711.90G2/24

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

No. 909–Diplomatic

Sir: I have the honor to refer to the Legation’s despatch no. 860 of August 28, 1937,12 reporting that it had in a note dated August 24 presented to the Foreign Office the Department’s observations on and suggested changes in the amendments submitted by Iraq to the draft Treaty of Commerce and Navigation under negotiation between our two Governments.

I have now received from the Foreign Office in reply a note dated November 27, 1937, having as its enclosure a draft of the Treaty incorporating the proposals already agreed upon between the two Governments and in addition those amendments proposed in the accompanying note. The note and the draft Treaty were both submitted in Arabic. However, an English text of the Treaty was also enclosed and the English of the accompanying note (the language in which it was drafted) was furnished the Legation by the courtesy of the Legal Adviser of the Foreign Office. Copies of the English texts of this note and the draft Treaty are enclosed herewith.

The Department will note from the enclosures that the Iraqi Government has now accepted Article II with the addition of an introductory clause and that in Article III the clause concerning the treatment of national vessels has been re-phrased. The phrase “within the country” has again been inserted by Iraq in clause 2, paragraph 2 of Article IV. In place of the original Article V, the omission of which at our suggestion is accepted, Iraq has submitted a new Article reserving to itself the right, should measures taken or maintained by the United States seriously affect its chief exports, to request the United States to open negotiations and if agreement be not reached [Page 777] within three months from its request, to terminate the Treaty immediately.

It is believed that all the changes proposed by Iraq can be accepted with the possible exception of Article V. If acceptable as submitted, there are a few errors of punctuation and spelling in the present draft which can be corrected in the final draft. In this connection, it is believed that the Department will desire to change the word “traveler’s” as used in the first paragraph of Article I of the text originally submitted by us, to the plural form of the word. The Department’s attention is also called to the substitution in this draft of the word “production” in clause 2, paragraph 2 of Article IV for the word “prohibition” between the words “which as regards” and “or trade are”. The word “prohibition” was first submitted to the Department in my telegram no. 11 of June 2, 11 [1] A.M., but it was changed to “production” in the draft submitted with my despatch no. 820 of July 7, 1937.

Subsequent to the submission of the Legation’s note of August 24 to the Foreign Office, the Legation inquired from time to time as to the progress that was being made. On September 22, the Legal Adviser, Mr. Archibald McDougall, inquired of Mr. Satterthwaite, then Chargé d’Affaires, whether there was anything in our file which would assist in the interpretation of the sentence regarding Article II in the Legation’s note to the Foreign Office of August 24 reading as follows:

“In conveying the foregoing to the Iraqi Government, I have been instructed to point out that the provision in question, since it relates only to trade between the United States and Iraq, does not obligate the Iraqi 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.”

Mr. McDougall was informed that no additional comment on this particular point could be found in the file. However, the following paragraph from the Department’s instruction no. 242 of January 18, 1937 was read to him:

“It is the view of the Department that most-favored-nation treatment in respect of quotas and exchange control requires that the allocations made under quotas or exchange control will be equal to the share of the trade in a particular commodity enjoyed in a previous representative period.”

The following paragraph of the Department’s instruction no. 261 of July 19, 1937, was also read to him:

“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 [Page 778] and since the Iraq Government is now applying special restrictive measures to imports from Japan.”

It was only after long and extended conferences among various officials and advisers of the Iraqi Government that they finally agreed to accept Article II substantially as submitted by the Department. Mr. McDougall informed Mr. Satterthwaite on September 29 that he had brought Mr. Hogg, the English adviser of the Ministry of Finance, around to his point of view on Article II and that the latter was at last willing to accept it, provided another Article be inserted in the Treaty embodying Iraq’s statement to the League of Nations concerning most-favored-nation treatment contained in Article XI (1) of its Declaration of May 30, 1932.13 The Legation later learned that subsequent to a final meeting on October 11, concrete proposals in reply to ours had been drafted for presentation to the Council of Ministers.

