The Secretary of State to the Minister in Latvia ( Coleman )
Sir: The Department has given consideration to your despatch No. 4615 of July 18, 1927, concerning the treaty of Friendship, Commerce and Consular Rights under negotiation between the United States and Latvia. It is pleased to note that the proposal concerning Article I submitted to you by the Foreign Office contains but few modifications of the Department’s draft, and hopes that the remaining differences will soon be adjusted to the satisfaction of both Governments.
Article I, paragraph 1. Rights to engage in professions and manufacturing, and to lease lands for manufacturing purposes.
It is noted that the first paragraph of the Latvian counter-draft of Article I differs from the draft submitted by this Government in that it does not contain the word “professional” in the fourth line or the word “manufacturing” in the fifth and ninth lines. You are authorized to state that this Government agrees to the omission of [Page 197] the word “professional” and of the word “manufacturing” at the place at which the latter omission first occurs provided that there be inserted after the words “the local law” in the seventh line of the paragraph the following: “to engage in every trade, vocation, manufacturing industry and profession, not reserved exclusively to nationals of the country”. The first paragraph of Article I will then read as follows:
“The nationals of each of the High Contracting Parties shall be permitted to enter, travel and reside in the territories of the other; to exercise liberty of conscience and freedom of worship; to engage in scientific, religious, philanthropic, and commercial work of every kind without interference; to carry on every form of commercial activity which is not forbidden by the local law; to engage in every trade, vocation, manufacturing industry, and profession, not reserved exclusively to nationals of the country; to own, erect or lease and occupy appropriate buildings and to lease lands for residential, scientific, religious, philanthropic, manufacturing, commercial and mortuary purposes; to employ agents of their choice, and generally to do anything incidental to or necessary for the enjoyment of any of the foregoing privileges upon the same terms as nationals of the State of residence or as nationals of the nation hereafter to be most favored by it, submitting themselves to all local laws and regulations duly established.”
You will note that in the first paragraph of Article I of the Treaty of December 23, 1925, between the United States and Estonia, rights are granted to engage in manufacturing work of every kind without interference and to engage in every trade, vocation and profession, not reserved exclusively to nationals of the country. The proposal which you are authorized to make to the Latvian Government places the right to engage in manufacturing as well as the right to engage in trades, vocations and professions on the same footing as the right to engage in trades, vocations and professions rests in the Treaty between the United States and Estonia. This Government would find it very difficult to accept the first paragraph of Article I of the Latvian draft granting no right to engage in professions and manufacturing and it is hopeful that the counter-proposals herein made will be acceptable to Latvia.
This Government desires that a right be accorded to its nationals to lease lands for the manufacturing industries in which they may be permitted to engage in Latvia. It, therefore, does not desire to agree to the omission of the word “manufacturing” in connection with the right to lease lands. It is believed that if the right to engage in manufacturing, restricted as hereinabove proposed by this Government, is included in the Treaty the word “manufacturing” may be and should be retained in the clause “to lease lands for residential, scientific, religious, philanthropic, manufacturing, commercial and mortuary purposes”. It would be obvious that the right to lease lands for [Page 198] manufacturing purposes would be applicable only to the manufacturing industries in which the nationals of each party might be permitted to engage in the territories of the other party.
Article I, paragraph 5. Statutes relating to immigration.
It is observed that the last paragraph of the Latvian draft of Article I differs from the last paragraph of this Government’s draft in that it is provided in the Latvian draft that nothing in the treaty shall be construed to affect existing statutes in relation “to the admission or sojourn of foreign nationals” or the right of either of the High Contracting Parties to enact such statutes as well as that nothing therein shall be construed to affect these rights in respect of the immigration of “aliens” which was the reservation in this Government’s draft. This Government construes the paragraph as contained in its original draft to embrace statutes affecting aliens temporarily visiting the United States as well as those affecting intended immigrants. It is, therefore, in agreement with the purpose of the additional words proposed by Latvia.
