands as originally drawn, though Schüller’s colleagues came back to the original suggestion of dropping the provision and taking care of the subject matter by an exchange of notes.
Article VII. Importations, exportations, most favored nation clause, etc. The consideration of this article, which has been greatly amplified, as the Department is aware, by Instruction 566 of April 2 last, required numerous conferences and sessions. I may say in this connection that the greatest obstacles were interposed by the Department of Commerce, and the Foreign Office felt that the desires of a coordinate branch of the Government, in some cases strongly expressed, could not be lightly waved aside. The argument which [Page 976] I had so often invoked with respect to other articles, namely the desirability of uniformity so as to have the Austrian provisions correspond with the German and Hungarian, was in this instance turned against me. Nevertheless it was conceded that the Austrian Government had been a party to the International Agreement concluded at Geneva on November 3, 1923, which dealt in article 3, as the Department is of course aware, with import and export prohibitions and restrictions, and there was no real objection to concluding a similar agreement with the United States. I herewith submit a revised draft of Article VII (sometimes expressed in the alternative) to conform to the Austrian views:
“Between the territories of the High Contracting Parties there shall be freedom of commerce and navigation. The nationals of each of the High Contracting Parties equally with those of the most favored nation, shall have liberty freely to come with their vessels and cargoes to all places, ports and waters of every kind within the territorial limits of the other which are or may be open to foreign commerce and navigation. Nothing in this treaty shall be construed to restrict the right of either High Contracting Party to impose, on such terms as it may see fit, prohibitions or restrictions of a sanitary character designed to protect human, animal or plant life, or regulations for the enforcement of police or revenue laws.
“Each of the High Contracting Parties binds itself unconditionally to impose no higher or other duties or charges or bases of such duties or charges, and no conditions or prohibition on the importation of any article, the growth, produce or manufacture of the territories of the other Party, from whatever place arriving, than are or shall be imposed on the importation of any like article, the growth, produce or manufacture of any other foreign country; nor shall any such duties, charges, conditions or prohibitions on importations be made effective retroactively. (Or the last clause may read: ‘nor shall any such duties, charges, conditions, or prohibitions on importations be made effective retroactively on imports already cleared through the customs, or on goods declared for entry into consumption in the country, but it is understood that prohibitions on importations existing at the time the imports are cleared through the customs may nevertheless be applied’)
“Each of the High Contracting Parties also binds itself unconditionally to impose no higher or other charges or other restrictions or prohibitions on goods exported to the territories of the other High Contracting Party than are imposed on goods exported to any other foreign country.
“In the event of licenses being issued by either of the High Contracting Parties for the importation into or exportation from its territories of articles the importation or exportation of which is restricted or prohibited, the conditions under which such licenses may be obtained shall be publicly announced and clearly stated in such a manner as to enable traders interested to become acquainted with them; the method of licensing shall be as simple and unvarying as possible and applications for licenses shall be dealt with as speedily as possible. Moreover, the conditions under which such licenses are [Page 977] issued by either of the High Contracting Parties for goods imported from or exported to the territories of the other Party shall be as favorable with respect to commodities, formalities, and otherwise as the conditions under which licenses are issued in respect of any other foreign country. In the event of rations or quotas being established for the importation or exportation of articles restricted or prohibited, each of the High Contracting Parties agrees to grant for the importation from or exportation or the territories of the other Party an equitable share, in view of the normal volume of trade in the particular class of goods between the two countries, in the allocation of the quantity of restricted goods which may be authorized for importation or exportation. In the application of the provisions of this paragraph no distinction shall be made between direct and indirect shipments. It is agreed, moreover, that in the event either High Contracting Party shall be engaged in war, it may enforce such import or export restrictions as may be required by the national interest.
“(In lieu of the sentence above stricken out, beginning: ‘In the event of rations or quotas, etc.’ the following sentence will be acceptable to the Austrian Government: ‘In the event of rations or quotas being established for the importation or exportation of articles restricted or prohibited, the formalities required by the importing or exporting country shall not be such as to prevent an equitable allocation of the quantities of goods of which the importation or exportation is authorized.’)