In view of the fact that this new Article proposed by Iraq as Article V is unilateral rather than bilateral, the Legation inquired of the Legal Advisor of the Foreign Office whether this phase of the matter had been fully discussed and whether the Iraq Government would entertain serious objections to making it bilateral. Mr. McDougall replied that this point had in fact been carefully considered and that, as stated in the Foreign Office note of November 27, it was inserted in order that the United States should not have a more favored position vis-à-vis Iraq than the members of the League of Nations, with respect to whom it is of course unilateral. He understands, however, that the United States might possibly claim a more favored position, since the Convention of January 9, 1930, was signed more than two years previous to Iraq’s Declaration to the League of Nations of May thirty, 1932. He added that the new Article would not have been proposed had it not been for our insistence on retaining Article II in its original form. He gave the impression that the Iraqi Government would be very reluctant and might possibly refuse to accept the Treaty without the inclusion of this new Article.

While discussing the Treaty on September 29, Mr. McDougall observed that there had been considerable discussion among the experts as to the possible benefits which Iraq might obtain by a relaxation of the duties and sanitary restrictions imposed by the United States on dates, especially those of a cheaper quality. The experts who had discussed the matter with him had suggested that Iraqi date exporters would benefit greatly if our tariff on dates were changed from a specific to an ad valorem basis, and that they would also benefit if the rule excluding shipments containing more than 10% [Page 779] of wormy dates were relaxed to 15%. As Sayid Ibrahim Kamal, the Minister of Finance, raised this same point during a conversation which I had with him on November 30, Mr. Satterthwaite discussed this point again in his last conversation with Mr. McDougall concerning the Treaty, pointing out that this was a question which could not properly be dealt with in the Treaty itself. As, however, it could probably be considered in the negotiation of a reciprocal trade agreement, Mr. McDougall requested the Legation to obtain the views of the Department as to the suggested change in the tariff on dates, and also to inquire whether or not the Department would be interested in discussing the negotiation of a trade agreement. This request is, of course, entirely informal and does not come from the Foreign Minister. In view of the fact, however, that Mr. McDougall is familiar with our trade agreement program and that his advice would in all probability be accepted, I should be glad to receive the Department’s observations on these points.

As to the Treaty itself, if the latest proposals of the Iraqi Government are acceptable to the Department, arrangements can probably be made for its signature within a short time after the receipt of my full powers.

Respectfully yours,

P. Knabenshue
[Enclosure 1—Translation]

The Iraqi Minister for Foreign Affairs (Towfik As-Suwaidi) to the American Minister Resident (Knabenshue)

No. 12832/7/41

Excellency: I have the honour to refer to the Note 394 of August 24th, 1937, which was addressed to the Acting Minister for Foreign Affairs by Mr. J. C. Satterthwaite as Chargé d’Affaires ad interim, concerning the draft Treaty of Commerce and Navigation which is under discussion between our two Governments. The proposals of the United States Government contained in that Note have now been carefully considered by my Government and I am happy to inform Your Excellency that, subject to the amendments set out below, these proposals are acceptable.

2. The amendments referred to above are as follows:

(1) In Article II, insert at the beginning of the Article the words “Having regard to the volume and nature of the trade between the two countries, it is agreed that” and at the end of the first paragraph of the Article the words “and that” the whole Article thus reading as one sentence. Subject to these amendments, which are dictated by Iraq’s extensive most-favoured-nation obligations, Article II is acceptable.

[Page 780]

(2) In the first paragraph of Article III, substitute for the words “the same treatment as national vessels” the words “treatment not less favourable than that accorded to national vessels or the vessels of the most favoured nation.”

This amendment gives full effect to the desire of the United States Government to retain in the Article the principle of national treatment of shipping, and at the same time it renders the Article more intelligible having regard to the special circumstance that Iraq possess no mercantile marine and has strictly speaking no national standard of treatment for shipping.

(3) In clause (2) of the second paragraph of Article IV, insert between the word “subject” and the words “to state monopoly” the words “within the country.”