As the terms, “foreign nationals” and “aliens” are not exactly synonymous, “aliens” including persons not nationals of any country as well as nations of foreign countries, it is believed that it is undesirable to use the two terms in a relation in which one meaning is intended. This Government proposes, therefore, that the last paragraph of Article I be rewritten as follows:
“Nothing contained in this Treaty shall be construed to affect existing statutes of either of the High Contracting Parties in relation to the immigration, admission or sojourn of aliens or the right of either of the High Contracting Parties to enact such statutes.”
Article VII, paragraph 1. Right to impose prohibitions and restrictions on commerce.
This Government is unable to agree with the Latvian Government as to the necessity of including State monopolies in the specification of exceptions to the principle of freedom of commerce.
As stated in this Department’s telegram No. 19 of May 16, 1927, and No. 21 of June 15, 1927, the operation of such State monopolies as Latvia now has would not be regarded by this Government as in conflict with the treaty, provided that the monopolies are not operated so as to discriminate against American nationals, vessels or goods, as compared with those of other countries. It was pointed out in the telegram of June 15, that the stipulations in regard to commerce contained in the draft, except those relating to shipping, are on a most favored nation basis and that no additional privileges are accorded to the United States. This clearly appears in the second sentence of the first paragraph of Article VII and in the second and fourth paragraphs of the same Article. That the treaty as drafted would not prevent the Latvian Government from imposing non-discriminatory [Page 199] restrictions or prohibitions upon goods constituting a State monopoly is shown by the fact that paragraphs two and three of Article VII admit by implication that such restrictions or prohibitions may be imposed on any goods. The United States, therefore, would have no greater rights under the treaty in respect of commerce with Latvia in the articles subject to State monopoly in Latvia than are or may be granted to some other country.
The Department notes from the statements of the Latvian Government communicated in your telegram No. 43 of June 2 last, four p.m., that it appears there will be no discrimination against the United States as compared with other countries in the operation of the monopolies. It, therefore, is apparent that the question of a conflict between the operation of the monopolies and the Treaty will not arise.
In the opinion of the Department the provision suggested is not only unnecessary but is otherwise objectionable. As the Latvian Government is doubtless aware, there is a decided popular feeling in the United States against monopolies, which has found expression in numerous laws of the United States. The few provisions relating to monopolies in treaties of the United States are in accordance with this popular feeling. Thus the Treaty revising treaties hitherto existing between the United States and Siam, concluded December 16, 1920,38 contains a provision to the effect that goods shipped from the United States shall be exempt from governmental restriction designed to create a monopoly, either government or private. Article III of that Treaty provides in part as follows:
“… the sale and resale, by any person or organization whatsoever, of goods which are the produce or manufacture of one of the High Contracting Parties, within the territories and possessions of the other, shall be exempt from all governmental restrictions and limitations designed or operating to create or maintain any monopoly or ‘farm’ for the profit either of the Government or of a private individual or organization.” (3 Malloy’s Treaties, etc., pages 2829, 2831).
There can be no doubt that this provision is in harmony with the consistent position of this Government and the desires of the people of the United States and that the provision which the Latvian Government proposes to insert in the treaty under negotiation would be contrary to them. For these reasons and likewise for the reason that the provision would in all probability meet with pronounced opposition and imperil the ratification of the Treaty by the United States this Government is extremely averse to inserting it in the treaty.
In view of the foregoing the Department hopes that the Latvian Government will not insist upon the proposed exception (c).[Page 200]
Article XI Rights of vessels to discharge and load cargoes, reservation as to coasting trade, etc.
You report that the Latvian Minister for Foreign Affairs has stated that the Commission having the proposed treaty under consideration does not see its way to omitting a reference to the towing service, and to the fishing and ship-building industries by way of exceptions to the provisions of this Article, the reason being that as a similar exception has been adopted in all Latvian treaties in which matters of navigation are regulated, the omission of it from one Treaty could cause Latvia difficulties in the interpretation of the principle of national treatment in matters of navigation. You are authorized to agree on the Latvian proposals in regard thereto as reported on page 4 of your despatch No. 4408 of March 21, 1927.
