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

711.822/8

The Secretary of State to the Minister in Liberia (Walton)

No. 61

Washington, November 15, 1937.

Sir: The receipt is acknowledged of your unnumbered despatch of August 14, 1937, transmitting the Liberian counter proposals for a treaty of friendship, commerce and navigation between the United States and Liberia.

The Department has examined these counter proposals in a spirit of friendly cooperation and has endeavored to accept as many of them as possible. Its comment follows:

Article III

This Government accepts the proposal of the Liberian Government to insert the word “lawfully” after the word “other” in the fourth line of this article. The revised article would read as follows:

“The dwellings, warehouses, manufactories, shops, and other places of business, and all premises thereto pertaining of the nationals of each of the High Contracting Parties in the territories of the other, lawfully used for any purposes set forth in Article I, shall be respected. It shall not be allowable to make a domiciliary visit to, or search of any such buildings and premises, or there to examine and inspect books, papers, or accounts, except under the conditions and in conformity with the forms prescribed in the laws, ordinances and regulations for nationals of the state of residence or nationals of the nation most-favored by it.”

Article IV

The Liberian Government inquires under what circumstances a further prolongation would seem desirable of the three-year period which would be allowed to nationals of one of the High Contracting Parties to dispose of real property in the territory of the other which they would inherit were they not barred on the ground of alienage from inheriting such land. The Liberian Government also asks what additional period would be regarded as a reasonable prolongation.

To both questions it must be answered that the circumstances of the particular case would control. It may happen that an estate is involved or so encumbered by liens that the period of three years may not be a sufficiently fair period of time in which to dispose of the property. An acutely depressed market for the sale of real property may in certain circumstances also be a ground for further prolongation of the period, within the discretion of the appropriate court.

Article VIII

The Liberian Government suggest an exception to the most-favored-nation clause providing that it does not apply to “such treaties for reciprocal trade that have been made or may in future be made with any further state; and treaties to facilitate the payment of foreign debts”.

The Department cannot agree to such sweeping exceptions to the scope of the most-favored-nation clause. Indeed, it is a cardinal principle of the present commercial policy of the Government to extend to all countries which do not discriminate against it, the concessions and duties and other import restrictions made in trade agreements.

The Department wishes to emphasize the fundamental importance of the most-favored-nation principle as an effective instrument for the reduction of barriers to trade. The Liberian Government is no doubt fully aware of the disastrous consequences which have resulted from the growth of trade barriers since 1929. The continued existence of severe restrictions on trade and particularly the existence of discriminations still gravely retards economic recovery. The consequences of these restrictions and discriminations are serious for the trade of all countries and especially so for small nations which are still striving to recover from the financial difficulties which developed during the depression.

This Government is now engaged in a program of reduction of trade barriers through trade agreements and commercial treaties. These instruments are broadly of two types:

1. Under the trade agreements, concessions relating to tariff duties and other restrictions upon specified products are made by both parties to each agreement. These concessions are accompanied by an undertaking by each party to give unconditional most-favored-nation treatment to the trade of the other. It follows that if either party to the agreement should make any concessions to a third country, such concessions would also be extended to the other party. Fifteen agreements have already been made on this basis.

2. The second type of agreement contains mutual pledges of unconditional most-favored-nation treatment without concessions relating to particular commodities. Through commercial treaties and agreements of this type the United States guarantees to the other country that concessions made by the United States to third countries in agreements of the first type will be extended to the other party. An exception is made by the United States only in the case of concessions to Cuba. In return, the United States receives similar assurance with regard to agreements which the other party may make with third countries, sometimes with minor exceptions.

It is for this reason that the United States has proposed the inclusion of the unconditional most-favored-nation clause in the proposed treaty with Liberia. Clearly the exceptions proposed by the Liberian Government are of so sweeping a nature that they would render the clause largely ineffective in its application to the trade between the two countries.

There are commercial treaties or agreements in force between the United States and twenty-nine other countries containing the unconditional most-favored-nation clause. A list describing them appears on pages 18–21 of the enclosed copy of Treaty Information Bulletin No. 95, August, 1937. None of these treaties or agreements contains an exception such as has been proposed by the Liberian Government.

It is manifest that concessions generalized through the most-favored-nation clause will result in a far greater reduction of trade barriers generally than would result from concessions made exclusively to one country or a limited group of countries. There could be no doubt that widespread acceptance and application of the unconditional most-favored-nation principle is essential to the removal of those obstacles to trade which are now impeding world recovery.

The United States is endeavoring to secure the cooperation of all other countries in its program for the removal of all discriminations and the liberalization of trade barriers generally. A practical contribution toward that end by the United States has been made by duty reductions, effected through trade agreements, on imports constituting approximately 25 to 30% of total dutiable imports into the United States.

This Government would be happy to have the Liberian Government associated with it in the broad program of the liberalization of measures affecting international trade. It is felt that the acceptance by the Liberian Government of the unconditional most-favored-nation clause, without sweeping exceptions, would be a valuable contribution toward that program.

Article IX

The Liberian Government suggests the addition to the provision that quotas are to be allocated on the basis of a representative period of the condition “provided one of the High Contracting Parties shall accord to the other High Contracting Party similar reciprocal considerations as may be granted by any third country”.