“Any advantages of whatsoever kind which either High Contracting Party may extend, by treaty, law, decree, regulations, practice or otherwise, to any article, the growth, produce or manufacture of any other foreign country shall simultaneously and unconditionally, without request and without compensation be extended to the like article, the growth, produce or manufacture of the other High Contracting Party.
“All articles which are or may be legally imported from foreign countries into ports of the United States or are or may be legally exported therefrom in vessels of the United States may likewise be imported into those ports or exported therefrom in Austrian vessels, without being liable to any other or higher duties or charges whatsoever than if such articles were imported or exported in vessels of the United States; and, reciprocally, all articles which are or may be legally imported from foreign countries into the ports of Austria or are or may be legally exported therefrom in Austrian vessels may likewise be imported into these ports or exported therefrom in vessels of the United States without being liable to any other or higher duties or charges whatsoever than if such articles were imported or exported in Austrian vessels.
“With respect to the amount and collection of duties on imports and exports of every kind, each of the two High Contracting Parties binds itself to give to the nationals, vessels and goods of the other the advantage of every favor, privilege or immunity which it shall have accorded to the nationals, vessels and goods of a third State, whether such favored State shall have been accorded such treatment gratuitously or in return for reciprocal compensatory treatment. Every such favor, privilege or immunity which shall hereafter be granted the nationals, vessels or goods of a third State shall simultaneously [Page 978] and unconditionally, without request and without compensation, be extended to the other High Contracting Party, for the benefit of itself, its nationals and vessels.
“The stipulations of this Article do not extend to the treatment which either High Contracting Party shall accord to adjoining states to facilitate border traffic or to the treatment which is accorded by the United States to the commerce of Cuba under the provisions of the Commercial Convention concluded by the United States and Cuba on December 11, 1902, or any other commercial convention which hereafter may be concluded by the United States with Cuba, or to the commerce of the United States with any of its dependencies and the Panama Canal Zone under existing or future laws.”
or:
“The stipulations of this Article shall not extend to the treatment which either Contracting Party shall accord to purely border traffic within a zone not exceeding ten miles (15 kilometres) wide on either side of its customs frontier, or to the treatment which is accorded by the United States to the commerce of Cuba under the provisions of the Commercial Convention concluded by the United States and Cuba on December 11, 1902, or any other commercial convention which hereafter may be concluded by the United States with Cuba, or to the commerce of the United States with any of its dependencies and the Panama Canal Zone under existing or future laws.”
Comparing this revised draft with the draft proposed by the Department on pages 5, 6, and 7 of Instruction No. 566 of April 2, it will be noted that the clause in the third line of paragraph 2, to wit, “or bases of such duties or charges” is objected to on the ground that it does not appear in the text of the German or Hungarian treaties, and that its meaning is obscure. The words “nor shall any such duties, charges, conditions or prohibitions on importations be made effective retroactively on imports already cleared through the customs or on goods declared for entry into consumption in the country” are of course also new, and not found in the German or Hungarian treaties. There was no objection, however, to adding the words “nor shall any such duties, charges, conditions or prohibitions on importations be made effective retroactively”. There was a willingness to accept all of the new language proposed, provided there be added the words: “but it is understood that prohibitions on importations existing at the time the imports are cleared through the customs may nevertheless be applied”. The Austrian difficulty is this. The negotiators are quite willing to agree that duties, charges, conditions and prohibitions shall not be retroactive, but they say certain import prohibitions cannot be applied until after importation. For example, obscene reading matter would, under the Austrian customs system, encounter little or no difficulty on entry, although an import prohibition exists against it, but it would subsequently very likely be confiscated by the police. [Page 979] A film might be imported without difficulty—customs officials could not judge of its character—but it could not be exposed until it had received the approval of the censors. Therefore some language is desired to save the right of making such import prohibitions in force at the time of entry effective after the goods have been cleared through the customs. The language here proposed is my own, incorporating the idea expressed to me in German. I trust that the Department, in view of the Austrian difficulty, will see no real objection to it. It is possible, however, that the Department may prefer to stop with the word “retroactively”. Under our practice “estimated duties” are always imposed by collectors on merchandise cleared through the customs, and it sometimes happens that these “estimated duties” do not always agree with the amount of duties ascertained to be due several months later on final liquidation. I frequently encountered such cases in my former practice. It might be wise on this account, in order to avoid diplomatic complaints against the United States, to stop with the word “retroactively”, though if the entire wording as proposed by the Department be preserved, the addition of the words “but it is understood that prohibitions on importations existing at the time the imports are cleared through the customs may nevertheless be applied” will not, I think, weaken the principle for which the Department is contending.
