638.3931/16
The Department of State to the Haitian Legation
Memorandum
Reference is made to the Treaty of Commerce between the Republic of Haiti and the Dominican Republic signed on August 26, 1941, to the memorandum on this subject presented by the Chargé d’Affaires ad interim of the United States at Port-au-Prince to the Minister of Foreign Affairs of Haiti on October 21, 1941,51 and to the note from the latter to the former dated November 7, 1941.
It is the understanding of the Government of the United States that by the Treaty of Commerce Haiti undertakes, inter alia, to grant to the Dominican Republic, with respect to a specified list of import products, percentage reductions in customs duties ranging from thirty-three to fifty percent; and that an examination of the provisions of paragraphs six and seven of Article VII of the trade agreement of March 28, 1935, between Haiti and the United States, in the light of the recommendation of September 18, 1941 of the Inter-American Financial and Economic Advisory Committee, relating to tariff preferences between contiguous countries, has led the Government of Haiti to believe that the tariff reductions in accordance with the treaty would not be subject to the most-favored-nation provisions of the first paragraph of Article VII of the trade agreement, which require that such tariff reductions be extended to like articles imported into Haiti from the United States.
[Page 363]The Government of the United States is unable to find in the provisions of the trade agreement cited by the Government of Haiti language which would exempt from the scope of the most-favored-nation clause tariff reductions granted by Haiti to the Dominican Republic.
Paragraph six of Article VII of the trade agreement provides as follows:
“The advantages accorded or which may hereafter be accorded by the United States of America or the Republic of Haiti 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 Republic of Haiti may become a party, shall be expected from the operation of this agreement.”
The term “frontier traffic” in the paragraph quoted above is interpreted by the Government of the United States, and by governments generally, to mean local trade within a zone extending for a limited distance on each side of the frontier for the benefit of the inhabitants of that zone. Ordinarily the latter may not extend beyond 15 kilometers (10 miles) on either side of the frontier, while the trade must be purely local trade between the inhabitants of the zone in question for their own needs; that is, the movement of goods must begin and end within the zone. Trade with inhabitants of other portions of either country transacted within the frontier zone or transacted by persons living in the zone, would not be considered frontier traffic entitled to exemption from the most-favored-nation clause.
This interpretation is in accord with the meaning given frontier traffic in recommendations of the League of Nations approving the exemption of such traffic from the most-favored-nation clause. In justifying such exemption, the League’s recommendations state that “the strict maintenance of a customs barrier between two adjacent countries is … clearly hampering to the inhabitants of the frontier districts …52 and an agreement allowing freedom of trade within a restricted zone on each side of the frontier is justifiable.” With reference to the extent of the zone, the League’s recommendations remark that “some recent treaties allow a contiguous state certain favours with a view to facilitating trade in particular frontier districts, not extending as a rule beyond 15 kilometers on either side of the frontier, besides granting privileges for the inhabitants of these districts”.
It is clear that the tariff reductions embodied in the Treaty of Commerce between Haiti and the Dominican Republic are not advantages [Page 364] accorded to facilitate frontier traffic as defined above, but relate to the trade between the entire territories of each of the two countries, including sea-borne trade. This view is confirmed by Article seven of the treaty making frontier traffic the subject of an additional protocol, which protocol was signed on the same day as the treaty.
Paragraph seven of Article VII of the trade agreement, also cited by the Government of Haiti, likewise fails to exempt tariff reductions granted by Haiti to products of the Dominican Republic from the most-favored-nation clause of the trade agreement. This paragraph reads as follows:
“The advantages now accorded or which may hereafter be accorded by the United States of America, its territories and possessions and the Panama Canal Zone to one another or to the Republic of Cuba shall be excepted from the operation of this Agreement. 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 the Philippine Islands irrespective of any change that may take place in the political status of the Philippine Islands.”
This paragraph furnishes additional evidence that it was the intention of the negotiators of the trade agreement to make certain that all exceptions to the operation of the trade agreement would be expressly stated therein. The failure to specify as an exception trade between contiguous countries, other than frontier traffic, therefore, is further evidence that there was no intention on the part of either Government to except such trade.
With regard to the recommendation of the Inter-American Financial and Economic Advisory Committee of September 18, 1941, relating to tariff preferences between contiguous countries, it will be recalled that recommendations of the Advisory Committee are not instruments having legal force and effect, and consequently do not automatically qualify the provisions of existing treaties or agreements between the Governments of the American republics. Each Government must decide to what extent and in what manner it wishes to adopt the recommendation in practice. The Governments of Haiti and the United States are not, therefore, released from their reciprocal obligations under the most-favored-nation provisions of the trade agreement in respect of trade between contiguous countries solely by virtue of the Advisory Committee’s recommendation.
To summarize, it is the view of the Government of the United States that trade between Haiti and the Dominican Republic is not excepted from the operation of the trade agreement between the United States and Haiti, either by provisions of the trade agreement [Page 365] itself or by virtue of the Advisory Committee’s recommendation, but on the contrary, that under the most-favored-nation provisions of the trade agreement, the United States is entitled to the benefit of such tariff reductions as may be granted by Haiti to products imported from the Dominican Republic or any other country.
Nevertheless, the Government of the United States recognizes the special situation of trade between Haiti and the Dominican Republic, and is now giving further study to the treaty under reference with a view to determining to what extent it would be warranted in waiving its rights under the most-favored-nation provisions of the trade agreement in the light of the recommendation of the Advisory Committee.
The Government of the United States will communicate further in this regard with the Government of Haiti as soon as possible.