711.452/42
Memorandum of Conversation, by the Chief of the Division of Trade Agreements (Hawkins)
| Participants: | Sir Firoz Khan—High Commissioner of the Government of India in London |
| Mr. W. H. Mather of Sir Firoz’s office in London | |
| Mr. Acheson | |
| Mr. Hawkins |
Sir Firoz Khan and Mr. Mather called pursuant to an appointment made at their request to discuss certain aspects of the proposed Treaty of Establishment, Commerce, Navigation and Consular Rights between the United States and India, a draft of which was submitted by this government in October 1939.
Sir Firoz Khan stated that his government is anxious to conclude the treaty as soon as possible in order that Indian nationals who desire to come to this country on business may enjoy the “treaty merchant” status under Section 3 (6) of the Immigration Act. He pointed out that the granting of these privileges is as much in our interest as in theirs since it would facilitate business contacts between individuals and companies in the United States and in India which would result in an increase in the sale of American products in the Indian market. He went on to say, however, that the draft treaty which we presented raises questions which are difficult to settle and which if not surmounted will prevent the extension of privileges to Indian merchants which are of benefit to both countries.
The difficulties presented are (a) those created by the definition of most-favored-nation treatment (Article XVI, Section 3) which would require the abolition of preferences by India to the United Kingdom and (b) the mineral resources article (Article VIII) which would [Page 195] accord to nationals of each country reciprocal rights with respect to the exploration for and exploitation of petroleum and other mineral resources in the other.
With respect to (a), India is faced with the situation created by its contractual obligation under its trade agreement of 1939 with the United Kingdom38 whereby preferences to the United Kingdom are guaranteed.
With respect to (b), Sir Firoz Khan was less explicit with respect to the difficulties from India’s standpoint but indicated that the granting of privileges for the exploitation of petroleum and other mineral resources, in Baluchistan, would be very difficult for the Government of India to accord and it is in this area that American interests particularly desire to operate. With respect to other parts of India, he said there is nothing to interfere with American enterprise. Mr. Acheson pointed out that as matters now stand there is a notable absence of reciprocity as between British and American interests; that the British enjoy rights of exploitation in the United States and while reciprocal rights are accorded American citizens in the United Kingdom these rights are of little practical value; that in India, where opportunities for mineral development exist, American enterprise is excluded; and that accordingly he felt that American nationals in all fairness should be permitted to share with the British in India opportunities such as the British share with American nationals in this country.
Sir Firoz Khan expressed the hope that in the interest of facilitating closer commercial relations with India this Government would be willing to conclude immediately a simple commercial treaty sufficient only to extend to Indian nationals “treaty merchant” status under Section 3 (6) of the Immigration Act and that other controversial issues such as those above mentioned would be excluded for the present and left for future adjustment. He supported this proposal by repeating his contention that the granting of such status to Indian merchants is as much in our interest as in the interest of India. It was pointed out to him that under the law a treaty of commerce and navigation is necessary in order to grant such rights and that in formulating the draft of the proposed treaty we sought to effect the adjustment of other issues which we consider of at least equal importance, such adjustment being the function of such a treaty. However, Mr. Acheson said that we would study the matter carefully in the light of the discussion.
Sir Firoz Khan said again that he was very anxious to expedite the conclusion of an arrangement which would settle the treaty merchant [Page 196] matter, and expressed the hope that we could reach some decision within the next week or two. He said he was going to New York but that he could be reached there and would be ready for further discussion at any time.
- British Cmd. 5966: Trade Agreement between His Majesty’s Government in the United Kingdom and the Government of India, London, March 20, 1939.↩