693.003/800: Telegram

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


12. Legation’s telegrams 1127, December 28, noon,67 and 1134, December 29, 8 p.m.

As to the possibility of negotiations of the nature referred to in the Department’s 418, December 19 [18], noon,68 the Department has not been especially optimistic. The Department has not contemplated going further than indicated in the statement which I made on January 27, 1927.69 Although the Department concurs in the [Page 380] view which you express that existing conditions in China would limit serious discussion automatically to the treatment of American trade and customs matters, it has no desire to give the impression that it discourages any efforts which might tend toward the unification of China. The reasons which you set forth for holding the negotiations, if any are undertaken, in China are appreciated by the Department.
The project described by Edwardes is, it is understood (see Legation’s 1134, December 29, 8 p.m., paragraph 2), as follows: (a) A joint commission would be formed at Shanghai by the different regimes functioning in China for the purpose of compiling a national tariff, with the assistance of the Maritime Customs, (b) When such national tariff shall have been completed the commission shall present it to the powers for acceptance or possible negotiation, (c) During the interim which precedes a compilation of the national tariff and the assumption of tariff autonomy by China, there shall be formal assent on the part of the powers to the collection by Maritime Customs of the Washington two and one-half percent surtax, so-called, and that thereafter the powers shall consent that this surtax be replaced by increased import duties as recommended in 1926 by the United States, Great Britain and Japan, the said increased duties to remain effective until the realization of tariff autonomy, (d) China supposedly would be represented by the Chinese joint commission in negotiations in regard to these preliminary steps.
The above proposals involve changes in existing tariff treaties of October 8, 1903, between the United States and China70 and the October 20, 1920 treaty.71 Only in two ways can this be done legally: (1) by entering into a new agreement or treaty to be submitted for ratification to the Senate, or (2) by a modus vivendi specifically authorized in advance by Congress—that is, an act could be passed by Congress authorizing the President to consent to a modification, so far as the tariff is concerned, of the rates of duties prescribed in the treaties. After the agreement with the representatives of the various regimes had been made, it could, of course, be submitted for ratification to the Senate. Probably this would be interpreted as a recognition of the various governments. I can not say whether or not this would be particularly objectionable. Whether Congress, by joint resolution, would give the President this blank authority, I do not know. I should like to have your views concerning the question as to the effect which publicity necessarily involved might have on the negotiations in China. This departure from treaties, it should always [Page 381] be borne in mind, can be achieved only through the authorization by the Congress as a whole giving to the President authority to exercise his discretion or through the ratification by the Senate. It is my opinion that, under our treaty of 1903 and under article III of the 1922 Washington Treaty,72 you could, as suggested, in concurrence with the other Ministers, consent to the interim surtax of two and one-half percent without the necessity of submitting it to the Senate for ratification. There is only one other alternative, namely, that if this Government should find such an agreement satisfactory, the authority might be assumed by the President to raise no objection to the rates becoming effective pending ratification by the Senate. The President might be justified in doing this as the Chinese are not living up to, and probably will not live up to, the present treaty rates.
From the second paragraph of Legation’s 1134, it is noted that reciprocal tariff bargaining by China is anticipated. No action should be taken by you endorsing the principle involved in that proposal or committing the United States to acceptance of such principle. Tariff discrimination is not only inconsistent with the concept of equality of opportunity advocated for so long by this Government, but appears also to be specifically in contravention of article 5 of the customs treaty adopted at the Washington Conference. The January 1927 statement reaffirmed this principle. Also, see paragraphs (3) and (4) of article I, as well as article II, of the Washington Conference treaty on principles and policies.73 The policy of this Government, furthermore, is opposed to reciprocal tariff arrangements. It has been announced by us that in all our recent treaties, and in prolonged negotiations with France, we have insisted that our tariff rates must be uniformly applied to all.74 Reciprocal arrangements are not permitted by our tariff law and our tariff could not be varied for the purpose of receiving reciprocal benefits from China. The commencement of a policy whereby each country would bargain with China would involve the United States and the other countries in a regime of bargaining for special privileges disastrous to China’s relations with all the powers.
In view of existing commitments, including article 7 of the treaty on principles and policies, you are authorized to take up with your interested colleagues such phases of the project in question as you may deem it discreet and necessary to discuss.