These words were employed in the amendment proposed in the Ministry’s Note No. 685 [6857] of June 26th, 1937,14 and are to be found in Article 4 (8) of the International Convention for the Abolition of Import and Export Prohibitions and Restrictions, signed at Geneva on November 8th, 1927,15 on which the amendment was based.

(4) In the place of Article V, the omission of which is acceptable, substitute a new Article as follows:

Article V

“Notwithstanding the provisions of Article VII of this Treaty, should measures taken or maintained by the United States of America seriously affect the chief exports of Iraq, Iraq reserves to itself the right to request the United States of America to open negotiations, and if agreement be not reached by negotiation within three months from its request, to terminate this Treaty immediately.”

This new Article is based upon Article 11 (1) of Iraq’s Declaration to the League of Nations of May 31st [30th], 1932, and its object is that Iraq should not be in a less favourable situation vis-à-vis the United States than vis-à-vis the Members of the League. It is believed that it has never been the policy of the United States Government to seek a better position in relation to Iraq than the Members of the League themselves enjoy. The Iraqi Government attach importance to the acceptance of this Article, especially in view of their acceptance of Article II, and it is hoped that the United States Government will find no difficulty in accepting the Article now proposed as Article V.

3. I have the honour to enclose completed drafts in English and in Arabic giving effect to the proposals on either side already accepted [Page 781] by our two Governments, and also to the amendments now proposed in this Note, and I shall be prepared to proceed to the signature of the Treaty at Your Excellency’s convenience.

I avail myself [etc.]

Towfik As-Suwaidi
[Enclosure 2—Translation]

Iraqi Draft of Proposed Treaty of Commerce and Navigation

Preamble

The United States of America and the Kingdom of Iraq, taking cognisance of the provisions of Article 7 of the Convention, signed at London January 9, 1930, to which the United States of America, Great Britain, and Iraq are Parties, whereby on the termination of the special relations existing between His Britannic Majesty and His Majesty the King of Iraq, negotiations shall be entered into between the United States and Iraq for the conclusion of a treaty in regard to their future relations, have resolved to conclude a treaty of Commerce and Navigation and for that purpose have appointed as their plenipotentiaries:

The President of the United States of America:

and

His Majesty the King of Iraq:

Who, having communicated to each other their full powers found to be in due form, have agreed upon the following articles:

Article I

In respect of import and export duties, all other charges imposed on or in connection with importation or exportation, and the method of levying such duties and charges, as well as in respect of transit, warehousing and customs formalities, and the treatment of commercial traveler’s samples, the United States of America will accord to Iraq and Iraq will accord to the United States of America, its territories and possessions, unconditional most-favored-nation treatment.

Therefore, no higher or other duties shall be imposed on the importation into or the disposition in the United States of America, its territories or possessions, of any articles the [growth,] produce or manufacture of Iraq than are or shall be payable on like articles the [growth,] produce or manufacture of any other foreign country.

Similarly, no higher or other duties shall be imposed on the importation into or the disposition in Iraq of any articles the [growth,] produce or manufacture of the United States of America, its territories or possessions, than are or shall be payable on like articles the [growth,] produce or manufacture of any other foreign country.

[Page 782]

Similarly, no higher or other duties shall be imposed in the United States of America, its territories or possessions, or in Iraq, on the exportation of any articles to the other or to any territory or possession of the other, than are payable on the exportation of like articles to any other foreign country.

Any advantage, of whatsoever kind, which either High Contracting Party may extend to any article, the growth, produce or manufacture of any other foreign country shall simultaneously and unconditionally, without request and without compensation, be extended to the like article the growth, produce or manufacture of the other High Contracting Party.

