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

711.542/14

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

Washington, April 9, 1928.

No. 194

Sir: In amplification of the Department’s telegram No. 106 of December 27, 1927, 6 p.m., regarding the Treaty of Friendship, Commerce and Consular Eights under negotiation between the United States and Switzerland, I have to inform you that in the course of the negotiation of similar treaties with other countries it has been found advisable to make a number of changes in the drafts which this Government proposed as the bases for the negotiations. These changes relate to the subject matter and language of articles like Articles VII, IX, XI, XII and XIII of the draft which Mr. Gibson submitted to the Swiss Government, November 2, 1926. The Department would be glad, therefore, to have those articles modified as hereinafter set forth, substituted for the corresponding articles of the original draft.

Article VII. Importations, Exportations, Most Favored Nation Clause, etc. It is desired that the second, fourth, seventh and eighth paragraphs of Article VII be amended by the inclusion of certain additional phrases or clauses shown by the underlining¹⁶ in those paragraphs as herein after quoted:

(Second paragraph)

“Each of the High Contracting Parties binds itself unconditionally to impose no higher or other duties, charges, or conditions and no 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 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.”

With reference to the second change noted above it may be stated that difficulties have been encountered by American merchants in obtaining most favored nation treatment in countries which import largely from warehouses in third countries. To remove or to prevent such difficulties, and to protect indirect trade against discrimination, this Government desires that the treaties hereafter concluded by it shall specifically stipulate that American products shall enjoy equality of treatment from whatever place arriving.

An observation similar to that made in explanation of the words “from whatever place arriving” may be made in regard to the third change in the same paragraph, namely, that providing that duties, charges, et cetera, shall not be made effective retroactively. At times American merchandise has been subjected to retroactive application of import duties; and it is to remove the possibility of similar treatment in the future that this Government desires to have the provision here proposed inserted in treaties which it may hereafter conclude.

(Fourth paragraph)

“Any advantage of whatsoever kind which either High Contracting Party may extend, by treaty, law, decree, regulation, 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.”

It has developed that in certain customs districts of some countries there is a practice of affording to some favored nation privileges not accorded to American commerce. It appears that as such practice is not the result of any express provision of treaty, laws, or regulations, it may be claimed that it is not within the most favored nation provisions of the fourth paragraph of the draft as originally written. While this Government has not concurred in such an interpretation of that paragraph, it proposes, in order to avoid misunderstandings in regard to such practices, to insert in the paragraph the phrase “by treaty, law, decree, regulation, practice or otherwise.” As the proposed phrase only clarifies and does not alter the meaning of the paragraph, it is hoped that the Swiss Government will have no objection to accepting it.

The second and fourth paragraphs of Article VII as herein amended have been adopted by this Government as the standard form of these paragraphs for use in its treaties. The proposal of them to Switzerland does not imply that the inequalities against which they are designed to be a safeguard have been practiced by Switzerland against the commerce of the United States. It is only a step toward the establishment of uniformity in the treaties of the United States as the same proposals for modifications in this Government’s draft are being made to other countries with which the United States already has begun the negotiation of commercial treaties as well as to countries to which drafts are now being submitted. With the exception of the word “charges” and the last provision of the second paragraph the additions to the second and fourth paragraphs are merely interpretive and Governments accepting them do not, in the view of this Government, assume any greater burden than Governments which have accepted the paragraphs in the form in which they were included in the draft as originally proposed by the United States to Switzerland. The possibility of dispute as to the meaning of the paragraphs in respect of the subjects mentioned in the additional phrases is, however, removed.

(Seventh paragraph)

“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 or 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 and unconditionally, without request and without compensation, be extended to the other High Contracting Party, for the benefit of itself, its nationals, (and) vessels or goods”

It is believed that the effect and advantage of the addition of the word “goods” at the end of this paragraph is obvious.

(Eighth paragraph)

“The stipulations of this Article do not extend 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, 1902,¹⁷ or any other commercial convention which hereafter may be concluded by the United States with Cuba. Such stipulations, moreover, do not extend to the treatment accorded to the commerce (of) between the United States (with) and the Panama Canal Zone or (with) any of the dependencies of the United States or to the commerce of the dependencies of the United States with one another, under existing or future laws”

The provision added to the eighth paragraph is the exception of commerce of the dependencies of the United States with one another from the most favored nation clause. That this is a reasonable exception will be obvious. The other changes in the paragraph result merely from the division of it into two sentences.

Article IX. Corporations. By telegram No. 106 of December 27, 1927, you were instructed to propose the insertion at the end of Article IX of the sentence “If such consent be given on the condition of reciprocity, the condition shall be deemed to relate to the provisions of the laws, National, State, or Provincial under which the foreign corporation or association desiring to exercise such rights is organized.” This provision is designed for use in treaties with countries in which the right of a corporation organized under the laws of the United States to engage in business is conditioned on reciprocity. The provision would have the effect of obtaining for American corporations in Switzerland, in the event that the laws of Switzerland relating to the right of a foreign corporation to engage in business contain a condition of reciprocity, the right to engage in business according to whether the laws of the State of the United States under which such corporation is organized extend the right to engage in business to foreign corporations. The provision was first drafted for inclusion in treaties with countries which would exclude all American corporations from engaging in business in their territories or restrict them, if any State of the United States excluded from or placed restrictions on the corporations of such country engaging in business in its territories. The Department would be glad to receive a report from you in regard to the treatment of alien corporations under Swiss laws. It does not intend to urge the inclusion of the provision, if it has no application to conditions in Switzerland.