As to paragraph 4 of this article as proposed by the United States, the Austrian Government objects to the words “with respect to commodities, formalities and otherwise”. The word “commodities” does not appear anywhere in the International Agreement of November 3, 1923, and the words “and otherwise” are thought to be too vague. The sentence beginning: “In the event of rations and quotas being established, etc.” is objected to as suggested by the United States. There is no objection in lieu of this sentence to adopting this phraseology, to wit: “In the event of rations or quotas being established for the importation or exportation of articles restricted or prohibited, the formalities required by the importing or exporting country shall not be such as to prevent an equitable allocation of the quantities of goods of which the importation or exportation is authorized”. This is in conformity with the language found in article 3 (e) of the International Agreement of November 3, 1923. This sub-paragraph 3 (e) was a French proposal. It will be observed that it simply stipulates that the formalities shall not be such as to prevent an equitable allocation, etc. This language is somewhat limited and the Department may regard it as unsatisfactory. My attention is drawn to the fact that at the recent World Economic Conference at Geneva in its final report there was a recommendation that there should be a new definition of the most favored nation principle, and Dr. Schüller tells me that the American delegates were prominent in [Page 980] advocating this. The Austrian delegates make the point that France does not recognize that the favored nation principle applies to rations or quotas or contingents, but that if the American proposal in this regard were accepted by Austria, it would probably expose Austria to a claim by France for favored nation treatment in this respect which would be unilateral, as France would not concede it in return. If this particular provision, which now finds its counterpart in article 3 (e) of the International Agreement of November 3, 1923, should be modified by a new international agreement to which the United States would not be a party, the Austrian Government stands ready to stipulate by an exchange of notes that favored nation treatment should be accorded to us. To re-state this matter: The language proposed by the United States is unacceptable, because it would enlarge Austria’s obligations under the application of the favored nation principle, but if a more liberal provision be adopted by international agreement, Austria will bind itself to give us the benefit of it. Under such conditions, it would seem advisable to eliminate altogether the sentence beginning: “In the event of rations or quotas being established”, and I trust that this recommendation will meet with the Department’s approval.
There was some objection to the word “war” in the last sentence of this paragraph 4. It was desired to substitute, “in times of national emergency”, but this objection was not pressed.
It will be noted that paragraph 6 of article VII incorporates the so-called “shipping clause” authorized by the Department on page 3 of Instruction 527 of December 1, 1926. This, of course, necessitated a revision of article XXV in accordance with the views set forth on page 8 of Instruction 566 of April 2.
Finally, in the concluding paragraph of article VII, the Minister of Commerce desired to incorporate language conferring the privilege accorded in the final paragraph of article VII of the treaty between the United States and Germany. The Austrian Government would prefer the language: “The stipulations of this article do not extend to the treatment which either High Contracting Party shall accord to adjoining states to facilitate border traffic” but would be content with this language, more closely corresponding to the text in the German treaty, to wit: “The stipulations of this article shall not extend to the treatment which either Contracting Party shall accord to purely border traffic within a zone not exceeding ten miles (15 kilometres) on either side of its customs frontier”. If the Department sees no particular objection, I should be glad if the preference of the Austrian Government could be approved.
