893.113/1579
The Secretary of State to the British Ambassador ( Lindsay )
Excellency: I have the honor to acknowledge the receipt of your note No. 396 of December 12, 1934,39 concerning the procedure in force in Great Britain in regard to the control of the exportation of arms to China. I am pleased to note that this procedure conforms in its essential features to the procedure which this Government has followed since March 4, 1922.
I have noted the difference which exists between the practice of your Government and the practice of this Government in connection with the definition of military aircraft. Although I appreciate the force of the reasons which you adduce in support of the less stringent definition which has been adopted by your Government, I feel that the more stringent definition which we have adopted is more consistent with the objective of preventing the development or the continuance in China of conditions of domestic violence and of cooperating with the Chinese Government in its efforts to maintain an effective control of the import into China of arms and munitions of war. I shall, therefore, pending some international agreement in regard to what constitutes military aircraft, continue to apply this definition in respect to exports to China, unless the continuance of this procedure should be found to result in placing American exporters at an unjustifiable disadvantage as compared with their principal foreign competitors.
I note that your Government has not as yet completed its consideration of the subject of the export of arms to China and that it will not fail to inform this Government of the conclusions which are finally reached in the matter. I venture to express the hope that in studying this matter, your Government may find it possible to give special consideration to the possibility of modifying the procedure now in effect in Hong Kong in respect to the transshipment of arms to China. As I pointed out in my note of August 10,40 we have, for a number of years, proceeded upon the presumption that under present political conditions in China, shipments from the United States to [Page 712] Hong Kong are destined for China. Unless that presumption can be overcome by the exporter in the United States, the exporter has been required to make application for license to export. When the consignees mentioned in such applications are firms duly registered by the Hong Kong authorities as dealers in firearms and when the articles covered by such applications appear on their face to be destined for the trade in Hong Kong, export licenses are issued without awaiting an expression of the desires of the Chinese Government. I may state, in this connection, that it is the practice of the Department to grant, without reference to the Chinese Government, licenses covering shipments to China of comparatively small quantities of small arms (such as shotguns, revolvers and sporting rifles) for the retail trade. During recent months shipments of this category to Hong Kong have reached such proportions as to cause suspicion that the articles were not for consumption by the normal retail trade. I, therefore, instituted an investigation of the situation, as a result of which I am informed that when an exporter in the United States obtains an export license stating, on the basis of information received from the consignee in Hong Kong, that Hong Kong is the destination of the shipment, the consignee may, before the shipment arrives, register with the Hong Kong police the sales contract showing that the shipment is in reality destined to China, and that in such cases the shipment is considered as being in transit and is permitted by the Hong Kong authorities to proceed to China. Thus in the absence of any knowledge with regard to who the actual importers in China may be, it obviously is impossible to determine whether the goods in question are in reality destined for consumption by the normal retail trade in China or whether they are to be put to other uses with regard to which the National Government desires to maintain effective import control. I understand further that under the procedure now obtaining in Hong Kong considerable quantities of small arms and ammunition are finding their way into China without the permission of the Chinese National Government. Although it is clear that, with regard to goods in transit, the Government of Hong Kong is bound by the provisions of the Convention and Statute on Freedom of Transit, signed at Barcelona on April 20, 1921,41 I venture to suggest that the Hong Kong authorities accept as the determining factor as to what constitutes goods in transit, documents issued in the country in which the shipment originates. It would not appear that the Hong Kong authorities would be violating either the spirit or the letter of the Statute of Freedom of Transit in insisting that some evidence of the intention to transship in Hong Kong appear in the bill of lading or other document relating to the shipment prepared [Page 713] in the country of origin. On the contrary, those authorities would seem to be merely acting pursuant to the provisions in Article V of the Statute that “Each Contracting State shall be entitled to take reasonable precautions to ensure that…goods…are really in transit.”42
The regularization of the present situation in the manner suggested would result in eliminating the present subterfuge now indulged in by Hong Kong importers (whereunder they now inform American exporters that shipments are destined for Hong Kong and inform the Hong Kong authorities that the shipments are destined for China) and would cause Hong Kong importers to furnish American exporters with correct information in regard to the ultimate destination of the goods. The American Government would thereupon be in position to determine whether the assent of the Chinese Government should be obtained prior to approval of license for export.
Accept [etc.]
- Ibid., p. 521.↩
- Ibid., p. 508.↩
- League of Nations Treaty Series, vol. vii, p. 11.↩
- League of Nations Treaty Series, vol. vii, p. 29. Omissions indicated in the original communication.↩