611.6831/190
The Secretary of
State to the Minister in Greece (MacVeagh)
No. 454
Washington, April 13, 1938.
Sir: With reference to the Department’s
instruction No. 445 of March 8, 1938, concerning Greek-American
trade relations, there is enclosed herewith the new draft modus vivendi which it is requested that you
submit to the Greek Minister for Foreign Affairs under cover of an
appropriate note of transmission.
The new draft modus vivendi, which embodies
the same principles of policy as contained in the text of the draft
which was proposed in your note to the Greek Minister for Foreign
Affairs on July 19, 1937, is designed to secure, for the trade
between the United States and Greece, mutual equality of treatment
in respect of all forms of trade control measures. The following
observations may be useful in the clarification of those provisions
of the new modus vivendi which are designed
specifically to accomplish this objective.
Article I embodies the general most-favored-nation clause and except
for the addition of the word “taxation” after the word “sale” in the
seventh line, the Article is identical with paragraph 2 of the
proposed draft of July 19, 1937. The provisions of this Article are
designed primarily to assure to each country equality of treatment
with third countries in the application and administration of
customs duties [Page 524] and other
charges imposed on or in connection with the importation or
exportation of merchandise.
The provisions of Article II are designed to insure, as nearly as
possible, the equivalent of most-favored-nation treatment with
respect to the importation of goods subject to quantitative
restrictions. The provisions of this Article differ in certain
respects from and are somewhat more flexible than the corresponding
provisions of the modus vivendi previously
proposed to the Greek Government.
The first section of the Article provides for a generally-recognized
application of the most-favored-nation principle, in the broadest
possible terms, to quantitative restrictions. The second section of
the Article is intended to prevent quantitative restrictions from
being administered by either Government as an instrument for
diverting or canalizing trade at the expense of the other country
and provides, at the option of the country which imposes the
restriction, for two alternative methods of procedure. The first
method, which is described in sub-paragraph (a) would, in effect, involve the imposition of a global
quota on imports from all sources without any restriction on the
share of this quota which may be supplied by the other country. The
second method, which is provided in sub-paragraph (b), involves the allotment of shares among the various
exporting countries and provides that the share allotted to the
other country party to the agreement shall be, as nearly as may be
determined, the same as the relative share which it would supply in
the absence of quantitative restrictions.
The method of determining allotments which is provided for in
sub-paragraph (b) differs in form from
paragraph 3 of the proposed modus vivendi of
July 19, 1937, which provided that the country which adopts import
restrictions shall allot to the other country a share of the total
permitted importations equivalent to the share of the total
importations supplied by the other country in some previous
representative period. The present Article avoids laying down this
formula, which may in some cases be unduly rigid and in others
unduly ambiguous, but states the purpose which underlies any such
formula, namely, that the share allotted to the other country shall
be equivalent to the relative share which would be supplied by it in
the absence of quantitative restrictions. In addition, it sets forth
certain factors which must be taken into consideration in
determining this share.
The provisions of Article III approach the problem of exchange
control in a different manner than that contained in paragraph 5 of
the proposed modus vivendi of July 19, 1937.
In this connection your attention is called to the fourth paragraph
of the Department’s instruction No. 392 of May 24, 1937.20 The
Department now feels that, if possible, the new provision on
exchange control should be incorporated [Page 525] in the proposed modus
vivendi. Article III provides that exchange shall be
granted without restriction, at a uniform rate with respect to both
products and countries, in payment for all goods permitted to be
imported subsequent to the effective date of the modus vivendi. Its purpose is to prevent the accumulation
of blocked balances in connection with such products as are actually
imported from the other country. It means that exchange control
shall not be used for the purpose of controlling, directly or
indirectly, the volume of goods imported from the other country. Any
quantitative regulation of imports from the other country must be in
accordance with the provisions of Article II. In effect, the new
exchange provision transfers the full burden of insuring
non-discriminatory treatment with respect to both quantitative
restrictions and exchange control measures to the quota article.
The first paragraph of Article IV is designed to insure to the other
country a fair and equitable share of the market if the government
of one country establishes or maintains a monopoly for the
importation or sale of a particular commodity or grants exclusive
privileges to an agency to import or sell a particular commodity.
This article is an application of the principles outlined in the
section on monopolies contained in the note which you presented to
the Greek Minister for Foreign Affairs on July 19, 1937. This
Article in no way affects the right of either country to maintain or
expand a monopoly régime; its sole purpose is to guard against
arbitrary diversion of trade on other than purely economic
grounds.