Article XI. Commercial travelers. This article has been amended in accordance with the authority accorded on pages 2 and 3 of Department’s Instruction 602 of June 23, 1927. The Austrian Government [Page 981] further proposes to add at the end of the first sentence of paragraph (a) of this article: “Commercial travelers shall not be subject to any other fee or tax on account of such activity”. This is also a recent proposal of the Department of Commerce. It is said that in some of the Succession States an attempt has been made to tax Austrian commercial travelers upon the proceeds of sales made by them. This has happened especially in Czechoslovakia, and the insertion of such a clause in the treaty between the United States and Austria would strengthen the attitude of Austria upon this point, and would be much appreciated.
Article XII. Commercial travelers. The changes made, noted on pages 3 and 4 of Instruction 602 of June 23, 1927, have been incorporated. Furthermore, the Austrian Government, pursuant to the desires of the Ministry of Commerce, proposes to strike out paragraph (d) in regard to advertising matter brought by commercial travelers in appropriate quantities. The Austrian law imposes a tax on advertising matter, except in very small quantities, brought in by commercial travelers, as it would on any other printed matter. The negotiators did not fail to note that this particular provision is “subject to the customs laws of the respective countries” in accordance with its express terms, but nevertheless they thought that the words “appropriate quantities” would be prolific of constant controversies, under cover of the favored nation principle, with the Succession States. The policy of the Austrian law in this respect is fixed, and inasmuch as this principle is recognized, it is felt that to introduce a provision which might lay the foundation for controversy would be most unwise. The Department of Commerce is most insistent upon this particular point.
The Foreign Office gives notice of its intention to notify me, with reference to the wording of sub-paragraph (c), that under Austrian law, commercial travelers are not allowed to sell to consumers. This is indirectly said in sub-paragraph (f) of Article XI.
Article XV. Criminal and civil jurisdiction over consular officers. I have already reported upon this article in my despatch No. 1372 of April 30. There will be no change in it, though in plenary session Schüller’s associates were disposed to press the objection that consular officers could only be called upon to testify as to matters of fact. The argument embodied on page 5 of Instruction 552 of February 11 reassured them, however.
Article XVI. Exemptions of consular officers and government property from taxation. There was some difficulty here in persuading Schüller’s colleagues to agree to the provision as revised on page 9 of Instructions 552 of February 11. The objection was chiefly to the language: “except taxes levied on account of the possession or ownership of immovable property situated in, or income derived from sources within the territories of the State within which they exercise [Page 982] their functions”. The Austrian negotiators desired this language: “except taxes levied on account of income derived from any property situated within the territories of the State within which they exercise their functions, according to the laws of that State, upon all foreigners who have no domicile or residence within that State”. The American language was, however, ultimately accepted.
Article XX. Competency of consular officers to take charge of property of deceased nationals, qualify as administrator, etc. The Austrian amendments as recited on page 11 of Department’s Instruction 552 were quite vigorously pressed. It appears that there have been various complaints filed with the Foreign Office, either from the Austrian Legation in Washington or from Austrian consuls in the United States with respect to the restricted competency of Austrian consular officers in this regard. I developed at some length the argument that this was a matter wholly within the jurisdiction of the States, and the Federal Government did not feel at liberty to encroach further upon State prerogatives. The American draft was accepted.
Article XXI. Competency of consular officers to receive funds, etc. This paragraph has been revised in accordance with the authority found on pages 16, 17 and 18 of Instruction 552. Note that the article as revised will read as follows:
“A consular officer of either High Contracting Party may in behalf of his non-resident countrymen collect and receipt for their distributive shares derived from estates in process of probate or accruing under the provisions of so-called Workmen’s Compensation Laws or other like statutes, for transmission through channels prescribed by his Government to the proper distributees.”