Articles XI and XII. Commercial Travelers. An officer of the Department was informed by an officer of the Department of Commerce that in a conversation between him and a member of the staff of the Swiss Legation the latter had stated that the Swiss negotiators had some difficulty in accepting the provisions of Articles XI and XII relating to commercial travelers. Since the submission of the draft to the Swiss Foregin. Office the Department has drafted an article providing most favored nation treatment for commercial travelers, which it desires to include in treaties which it may hereafter conclude, instead of detailed provisions such as those contained in Articles XI and XII, which it is the purpose of this Government to discontinue. The new Article is as follows:

Commercial travelers representing manufacturers, merchants and traders domiciled in the territories of either High Contracting Party shall on their entry into and sojourn in the territories of the other Party and on their departure therefrom be accorded the most favored nation treatment in respect of customs and other privileges and of all charges and taxes of whatever denomination applicable to them or to their samples.

If either High Contracting Party require the presentation of an authentic document establishing the identity and authority of a commercial traveler, a signed statement by the concern or concerns represented, certified by a consular officer of the country of destination shall be accepted as satisfactory.

The first paragraph is identical with Article XIV of the Treaty of Friendship, Commerce and Consular Rights between the United States and Estonia, signed December 23, 1925, (Treaty Series No. 736) and the second paragraph is a development of paragraph 2 of the protocol to that Treaty.¹⁸ The Article in its present form is included in a Treaty of Friendship, Commerce and Consular Rights signed by the United States and Honduras, December 7, 1927,¹⁹ now before the Senate of the United States and in drafts of such treaties under negotiation with a number of countries.

You will observe that the first paragraph provides for the most favored nation treatment of commercial travelers representing manufacturers, merchants, or traders, domiciled in the territories of one of the Contracting Parties upon their entrance into, sojourn within and departure from the territories of the other. The second paragraph covers the cases where a certificate of identity of the commercial traveler is required.

The Department would be glad to receive from you a report on the treatment which American commercial travelers in Switzerland would be entitled to receive under the most favored nation Article.

If this Article is accepted by Switzerland Articles XI and XII of the draft should be dropped out. The new Article should be numbered Article XI and Articles XIII and following should be renumbered Articles XII and following.

Article XIII (Article XII). Freedom of Transit. By telegram No. 106 of December 27, 1927, you were instructed to substitute “coming from, going to or passing through” for “coming from or going through” in line 11 of Article XIII. The Department desires that you also propose 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 those territories or goods of which the importation may be prohibited by law. 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 on transport in transit shall be reasonable, having regard to the conditions of the traffic.”

The purpose of the first change is to cover expressly all the situations in which the question of freedom of transit might arise. It is believed that the advantage of that modification as well as the effect and advantage of the modification at the end of the paragraph as clarifying the original draft of the Article is obvious. This Article as thus revised is included in drafts of treaties which the United States has under negotiation with other countries.

Two copies of Articles VII, XI and XIII as hereinabove revised are enclosed, Article XIII being renumbered Article XII on the assumption that the new Article XI will be accepted by Switzerland in place of Articles XI and XII of the first draft.

I am [etc.]

Frank B. Kellogg

[Enclosure 1]

Article VII

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, charges, or conditions and no 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 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.

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.

Any advantage of whatsoever kind which either High Contracting Party may extend, by treaty, law, decree, regulation, 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 Swiss 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 Switzerland or are or may be legally exported therefrom in Swiss 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 Swiss vessels.

In the same manner there shall be perfect reciprocal equality in relation to the flags of the two countries with regard to bounties, drawbacks and other privileges of this nature of whatever denomination which may be allowed in the territories of each of the Contracting Parties, on goods imported or exported in national vessels so that such bounties, drawbacks and other privileges shall also and in like manner be allowed on goods imported or exported in vessels of the other country.

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 or 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 and unconditionally, without request and without compensation, be extended to the other High Contracting Party, for the benefit of itself, its nationals, vessels or goods.

The stipulations of this Article do not extend 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. Such stipulations, moreover, do not extend to the treatment accorded to the commerce between the United States and the Panama Canal Zone or any of the dependencies of the United States or to the commerce of the dependencies of the United States with one another under existing or future laws.

[Enclosure 2]

Article XI

Commercial travelers representing manufacturers, merchants and traders domiciled in the territories of either High Contracting Party shall on their entry into and sojourn in the territories of the other Party and on their departure therefrom be accorded the most favored nation treatment in respect of customs and other privileges and of all charges and taxes of whatever denomination applicable to them or to their samples.

If either High Contracting Party require the presentation of an authentic document establishing the identity and authority of a commercial traveler, a signed statement by the concern or concerns represented, certified by a consular officer of the country of destination shall be accepted as satisfactory.

[Enclosure 3]

Article XII

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 those territories or goods of which the importation may be prohibited by law. 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 on transport in transit shall be reasonable, having regard to the conditions of the traffic.

16. Printed in italics.
17. Foreign Relations, 1903, p. 375.
18. Foreign Relations, 1925, vol. ii, pp. 70, 84.
19. Ibid, 1927, vol, iii, pp. 101, 106.