667N.116/56: Telegram
The Secretary of State to the Ambassador in the United Kingdom ( Kennedy )
1638. The Department has been informed in a telegram, no. 23, dated December 13, 1939, 5 p.m., from the American Consul General in Jerusalem, that the Palestine Government has established an import license system effective December 11, 1939, applicable to some 422 of the total of 760 items of merchandise in the Palestine customs classification list, including almost all articles imported from the United States.
The Department is also informed that in an interview on December 12, 1939 between a representative of the Consulate General and the Economic Adviser of the Palestine Government, the latter stated that he was unable to give assurances that American trade will not be subject to restrictions placing it on a less favorable footing than British trade with Palestine. The Economic Adviser is stated to have explained that the policy of the Palestine Government, in accordance with instructions from the British Government, is to accord preference to imports from British Empire sources, such a policy having been justified by the Economic Adviser on the ground that the British Government cannot cut Palestine adrift during the war but must afford its currency and economic interests the protection of emergency measures applied throughout the British Empire.
Any effort, of course, on the part of the Palestine authorities to discriminate against American imports into Palestine with a view to reducing the demand for foreign exchange or for exchange from countries outside the sterling exchange control area would be in violation of American treaty rights in Palestine and particularly those embodied in Article 2 of the American-British Mandate Convention of December 3, 1924 and the related Article 18 of the Mandate assuring American [Page 816] trade with Palestine equality of treatment with that of the Mandatory Power or of any foreign state.
While this Government is not disposed to raise any question regarding the adoption of measures in Palestine which may be reasonably necessary and consistent with the status of Palestine and the obligations of the British Government as mandatory for that territory, it cannot overlook illegal and unwarranted interferences with American treaty rights and it is unable to recognize either the necessity or justification for the administration of the exchange control and import license system in Palestine in a manner to give preference to imports from British Empire sources, with a resultant discrimination against imports from the United States.
The foregoing observations are deemed equally applicable, mutatis mutandis, to British mandated territories in Africa27 where an exchange control and import license system is understood to have been introduced similar to that in Palestine.
You are requested to address a note to the Foreign Office in the sense of the above and to inform the Foreign Office that this Government confidently expects that the British Government, in accordance with the obligations under its mandate conventions with the United States, will continue to recognize that American products must be admitted to Palestine and British mandated territories in Africa on a basis of full equality in all respects with British and all other products.
A written instruction is being addressed to you28 concerning the objections of this Government to similar restrictions which have been introduced in British territories within the Conventional Basin of the Congo.