The stipulations of this Treaty regarding the treatment to be accorded by each High Contracting Party to the commerce of the other do not extend:

(a)
to the advantages now accorded or which may hereafter be accorded by the United States of America, its territories or possessions or the Panama Canal Zone to one another or the Republic of Cuba. The provisions of this paragraph shall continue to apply in respect of any advantages now or hereafter accorded by the United States of America, its territories or possessions or the Panama Canal Zone to one another, irrespective of any change in the political status of any of the territories or possessions of the United States of America;
(b)
to any advantages in customs matters which Iraq may grant to goods the produce or manufacture of Turkey, or of any country whose territory was in 1914 wholly included in the Ottoman Empire in Asia;
(c)
to any advantages which are, or may in the future be accorded by either Party to purely border traffic within a zone not exceeding ten miles (15 kilometres) wide on either side of the customs frontier;
(d)
to any advantages in customs matters which are, or may in the future be accorded to States in customs union with either High Contracting Party so long as such advantages are not accorded to any other State.

Article II

Having regard to the volume and nature of the trade between the two countries it is agreed that in all that concerns matters of prohibitions or restrictions on importations and exportations each of the two countries will accord, whenever they may have recourse to the said prohibitions or restrictions, to the commerce of the other country treatment equally favorable to that which is accorded to any other country and that in the event either country establishes or maintains import or customs quotas, or other quantitative restrictions, or any system of foreign exchange control, the share of the total permissible importation of any product or of the total exchange made available for importation of any product of the other country [Page 783] shall be equal to the share in the trade in such product which such other country enjoyed in a previous representative period.

Article III

Vessels of the United States of America will enjoy in Iraq and Iraqi vessels will enjoy in the United States of America treatment not less favourable than that accorded to national vessels or the vessels of the most favored nation.

The coasting trade of the High Contracting Parties is exempt from the provisions of this Article and from the other provisions of this Treaty, and is to be regulated according to the laws of each High Contracting Party in relation thereto. It is agreed, however, that vessels of either High Contracting Party shall enjoy within the territory of the other with respect to the coasting trade the most-favored-nation treatment.

Article IV

Nothing in this Treaty shall be construed to prevent the adoption of measures prohibiting or restricting the exportation or importation of gold or silver, or to prevent the adoption of such measures as either High Contracting Party may see fit with respect to the prohibition, or the control, of the export or sale for export, of arms, ammunition, or implements of war, and, in exceptional circumstances, of all other commodities.

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 archaeological value; (2) prohibitions or restrictions applied to products which as regards production or trade are or may in the future be subject within the country to state monopoly or monopolies exercised under state control; or (3) regulations for the enforcement of revenue or police laws.

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.

[Page 784]

Article V

Notwithstanding the provisions of Article VII of this Treaty, should measures taken or maintained by the United States of America seriously affect the chief exports of Iraq, Iraq reserves to itself the right to request the United States of America to open negotiations, and if agreement be not reached by negotiation within three months from its request, to terminate this Treaty immediately.

Article VI

The present Treaty shall, from the day on which it comes into force supplant Article 7 of the convention between the United States of America and Great Britain and Iraq signed at London January 9, 1930, in so far as commerce and navigation are concerned.

Article VII

The present Treaty shall take effect in all its provisions on the thirtieth day after the exchange of ratifications, and shall continue in force for the term of three years from that day. If neither High Contracting Party notifies to the other at least one year in advance an intention of terminating the Treaty upon the expiration of the aforesaid period of three years, the Treaty shall remain in full force and effect after the aforesaid period and until one year from such a time as either of the High Contracting Parties shall have notified to the other an intention of terminating the Treaty.

Article VIII

The present Treaty shall be ratified and the ratifications thereof shall be exchanged at Baghdad as soon as possible.

In witness whereof the respective Plenipotentiaries have signed the present Treaty and have affixed their seals thereto.

Done in duplicate in the English and Arabic languages, which have the same value and shall have equal force, at Baghdad this . . . . . day of. . . . . . . . 1937, of the Christian Era, corresponding with the. . . . . day of. . . . . . . 1356, of the Hijra.

  1. Not printed.
  2. For text of Declaration, see League of Nations document No. A. 17. 1932. VII Request of the Kingdom of Iraq for Admission to the League of Nations, p. 3.
  3. Not printed, but see despatch No. 820–Diplomatic, July 7, 1937, from the Minister Resident in Iraq, p. 773.
  4. Department of State Treaty Series No. 811, p. 7.