The Secretary of State to the Minister in the Netherlands ( Emmet )

No. 29

Sir: I am enclosing, for your confidential information, a copy of a commercial treaty draft1 which was handed this afternoon to the Netherlands Minister in Washington2 for transmission to The Hague for the consideration of his Government.

The negotiation of this treaty has been undertaken primarily in order to make it possible for the United States to accord to the Netherlands as favorable treatment with regard to the excise tax upon coal and coke as it accords to Germany and Great Britain on the basis of the most-favored-nation treaties with those countries. The Revenue Act of 19323 contained a provision exempting from this excise any country which imports more coal from the United States than it exports to the United States and upon the basis of this provision Canadian coal imports were declared tax exempt. Great Britain and Germany thereupon claimed a like exemption on the basis of their treaty rights and somewhat later the Netherlands claimed the same treatment as that accorded to Great Britain and Germany.

The Netherlands Minister in presenting this claim stated that the Dutch interest involved was negligible but that the claim was being raised as a matter of principle in order that the Dutch Government might know definitely whether the United States and the Netherlands were to continue to accord mutual most-favored-nation treatment to each other.

The most-favored-nation treatment accorded to the Netherlands appears in the past to have rested, as stated in the Legation’s despatch No. 480 of October 5, 1932,1 not upon a treaty but merely upon President Taft’s Proclamation of January 29, 1910,4 and a note dated July [Page 628] 11, 1924,6 in the latter of which it was stated that the Secretary of State understood that the United States and the Netherlands applied most-favored-nation treatment to the commerce between the two countries and that the United States for its part did not contemplate making any departure from that principle. As it was held that in the absence of a treaty it would be impossible to extend to the Netherlands the same treatment accorded to Germany and Great Britain it was agreed that a most-favored-nation treaty should be concluded between the United States and the Netherlands.

The provisions of the proposed treaty, with the exception of Article 3, are similar to those which have customarily been included in previous simple most-favored-nation treaties concluded by the United States with other countries. Article 3, however, concerns such comparatively new restrictions on trade as rations, contingents, quotas, customs quotas, monopolies, et cetera, and has been drafted with a view to establishing the principle that if either party sets up a system of quantitative restriction or control of imports or sales of any article, the share of the permissible trade allotted to the other party shall not be less in proportion than the share of the total trade enjoyed by that party prior to the establishment of the restriction. I shall be pleased to receive any comments that you may have with regard to this article or any suggestions for its improvement that you may care to make.

It will be noted that the present draft treaty is not an agreement of the type contemplated by the bill now pending in Congress which would authorize the President to enter into reciprocal trade agreements involving reductions in duties and modifications in other trade barriers.7 This bill has been passed by the House and has been reported favorably by the Senate Committee on Finance. If and when this bill shall have been enacted into law it is expected that negotiations will from time to time be instituted with foreign governments with a view to concluding reciprocal trade agreements. The Department is not in a position to advise you at this time whether the Netherlands will be among the countries with which such agreements will be sought.

Exploratory conversations were instituted some time ago with several countries with a view to concluding reciprocal trade agreements. In the case of Colombia these conversations led to the signing of an agreement.8 This agreement will not be brought into force until after the pending legislation shall have been enacted. The exploratory conversations with other countries are largely in abeyance pending the enactment of this legislation.

[Page 629]

Although negotiations for a trade agreement with the Netherlands are therefore not in immediate prospect, the Department would welcome an expression of your views with regard to such an agreement. An indication of what American commodities would in your opinion be most likely to benefit substantially from a reduction in the Netherland duties would be particularly valuable.

Very truly yours,

For the Secretary of State:
Francis B. Sayre
  1. Not printed.
  2. Jonkheer H. M. van Haersma de With.
  3. 47 Stat. 169.
  4. Not printed.
  5. 36 Stat. 2522.
  6. Foreign Relations, 1924, vol. ii, p. 481.
  7. The Trade Agreements Act, approved June 12, 1934; 48 Stat. 943.
  8. Unperfected trade agreement, signed December 15, 1933, Foreign Relations, 1933, vol. v, p. 217.