711.942/392a: Telegram
The Secretary of State to the
Ambassador in Japan (Grew)
[Paraphrase]
Washington, December 18, 1939—2
p.m.
402. A statement has been prepared by the Department for use in reply to an
approach by the Japanese Government, if made, asking the United States
Government to define its position concerning the question of the negotiation
of a commercial agreement or treaty to replace the commerce and navigation
treaty of 1911. The paragraphs of the statement, which follows, have been
numbered merely for convenience of reference:3
- “1. The Government of the United States has repeatedly
expressed its willingness to enter into commercial treaties or
agreements with all countries on the basis of certain well-known
principles and procedures
[Page 191]
which this Government regards as
fundamental to sound international relations.
- 2. The Government of the United States regards
non-discriminatory treatment as the foundation principle of its
commercial policy and considers the rule of equality of
commercial rights and opportunity to be the only practicable and
desirable basis for concluding commercial treaties or
agreements. The history of the commercial policies of the
leading trading nations of the world demonstrates conclusively
that the negotiation of commercial agreements based upon any
other principle leads inevitably to friction and the taking of
counter measures by injured third nations, to the stifling of
the legitimate trade of all nations, and to chaotic
international commercial relations. In the past, when the
principal restrictions on trade consisted of tariff duties,
non-discriminatory treatment could usually be assured by mutual
general pledges of equality of treatment; but in recent years
new forms of trade restrictions, such as quantitative
limitations, monopolistic instrumentalities, exchange control,
and related measures affecting importation and exportation of
goods and remittance of funds, have achieved such importance as
methods of regulating trade that, to ensure non-discriminatory
treatment, it has been found necessary to have’ new provisions
supplementing the standard provision or rule of equality of
treatment. For example, with regard to quantitative limitations
on trade it has been found essential, in order that
non-discriminatory treatment may be established beyond dispute,
to have in force an expressly defined procedure assuring
exporting countries opportunity to supply fair shares in the
total of imports permitted. Similarly, with regard to exchange
control, it is important that there be established a procedure
providing for the supplying of foreign exchange for trading and
other purposes in such a manner as to ensure against
discrimination. In the light of modern experience, the
Government of the United States regards as a sine qua non of entering into negotiations with any
country looking toward the conclusion of a commercial treaty or
agreement, that it be understood in advance that
non-discriminatory treatment is to be made the basis for
commercial intercourse and that there are to be established
procedures designed to ensure non-discriminatory
treatment.
- 3. In contemplating the negotiation of a commercial treaty or
agreement with any country on the foregoing basis, it is
naturally appropriate for the Government of the United States to
examine not only the policies and practices of the country in
question as they are applied within that country’s territory but
also the policies and practices of that country as they affect
American trade with and in third countries. Substantial and
continuing discriminations against the commercial interests of
the United States brought about by the influence or by agencies
of any country within the territory of a third country are
obviously injurious to the United States. If such
discriminations have been imposed in a third country against
that country’s wishes it is apparent that the discriminations
can be removed most effectively and expeditiously by action on
the part of the nation which imposes, or which causes the
imposition of, the discriminations. Such discriminations are at
present in effect throughout large areas of China occupied by
Japanese armed forces. These discriminations have been brought
[Page 192]
about by agencies
which are directed by the Japanese Government or agents thereof
and which exercise control over the economic life of such areas
to the special advantage of Japanese interests through such
instrumentalities as exchange and currency control, levies upon
and restriction of exports and imports, monopolies, and
restrictions upon navigation of China’s waterways and upon
travel and residence and trade in various parts of China.
- 4. It follows that so long as agencies and instrumentalities
of the Japanese Government continue in fact to render
inoperative the practice of equality of treatment for American
commercial interests throughout large areas of China, there
exists a serious obstacle to the conclusion by the United States
of a new commercial treaty or agreement with Japan. Entirely
apart from the question of existing treaty commitments and
treaty rights, this obstacle to the conclusion of a new
commercial treaty or agreement would be present by virtue of the
discriminatory practices which at present thus prevail in the
occupied areas in China.
- 5. In giving consideration to the question of entering with
any other country into a new treaty or agreement for the
regulation of commerce, the Government of the United States, in
both its executive and its legislative branches, must and does
take full account not only of the treatment accorded by the
authorities of the other country, in areas under the control of
those authorities, to American goods and American enterprises,
but also of the treatment accorded by those authorities in such
areas to American commerce as a whole, including American
nationals, American firms, American investments, and American
economic and cultural activities in general. The principle of
equality of treatment is applicable in all areas and carries
implicit within itself the principles of non-discrimination and
fair treatment.
- 6. The Government of the United States has set forth
hereinbefore what it regards as important considerations bearing
on the question of the concluding of a new commercial treaty or
agreement between the United States and Japan. The Government of
the United States hopes that the Japanese Government likewise
attaches importance to these considerations, and the Government
of the United States will be glad to have evidence of the steps
which the Japanese Government is taking toward giving practical
effect to its attitude. Certain of these considerations have
recently been discussed between the American Ambassador to Japan
and the Japanese Minister for Foreign Affairs in informal
conversations in Tokyo, and should the Japanese Government
desire further information in regard to them the Government of
the United States is of course ready to furnish it.”
The statement set forth above is intended for your information and guidance
in your discussions with Japanese officials on the subject of
Japanese-American relations. If you should be asked by a responsible
official of the Japanese Government in regard to the attitude of the United
States Government toward the negotiation of a new treaty or agreement for
the regulation of commerce, you may reply, in your discretion, along the
lines of the above statement. Your taking of an initiative in regard thereto
is not contemplated by the Department.
