Memorandum of Conversation, Prepared in the Department of State25

Participants: Ambassador Gauss
Mr. Stanton, FE
Mr. Fowler, CP26
Mr. Bishop, LE28
Mr. Wilson, CP

Mr. Gauss expressed the opinion that it would be desirable to present a draft treaty to the Chinese as soon as possible, in view of the [Page 1021] fact that the Embassy in Chungking has been advised by the Director of the Treaty Division of the Chinese Foreign Office that the Chinese draft of a commercial treaty will soon be ready for presentation to the United States.

There was brief discussion of the substantive contents of the draft treaty which the United States has prepared for presentation to the Chinese, particularly those parts of the draft relating to (1) protection of literary and industrial property, (2) exchange control, (3) participation by nationals and corporations of one state in domestic corporations of the other state, (4) mining, (5) freedom of press, freedom of interchange of information for dissemination to the public, and freedom of publication, (6) judicial remedies (including those of corporations not having a permanent establishment, branch or agency within the territories of the party in whose jurisdiction they resort to such remedies), (7) rights of accused persons, (8) commercial arbitration, (9) military service, (10) coastal trade and inland navigation, (11) real property.

There was a reference to despatch no. 2876 dated August 15, 1944 from the Embassy in Chungking, in regard to the possibility of having some statement in the draft treaty concerning exemption of Americans in China from forced loans or contributions. Mr. Gauss drew attention to the fact that the problem was not limited to time of war. It was brought out in discussion that the draft treaty contains a statement as to exemption of treaty aliens from all contributions in money or in kind imposed in lieu of compulsory military service.

On the subject of real property, Mr. Gauss expressed his opinion that the provision of the draft treaty on this point (which is in substance that of the treaty between the United States and Thailand, 1937, but with added coverage for corporations created by the United States) should be adequate. Mr. Gauss’ attention was called to the fact that there is some feeling in the Department that the Siamese formula asking for most-favored-nation treatment may give Americans in China very little and that we should initially ask for national treatment, falling back upon the Siamese formula in the event that the Chinese should be unwilling to grant national treatment. In reply Mr. Gauss stated that he had no serious objection to such tactics but he felt that Americans would be satisfied with the rights respecting real property which they would enjoy under the most-favored-nation formula. He stated that the British expect to secure broad rights with respect to the ownership of real property in China, which would affect what Americans would secure under the most-favored-nation clause in the draft treaty. Mr. Gauss referred to a conversation with a Chinese official and to a conversation with a representative of an American oil company, both of whom had expressed the view that [Page 1022] the formula of the Siamese treaty would be satisfactory. A question was raised as to proof of domicile of American nationals who might claim most-favored-nation treatment as to real property in China on the basis of their respective state laws. While foreseeing that there might be some difficulty as to such proof, Mr. Gauss indicated that he was not greatly concerned about this phase of the problem. He agreed with the suggestion of Mr. Fowler that bona fide American applicants should be able to obtain the rights sought, and that arbitrary rulings in China on this matter might properly be the subject of diplomatic protests.

Mr. Gauss indicated his approval of the proposals of the draft treaty in general, of the plan of presenting it to the Chinese Government in the very near future, and of proceeding with actual negotiations as soon as the Chinese Government is willing to do so.

  1. Drafted by Robert R. Wilson of the Division of Commercial Policy and Edwin F. Stanton, Special Assistant to the Director of the Office of Far Eastern Affairs (Grew).
  2. William A. Fowler, Chief of the Division of Commercial Policy.
  3. Woodbury Willoughby, Associate Chief of the Division of Commercial Policy.
  4. William W. Bishop, Jr., Assistant to the Legal Adviser.