The second paragraph provides for most-favored-nation treatment with
respect to government purchases generally, but does not prevent
either Government from giving preference to its own nationals with
respect to such purchases.
Your attention is called to the fact that the provisions of Articles
III and IV were included in the temporary commercial arrangement
concluded between the United States and Italy on December 16,
1937,21 a
copy of which is enclosed.
In the event that Article III of the new modus
vivendi proves to be unacceptable to the Greek Government
you are authorized to substitute therefor the provisions of
paragraph 5 of the modus vivendi of July 19,
1937. If Article IV of the new modus vivendi
proves to be unacceptable to the Greek Government you are authorized
to withdraw that Article in its entirety.
If the text of the new modus vivendi contains
passages that are obscure to you or provisions which in your opinion
should be altered you should withhold action and consult with the
Department by telegraph. [Page 526]
Immediately upon presenting the new modus
vivendi to the Minister for Foreign Affairs you should
inform the Department of your action by telegram.
Very truly yours,
For the Secretary of State:
Francis B. Sayre
[Enclosure]
Draft Modus Vivendi Between the United
States and Greece
Sir: I have the honor to make the
following statement of my understanding of the agreement reached
through recent conversations held at Athens by representatives
of the Government of the United States of America and the
Government of the Kingdom of Greece with reference to the
treatment which the United States of America shall accord to the
commerce of the Kingdom of Greece and which the Kingdom of
Greece shall accord to the commerce of the United States of
America.
These conversations have disclosed a mutual understanding between
the two Governments which is that the United States of America
will accord to the commerce of the Kingdom of Greece and the
Kingdom of Greece will accord to the commerce of the United
States of America, its territories and possessions,
non-discriminatory treatment.
Accordingly the two Governments have agreed upon the following
provisions:
I
With respect to customs duties or charges of any kind imposed on
or in connection with importation or exportation, and with
respect to the method of levying such duties or charges, and
with respect to all rules and formalities in connection with
importation or exportation, and with respect to all laws or
regulations affecting the sale, taxation or use of imported
goods within the country, any advantage, favor, privilege or
immunity which has been or may hereafter be granted by the
United States of America or the Kingdom of Greece to any article
originating in or destined for any third country, shall be
accorded immediately and unconditionally to the like article
originating in or destined for the Kingdom of Greece or the
United States of America, respectively.
II
- 1.
- Neither the Government of the United States of America nor
the Royal Hellenic Government shall regulate by import
licenses or permits the importation into its territory of
any article in which the other country has an interest, or
by any method maintain limitation [Page 527] or control of the amount
of importation of any such article, unless similar action is
taken with respect to the importation of such article from
all other countries.
- 2.
- If imports of such an article from the other country are,
directly or indirectly, restricted by such regulation,
limitation, or control, the Government taking such action
shall establish in advance, and inform the other Government
of, the total amount permitted to be imported from all
countries during any specified period, which shall not be
shorter than three months, and of any increase in such
amount during the specified period, and shall either—
- (a)
- Impose no limitation on the part of such total
amount which may be imported from the other country;
or
- (b)
- Establish in advance, and inform the other country
concerning, the quota of such article which shall be
permitted to be imported from the other country
during the specified period. Such quota shall be, as
nearly as may be determined, equivalent to the
proportion of the total importation in such period
which the other country would supply in the absence
of such regulation, limitation, or control. In
calculating such quota, account shall be taken of
the proportion of the total importation of such
article which the other country supplied during
previous periods, of the trend of the trade in such
article, and, in the case of a quota period shorter
than a year, of seasonal variations, if any, in the
trade. Where a quota for importation from the other
country is established, no obstacle, administrative
or otherwise, shall be placed in the way of
importation sufficient to fill the quota allotted to
the other country. If the total amount permitted
entry from all countries is increased during any
quota period, the quota established for the other
country shall be increased proportionately.
- 3.
- If the Government of either country establishes or
maintains such regulation, limitation, or control of the
importation of an article in which the other country has an
interest, it shall—
- (a)
- Make public the regulations regarding the issuance
of licenses or permits, or regarding any other
method of limitation or control, before such
regulations are put into force;
- (b)
- Administer any system of licenses or permits or
any other method of limitation or control so as not
to discriminate against importation from the other
country, and in no manner, directly or indirectly,
influence importers regarding the country from which
they stall seek permission to import any such
article;
- (c)
- Ensure that there shall be no undue delay in the
issuance of licenses or permits;
- (d)
- Ensure that any importer seeking to establish new,
or to re-establish old, trade connections with the
other country, or to maintain such trade
connections, shall be given reasonable opportunity
to import any such article; and upon request inform
any such importer hose application is rejected of
the reasons for such rejection;
- (e)
- At all times upon request advise the Government of
the other country of the amount of any such article,
the growth, produce, or [Page 528] manufacture of each exporting
country which has been imported, or for which
licenses or permits for importation have been
granted.
