The Secretary of State to the Minister Resident in Iraq ( Knabenshue )

No. 261

Sir: The receipt is acknowledged of your telegrams No. 6 of April 14, 1 p.m., and No. 11 of June 2, 1 a.m., relating to the negotiation of a treaty of commerce and navigation with Iraq. The Department desires you to make another effort to obtain the agreement of the Iraq Government to the retention of Article III of the draft enclosed with its instruction of January 18, 1937. The policy of national treatment of shipping was laid down in an Act of Congress of March 3, 1815.6 That policy has been in force between the United States and Great Britain for more than one hundred years, as evidenced by Presidential Proclamation of October 5, 1830,7 and Order-in-Council of November 5, 1830.8 Provisions for national treatment of shipping are in force between the United States and many maritime powers (see commercial treaty with Germany of 1923,9 Italy 1871,10 and Norway 1928).11 A similar provision is to be found in the treaty of commerce and navigation with Turkey of 1929.

Article V of the draft under reference relating to air navigation merely duplicated corresponding provisions of the second paragraph of Article VII of the tripartite convention. The Department has carefully reconsidered this matter in consultation with the Department of Commerce and has concluded that, in view of the complex and rapidly evolving nature of air navigation, it would be preferable to negotiate separate agreements on the subject, such as those relating to airworthiness certificates and pilots’ licenses. Since negotiation on such technical aspects of air navigation would involve complicated and lengthy discussions, it is believed better to negotiate these agreements as the particular need arises. In these circumstances, the omission of Article V is suggested.

All changes suggested in Articles VII and VIII are acceptable.

The Department regards the principle stated in the last paragraph of Article II as an important part of the proposed treaty and, therefore, desires that it be retained. The growth of import quotas and restrictions on transfers of payment has been so significant in recent years that the inclusion of provisions guaranteeing non-discriminatory treatment with respect to such matters is regarded by this Government [Page 775] as essential to the satisfactory regulation of our commercial relations with other countries.

Provisions similar to those included in the second paragraph of Article II, but considerably more detailed, are included in the reciprocal trade agreements concluded by the United States and in all commercial treaties now under negotiation. These provisions are considered to be a necessary complement to the provisions for nondiscriminatory treatment in respect of customs duties and similar matters embodied in the most-favored-nation clause. While the Department does not, of course, anticipate that either country will discriminate against the other in the matter of import quotas and exchange control, it would not be disposed, in view of the fact that the important principle embodied in the paragraph is customarily included in all recent trade agreements and draft treaties, to accede to the omission of that paragraph in the present treaty. In conveying the foregoing to the Iraq Government, you should point out that the provision in question, since it relates only to trade between the United States and Iraq, does not obligate the Iraq Government to extend similar treatment to other countries except as such extension might be required by treaties or agreements to which Iraq is a party.

For your information, the Department does not consider the question of restriction of Japanese imports as particularly relevant in this connection, since it is understood that Iraq has no treaty or agreement with Japan providing for most-favored-nation treatment and since the Iraq Government is now applying special restrictive measures to imports from Japan.

The additional reservations suggested by the Iraq Government for insertion in the last paragraph of Article IV are acceptable to the Department, subject to the inclusion of a guarantee of non-discriminatory treatment with respect to the matters covered by the paragraph and with regard to the foreign purchases of monopoly organizations. The paragraph in question would be acceptable to the Department in the following form:

Subject to the requirement that, under like circumstances and conditions, there shall be no arbitrary discrimination by either High Contracting Party against the other High Contracting Party in favor of any third country, nothing in this Treaty shall be construed to restrict the right of either High Contracting Party to impose (1) prohibitions or restrictions designed to protect human, animal, or plant health or life or national treasures of artistic, historical, or archeological value; (2) prohibitions or restrictions applied to products which as regards prohibition or trade are or may in the future be subject to state monopoly or monopolies exercised under state control; or (3) regulations for the enforcement of revenue or police laws.

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Each of the High Contracting Parties agrees that, in respect of the foreign purchases of any state monopoly for the importation, production, or sale of any commodity or of any agency having such monopoly privileges, the commerce of the other High Contracting Party shall receive fair and equitable treatment, and that, in making its foreign purchases, such monopoly or agency will be influenced solely by those considerations which would normally be taken into account by a private commercial enterprise interested solely in purchasing goods on the most favorable terms.

Very truly yours,

For the Secretary of State:
R. Walton Moore
  1. 3 Stat. 224.
  2. 4 Stat. 817.
  3. British and Foreign State Papers, vol. xvii, p. 893.
  4. Signed at Washington, December 8, 1923, Foreign Relations, 1923, vol. ii, p. 29.
  5. Signed at Florence, February 26, 1871; William M. Malloy (ed.) Treaties, Conventions, etc., Between the United States of America and Other Powers, 1776–1909 (Washington, Government Printing Office, 1910), vol. i, p. 969.
  6. Signed at Washington, June 5, 1928, Foreign Relations, 1928, vol. iii, p. 646.