The Acting Secretary of State to the British Ambassador ( Lindsay )

Excellency: I have the honor to refer to the note of the Secretary of State of August 10, 1934,74 to Your Excellency’s note of December 12, 1934,75 and to the Secretary of State’s reply of January 10, 1935, in which the positions of our two Governments in respect to the export of aircraft to China were set forth. The Secretary of State then expressed the hope that the British Government would be able to adopt an interpretation in regard to what constitutes military aircraft, which would be substantially similar to that of this Government. It was then explained that this Government regards as military aircraft (a) all types of aircraft actually fitted with armor, guns, machine guns, gun mounts, bomb dropping or other military devices, and (b) aircraft presumed to be destined for military use, whether actually fitted with armament or not. Licenses are required for the shipment to China of engines, spare parts, and equipment for such planes.

In reply, Your Excellency stated that your Government did not consider that under existing conditions the application of the stricter procedure in force in the United States was practical and that it proposed to continue to regulate the export of aircraft to China by its export procedure under which a license is not required for unarmed aircraft. It is our understanding moreover that under the British procedure licenses are not required for engines, spare parts and equipment for use therewith.

As an example of the practical difficulties to which this difference in procedure gives rise, I venture to cite a case which has recently come to the attention of this Government. An American firm refused an order for aircraft engines on the grounds that it would be impossible to fill it legally since the Cantonese Government which had placed the order had stated that it would not apply to the Nanking Government for a “huchau” to cover these shipments. Subsequently this firm received an order from a British company for a similar number of aircraft engines of the same type to be shipped to Great Britain. Upon inquiry it was ascertained that the engines in question were intended for re-export to Hong Kong and were destined for the Cantonese Government to which they would be delivered without a “huchau” from Nanking. The company has been informed that this Government is not in a position to raise definite objection to the exportation of these engines to England on the grounds of legality, even though their ultimate destination would be China.

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Inasmuch as the entire question of the licensing of military aircraft for export and the distinction to be drawn between civil and military aircraft has been the subject of intensive study in Geneva by the Committee for the Regulation of the Trade in and Private and State Manufacture of Arms and Implements of War, upon which both the British and American Governments were represented, I believe that many of the difficulties now experienced could be obviated if our Governments could agree to make their lists of arms and implements of war, for which licenses are required for shipment to China, conform more closely to the list prepared by the Committee in Article 4 of its report (Conf. D./100 (l)–April 12, 1935). The draft text of this Article was provisionally adopted by the Committee in a first reading.

Should your Government be disposed to consider the adoption of this suggestion, I should be glad to discuss the details of this procedure and its application with a view to attaining the results which both our Governments desire.

Accept [etc.]

William Phillips