- 4.
- The provisions of this Article shall also be applicable
with respect to any regulation, limitation, or control
imposed by either Government upon the importation of such
article at a particular rate of duty or charge.
III
In the event that the Government of the United States of America
or the Royal Hellenic Government establishes or maintains,
directly or indirectly, any form of control of the means of
international payment, it shall, in the administration of such
control:
- (a)
- Impose no prohibition, restriction, condition, or
delay on the transfer of payment for imported articles
the growth, produce, or manufacture of the other
country, or of payments necessary for and incidental to
the importation of such articles;
- (b)
- Accord unconditionally, with respect to rates of
exchange and taxes or surcharges on exchange
transactions in connection with payments for or payments
necessary and incidental to the importation of all
articles the growth, produce, or manufacture of the
other country, treatment no less favorable than that
accorded in connection with the importation of any
article whatsoever the growth, produce, or manufacture
of any third country; and
- (c)
- Accord unconditionally, with respect to all rules and
formalities applying to exchange transactions in
connection with payments for or payments necessary and
incidental to the importation of articles the growth,
produce, or manufacture of the other country, treatment
no less favorable than that accorded in connection with
the importation of the like articles the growth,
produce, or manufacture of any third country.
IV
- 1.
- In the event that the Government of the United States of
America or the Royal Hellenic Government establishes or
maintains a monopoly for the importation, production, or
sale of a particular commodity or grants exclusive
privileges, formally or in effect, to one or more agencies
to import, produce, or sell a particular commodity, the
Government of the country establishing or maintaining such
monopoly, or granting such monopoly privileges, agrees that
in respect of the foreign purchases of such monopoly or
agency the commerce of the other country shall receive fair
and equitable treatment. To this end it is agreed that in
making its foreign purchases of any product such monopoly or
agency will be influenced solely by those considerations,
such as price, quality, marketability, and terms of sale,
which would ordinarily be taken into account by a private
commercial enterprise interested solely in purchasing such
product on the most favorable terms.
- 2.
- It is agreed that the Government of each country, in the
awarding of contracts for public works and generally in the
purchase of supplies, shall not discriminate against the
other country in favor of any third country.
V
- 1.
- The advantages now accorded or which may hereafter be
accorded by the United States of America or the Kingdom of
Greece to adjacent countries in order to facilitate frontier
traffic, and advantages resulting from a customs union to
which either the United States of America or the Kingdom of
Greece may become a party, shall be excepted from the
operation of this Agreement.
- 2.
- It is understood that the advantages now accorded or which
may hereafter be accorded by the United States of America,
its territories or possessions, the Philippine Islands, or
the Panama Canal Zone to one another or to the Republic of
Cuba shall be excepted from the operation of this
Agreement.
- 3.
- Subject to the requirement that, under like circumstances
and conditions, there shall be no arbitrary discrimination
by either country against the other country in favor of any
third country, the provisions of this Agreement shall not
extend to prohibitions or restrictions (1) imposed on moral
or humanitarian grounds; (2) designed to protect human,
animal or plant life or health; (3) relating to prison-made
goods; (4) relating to the enforcement of police or revenue
laws.
- 4.
- Nothing in this Agreement shall be construed to prevent
the adoption of measures prohibiting or restricting the
exportation of gold or silver, or to prevent the adoption of
such measures as either Government may see fit with respect
to the control of the export or sale for export of arms,
ammunition, or implements of war, and, in exceptional
circumstances, all other military supplies, and it is
agreed, further, that nothing in this Agreement shall be
construed to prevent the adoption or enforcement of measures
relating to neutrality.
VI
The present Agreement shall replace the exchange of notes between
the Government of the United States and the Government of the
Kingdom of Greece of December 9, 1924, and shall become
operative on this . . . . . day of . . . . . , . . . . . , and
shall continue in force until superseded by a more comprehensive
commercial agreement or by a definitive treaty of commerce and
navigation, or until denounced by either country by advance
written notice of not less than thirty days.
Accept, Sir, etc., etc.
