560.M5/72: Telegram
The Consul at Geneva ( Blake ) to the Acting Secretary of State
[Received 2 p.m.]
From Wilson. The question of principal interest to the United States which is being discussed here seems to me clearly to be that concerning the effect of multilateral economic agreements upon the most-favored-nation clause in bilateral treaties. The following is a summary of the position of the question in the light of discussions in subcommittees and private conversations:
There is general acceptance of the view that existing rights based on the most-favored-nation clause cannot be affected or modified [Page 242] without the consent of the parties concerned. Thus it was agreed to make no attempt to restrict the advantages of the tariff truce convention, if one should be adopted here, to signatory states only. As regards the future, there is a division of opinion. On the one side, the Belgians, French, Dutch, Swiss and Germans hold that the application of the most-favored-nation clause in an unrestricted and unconditional form constitutes a serious obstacle to the economic work of the League as regards the conclusion of collective agreements. They desire that future commercial treaties should contain a provision excluding from the effect of the most-favored-nation clause the advantages of multilateral conventions of a general character concluded under the auspices of the League of Nations and open to all countries (for example, see article 2 of treaty between France and Switzerland of July 8, 1929,47 and article 1 of treaty between the Belgo-Luxemburg and Switzerland of August 26, 192948). They also favor the modification in this sense, by mutual agreement, of existing most-favored-nation treaties as has been done by Belgium and Holland in an exchange of letters in January 1930. On the other side, Great Britain, Italy and Norway oppose any limitation on the most-favored-nation clause and insist that no recommendation in this sense should be made by the present Conference but that on the contrary every state must be left free to decide its own policy in the matter.
On the whole, the question is being discussed in a moderate manner. Even those states which hold the problem lies at the heart of the future economic work of the League appear to recognize that they have nothing to gain by trying to force the acceptance of their idea and that they must leave each state free to decide the question according to its own interests. They will, however, of course continue to urge at every appropriate occasion the adoption of the restrictive clause referred to above.