Article XXII. Exemptions from duty on importations of consular supplies and belongings of consuls. This article has been revised in accordance with the authority accorded on page 18 of Instruction 552. The Austrian negotiators discussed the possibility of having this article correspond with the language found in Article XXVII of the treaty with Germany and Article XXII of the treaty with Hungary. The Department of Finance, however, preferred the more restricted phraseology which corresponds with Austrian municipal law and practice.
Article XXIII. Definition of territories and nationals. This article has been amended in accordance with the Department’s suggestion on page 21 of Instruction 552.
Article XXIV. Treaty of August 24, 1921, establishing friendly relations. The Austrian negotiators desire to incorporate the language “or to Austria or its nationals” as authorized on page 21 of Instruction 552.
Article XXV. Duration and termination of treaty. This article has been altered in conformity with the revision on page 23 of Instruction [Page 983] 552, except that it is provided that eight years is substituted for ten years. The reason for this is that while the Austrian Government does not oppose long-term treaties, it has so far committed itself to no corresponding treaty beyond the beginning of 1935. The Anglo-Austrian treaty of May 22, 1924, mentioned on page 3 of Instruction 566 may terminate, in accordance with its terms, in February, 1935. The Government may desire a general revision of all its commercial treaties at this period, and therefore did not desire to be hampered in this respect. It preferred six or seven years, but agreed to eight. One year more or less made no particular difference, but it was felt that two or three or four years might prove embarrassing.
I am enclosing herewith a revised draft in accordance with the foregoing.93
To recapitulate: Upon analysis it will be noted that the only articles really requiring the Department’s scrutiny and further instructions are articles VII, XI and XII. Of these, VII and XII are the most important. If it had not been for the rather elaborate explanation in regard to article VII, made necessary of course by the Department’s revised instructions, incorporating the new provisions found in Instruction 566 of April 2, I should have telegraphed with respect to the other two articles in accordance with the Department’s authorization. I trust it will be evident that the United States has secured as a result of the negotiations practically what it asked for, and that the new language interpolated in article VII marks a very substantial advance in the direction desired. The Austrian negotiators feel that they have receded on most of their conditions, as indeed they have, and if the Department can see its way clear to do so, I trust it will speedily meet the Austrian views with respect to the three articles in question, and express its preference for the various alternatives suggested. If my final instructions could be communicated by telegraph, it would be most helpful. The Foreign Office is beginning to put the text into German and a draft, subject to my final instructions of course, will be in my hands towards the end of the month. The Foreign Office official who has this matter particularly in hand will leave for a three weeks’ vacation the last week in July, returning about August 12. By that time it is hoped that I may have my final telegraphic instructions. The treaty will then be set up in type in accordance, of course, with Instruction 573 of April 14,94 and any typographical errors or discrepancies will be discovered and corrected. The revised draft as herewith submitted was initialled today by Dr. Schüller and myself. It is understood that the only articles now left open for discussion are VII, XI and XII, as above indicated. Schüller leaves tomorrow morning, to be absent until September. The possibility [Page 984] of slight error in the text is not excluded but I can assure the Department that the final draft for signature will be carefully checked, both as to text, spelling and punctuation.
It is probable that the Chancellor, Dr. Seipel, will sign on behalf of Austria, though this is a matter for the cabinet council to decide. The power of attorney may be given to the Minister of Commerce, who is quite keen about his prerogatives in such matters, I am told. The Chancellor will return from his vacation in Karlsbad the latter part of August, and I hope around that time the treaty can be concluded. I am rather anxious about this because it is quite possible that there may be a cabinet crisis in the autumn—some time in September—if the parliamentary situation does not improve. If there should be cabinet reconstruction, some serious delay might ensue. I know it is the Department’s desire that the treaty be in Washington in ample time for submission to the Senate when Congress reconvenes, whether it be October, November or on the first Monday in December. For these reasons I am emboldened to label this despatch urgent, and to ask for early instructions.
I have [etc.]