This Government believes that quotas should be allocated without condition on the basis of a previous representative period. To require the payment of “equivalent compensation” for equitable treatment in the matter of quotas is to render the provision nugatory. There are sixteen trade agreements now in force between the United States and other countries and in so far as they deal with quotas they embody the principle of unconditional allocation on the basis of imports in a previous representative period.

The changes in phraseology suggested for the last sentence of Article IX are acceptable.

Article X

The Liberian Government requests a definition of the term “noncommercial transactions used in connection with the article concerning the transfer of foreign exchange”.

Commercial transactions may be taken to mean payments for goods, and payments incidental to the transportation of goods, such as freight and insurance. Non-commercial transactions refer to all other payments, for example, payments for loans, the interest on loans, and payments of the proceeds of estates.

Article XIV

The Liberian Government suggests the deletion of the second sentence of the article which provides specifically for national treatment of shipping in connection with tonnage and other taxes. It must be pointed out that the second sentence adds little to the principle enunciated in the first sentence which is apparently acceptable to the Liberian Government. The Department does not understand the objection to the second sentence if the first be acceptable. Moreover, it does not see that a guarantee of national treatment with respect to tonnage taxes will decrease current revenues and instructs you to inquire whether port and harbor dues are now higher on foreign than national vessels.

The principle of national treatment of shipping was laid down in an act of Congress of March 3, 1815.¹⁰ 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, 1830,¹¹ and Order in Council of November 5, 1830.¹² It is embodied in a great number of treaties among the maritime powers and has been invariably included in the modern treaties of the United States touching navigation—(see, for example, commercial treaty with Germany 1923,¹³ Italy 1871¹⁴ and Norway 1928¹⁵). It is to be hoped that the Liberian Government will subscribe to so widely accepted a principle.

Article XVII

This Government has examined with care the Liberian counter proposal for an article dealing with the juridical personality of corporations and associations. It is noted that the Liberian proposal restricts such recognition to commercial companies and associations. You are, of course, aware of the very great assistance afforded to the Republic of Liberia by American missionary agencies particularly in educational and medical activities. It would seem appropriate to recognize the juridical personality of missionary and other nonprofit societies in a treaty covering the basic relations between the two countries. You are instructed, therefore, to point out to the Liberian authorities the lively interest which this Government takes in these matters and to endeavor to secure agreement to the original proposal which, by its very nature, could not be burdensome to either Party.

Article XXI

The Liberian Government suggests the addition of the words “or such areas as may be excluded from visit by law, military order or other regulations” after the word “territories” in the tenth line of the first paragraph.

The Department agrees in principle with this change but desires to have it expressed in the following form:

“There shall be complete freedom of transit through the territories including territorial waters of each High Contracting Party on the routes most convenient for international transit, by rail, navigable waterway, and canal, other than the Panama Canal and waterways and canals which constitute international boundaries, to persons and goods coming from, going to or passing through the territories of the other High Contracting Party, except such persons as may be forbidden admission into its territories or goods of which the importation may be prohibited by law or regulations, provided that the foregoing shall not be construed to prevent either High Contracting Party from excluding aliens from special areas within its territories closed to visit by law, military order or regulations.”

The Liberian Government desires that the second paragraph of this article read as follows:

“Persons and goods in transit, shall not be subjected to any transit duty, or to any unnecessary delays or restrictions, or to any discrimination as regards charges, facilities or any other matter higher than that imposed upon the most favored nation”.

It is suggested that it may be preferable to word the paragraph as follows:

“Persons and goods in transit shall not be subjected to any transit duty, or to any unnecessary delays or restrictions, or to treatment as regards charges, facilities or any other matter less favorable than that accorded to the most favored nation”.

In lieu of the existing fourth paragraph of this article which provides that transit charges shall be reasonable, the Liberian Government proposes a statement recognizing that goods in transit, when warehoused or otherwise stored, shall be subject to storage charges. It would seem desirable to have both provisions and accordingly the Department authorizes you to accept the Liberian proposal followed by the original sentence constituting the fourth paragraph of this article.

Article XXVI

The Liberian Government suggests the inclusion of arbitration provisions in this treaty. This Government has not heretofore included arbitration provisions in its treaties of friendship, commerce and navigation. It would seem, moreover, that the arbitration convention between the United States and Liberia signed at Monrovia February 10, 1926,¹⁶ which is still in force, would be adequate to govern the situation. The Department, of course, would be glad to consider proposals for the revision of that convention if it is deemed necessary.

Article XXVII

The Department agrees to the proposal that the exchange of ratifications take place at Monrovia.

Very truly yours,

Cordell Hull

10. 3 Stat 224.
11. 4 Stat. 817.
12. British and Foreign State Papers, vol. xvii, p. 893.
13. Signed at Washington, December 8, 1923, Foreign Relations, 1923, vol. ii, p. 29.
14. Signed at Florence, February 26, 1871, Malloy, Treaties, 1776–1909, vol. i, p. 969.
15. Signed at Washington, June 5, 1928, Foreign Relations, 1928, vol. iii, p. 646.
16. Foreign Relations, 1926, vol. ii, p. 597.