The article as revised will then read as follows:
“Merchant vessels and other privately owned vessels under the flag of either of the High Contracting Parties shall be permitted to discharge portions of cargoes at any port open to foreign commerce in the territories of the other High Contracting Party, and to proceed with the remaining portions of such cargoes to any other ports of the same territories open to foreign commerce, without paying other or higher tonnage dues or port charges in such cases than would be paid by national vessels in like circumstances, and they shall be permitted to load in like manner at different ports in the same voyage outward, provided, however, that the coasting trade and the towing service of the United States and the Republic of Latvia are exempt from the provisions of this Article and from the other provisions of this Treaty, and are to be regulated according to the laws of the United States and the Republic of Latvia, respectively, in relation thereto. It is agreed, however, that the nationals of either High Contracting Party shall within the territories of the other enjoy with respect to the coasting trade and the towing service the most-favored-nation treatment.
“The provisions of this Treaty relating to the mutual concession of national treatment in matters of navigation do not apply to the special privileges reserved by either High Contracting Party for the fishing industry and for the national ship-building industry.”
Article XV. Freedom of Transit.
With a view to having the exceptions to freedom of transit which the Latvian Government desires shall be permissible under this Article stated more exactly than would be done by reference to the Convention and Statute of Barcelona in regard to freedom of transit, the Department desires that further consideration be given to the language relating to exceptions which will be contained in the first paragraph of the Article. You are instructed, therefore, not to reach a final agreement in regard to the proposal which you made to the Latvian Government pursuant to paragraph two of the Department’s telegram No. 21 of June 15 last, 3 p.m., to include in the Article a reference to the Convention and Statute of Barcelona, [Page 201] until you receive further instructions from the Department on this point. The Department would be glad if the Latvian Government would submit a draft for this Article expressing, without mentioning the Convention and Statute of Barcelona, the exceptions which it desires to have made.
This Government desires to propose two minor modifications to this Article as contained in the draft of the Treaty transmitted with instruction No. 406 of January 21, 1927, namely (1) that the words “coming from or going through” in lines 7 and 8 shall be replaced by the words “coming from, going to or passing through” and (2) that at the end of the first paragraph of the Article the words “or to any discrimination as regards charges, facilities or any other matter” be substituted in place of “and shall be given national treatment as regards charges, facilities and all other matters”. The Article as thus revised will read as follows:
“There shall be complete freedom of transit through the territories including territorial waters of each High Contracting Party on the routes most convenient for international transit, by rail, navigable waterway, and canal, other than the Panama Canal and waterways and canals which constitute international boundaries, to persons and goods coming from, going to or passing through the territories of the other High Contracting Party, except such persons as may be forbidden admission into its territories or goods of which the importation may be prohibited by law or regulations. Persons and goods in transit shall not be subjected to any transit duty, or to any unnecessary delays or restrictions, or to any discrimination as regards charges, facilities, or any other matter.
“Goods in transit must be entered at the proper custom house, but they shall be exempt from all customs or other similar duties.
“All charges imposed or transport in transit shall be reasonable, having regard to the conditions of the traffic.”
It is believed that the effect and advantage of these two modifications as clarifying the original draft of the Article will be obvious.
Copies of Articles I, XI, and XV as hereinabove revised are enclosed, Articles XI and XV being numbered Articles XII and XVI, respectively, on the assumption that a new Article VIII will be inserted in the Treaty pursuant to the Department’s telegram No. 8 of March 7, 1927, 6 p.m.
If you are unable to reach a complete agreement with the Latvian Government pursuant to these instructions, the Department will be glad to have you report by telegram the points on which agreement is not reached. It will endeavor to expedite the completion of the negotiations as much as possible.
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