Foreign Relations of the United States Diplomatic Papers, 1937, The British Commonwealth, Europe, Near East and Africa, Volume II

611.5531/723

The Secretary of State to the Ambassador in Belgium (Gibson)

No. 28

Washington, November 2, 1937.

Sir: As you are aware, the trade agreement between the United States and the Belgo-Luxemburg Economic Union, effected by an exchange of notes on February 27, 1935, does not include comprehensive general provisions respecting the treatment which will be accorded by each country to the other’s trade. However, it was provided in the exchange of notes that the agreement should be supplemented as soon as possible by an agreement containing general provisions.

The text of the United States standard draft of general provisions was furnished to the Belgian Government during the negotiation of the trade agreement, and a revised text was sent to the Belgian authorities on June 27, 1935.⁷ Under date of March 31, 1936, the Belgian Government, through its embassy in Washington, transmitted to the Department the proposed text of an agreement, which, although based in general upon the United States standard provisions, varied from them in a number of important particulars. A mimeographed copy of the Belgian proposals, with the corresponding Articles of the United States standard provisions as submitted to the Belgian Government shown in a parallel column, is enclosed herewith.⁸

In view of the requirement under the Trade Agreements Act⁹ that public notice be given and that a public hearing be held with regard to the negotiation of the supplementary agreement, the Department felt that announcement at that time of intention to negotiate might result in pressure for the renegotiation of the entire trade agreement. This view was communicated to the Belgian Embassy on August 11, 1936,¹⁰ with a suggestion that the negotiations be postponed until a favorable opportunity presented itself. The Department desired, however, to reach more or less definitive agreement with the Belgians as to the text of the supplementary agreement in advance of any public announcement, and, therefore, began informal discussions with the Belgian Ambassador in January, 1937, with regard to the points of difference between the two drafts.

As a result of these conversations, the Belgian Ambassador requested that the Department furnish him with the exact text of the changes in the Belgian draft desired by the Department and with a statement of the reasons for the desired changes. This was done on July 9, 1937. The text of the United States counter-draft and a memorandum showing the changes made in the Belgian draft and commenting on the changes are enclosed.¹¹

The Department has not received any formal expression of the Belgian Government’s views with regard to the United States draft. However, Mr. Walravens, Second Secretary of the Belgian Embassy, recently called at the Department and stated informally that the Belgian officials responsible for the negotiation of the supplementary agreement felt that the Department had not made any effort to meet their wishes on certain points in which the Belgian Government was interested and that it would, therefore, appear difficult for the Belgian Government to accede to the Department’s wishes on certain other points. Copies of memoranda of two conversations held with Mr. Walravens on August 26 and August 31, which are self-explanatory, are also enclosed,¹² as well as a copy of a memorandum later handed to Mr. Walravens.¹³

The Department is anxious to avoid coming to an impasse with the Belgian Government in the present negotiations and believes that it would be helpful if a detailed statement of its position were to be made to the Belgian officials who are directly responsible for the negotiation of the agreement. You are therefore requested to seek an opportunity at an early date to go over the United States draft with the Foreign Office and to reiterate the statements made to Mr. Walravens on August 31. In doing so, you should make clear that the Department does not wish to change the place of the negotiations and that your purpose is merely to facilitate the examination by the Foreign Office of the Department’s proposals.

In connection with this general subject, reference is made to the Embassy’s despatch No. 1301, dated July 1, 1937,¹⁴ regarding the extension by Belgium to the United States of the concessions granted by the Belgian Government in the Oslo Convention of May 28, 1937.¹⁵ In the despatch under reference, the Embassy reported a statement by an official of the Belgian Foreign Office to the effect that the Belgian Government intended to extend the benefit of the Convention to the United States, although it did not consider itself legally obligated to do so.

The position taken by the Belgian Government with reference to the extension of the Oslo Convention benefits is presumably the same as that stated by it at the time of its adherence to the Agreement relative to the Non-application of the Most-Favored-Nation Clause to certain Multilateral Economic Conventions¹⁶ (Treaty Series No. 898). This Agreement, which was opened for signature at the Pan American Union in 1934 in accordance with a resolution adopted at the Montevideo Conference,¹⁷ has been ratified only by the United States and Cuba. It was signed ad referendum by the Belgian Government, which made the following declaration at the time of signing the agreement:

“The Belgian Government declares that in signing the present agreement it does not intend to recognize that in the absence of engagements of the same nature as those stipulated therein, and outside of any reciprocity of fact, the most-favored-nation clause may be invoked with a view to being admitted to the benefits of economic conventions susceptible of a general application which have for their purpose the promotion of international trade, and to which all countries may adhere.”

The Department does not concur in the view expressed in the Belgian declaration nor is it believed that it has been widely accepted by other countries. It is the view of the Department that the Belgo-Luxemburg Economic Union is legally obligated by its trade agreement with the United States to extend to this country the concessions granted by it in the Oslo Convention. However, in view of the fact that the Belgian Government has extended to this Government the benefits of the concessions granted in the Oslo Convention, the Department does not consider it necessary or desirable at this time to engage in a discussion with the Belgian Government as to its legal obligations under the trade agreement. In this connection, note has been made of Miss Willis’¹⁸ oral statement, also reported in your despatch of July 1, that the position of this Government with regard to the legal obligation to extend the benefits of the Oslo Convention might not be identical with that of the Belgian Government.

You will note that the draft agreement prepared by the Belgian Government included, as numbered paragraph (5) of Article 13, a reservation similar to the provisions of Articles I and II of the Agreement for the Non-application of the Most-Favored-Nation Clause. This reservation has been omitted in the United States draft. In discussing this omission you should say to the Foreign Office that the reservation has not been included in any of the most-favored-nation trade agreements concluded by the United States with other countries, and that the Department does not wish, by including the reservation in the supplementary agreement with Belgium, to establish a precedent for the inclusion of such a reservation in bilateral treaties or agreements of the United States. If this explanation does not satisfy the Foreign Office, you may say further that the Department does not wish to enable other countries to obtain thereby the benefits of such a provision in so far as the United States is concerned without undertaking obligations corresponding to those assumed by the United States in the Agreement for the Non-application of the Most-Favored-Nation Clause. Under the terms of that agreement the provision is applicable as between all governments adhering to the agreement. If the reservation is included in a bilateral agreement it is applicable only between the two parties. For these reasons the Department considers that the Agreement for the Non-application of the Most-Favored-Nation Clause provides the most suitable method for establishing and securing the general acceptance of the reservation proposed by the Belgian Government.

Very truly yours,

For the Secretary of State:

Francis B. Sayre

7. Letter of June 27, 1935, to the Belgian Ambassador, missing from Department files.
8. Not attached to file copy.
9. 48 Stat. 943.
10. Foreign Relations, 1936, vol. ii, p. 10.
11. Neither printed.
12. Supra.
13. Not found in Department flies.
14. Not printed.
15. League of Nations Treaty Series, vol. clxxx, p. 5.
16. See Foreign Relations, 1934, vol. iv, pp. 8 ff.
17. For correspondence concerning the Montevideo Conference, see ibid., 1933, vol iv, pp. 1 ff.
18. Frances E. Willis, Third Secretary of Embassy in Belgium.