The Secretary of State transmits for the information of the Officer in
Charge a memorandum which outlines the economic and commercial program
now being considered in the Department of State as it relates to the
U.S.S.R.
This memorandum was prepared in response to an informal request made by
Brigadier General Frank N. Roberts85 for a
brief statement regarding the economic and commercial program being
considered in the Department as it relates to the U.S.S.R. The original
copy of this memorandum was informally handed to General Roberts before
his departure for Moscow.
[Enclosure]
Memorandum Prepared in the Department of
State
[Washington,] October 11,
1945.
The following is a brief outline of the commercial and economic
program now being considered in the Department of State as it
relates to the USSR. This outline is for background information
only. Some of these programs are only in a tentative stage of
development, but an outline of them may be helpful in indicating
some of the thoughts which have been expressed concerning economic
and commercial relations between the United States and the USSR and
some of the steps which have been taken in their implementation.
(A) The Proposed
International Conference on Trade and Employment.
The proposal for an International conference on trade and employment
is based upon Article VII of the Lend-Lease agreements which have
been concluded with over thirty countries constituting most of the
United Nations. Although specific agreements have not been signed
with the British dominions, adherence to the principles of Article
VII of these agreements has been indicated by them. The Lend-Lease
agreement with the USSR, which was signed on June 11, 1942, is
almost identical with the Lend-Lease agreement signed with
Britain86 and other countries.
Article VII of that agreement provides for “agreed action by the
United States of America and the Union of Soviet Socialist
Republics, open to participation by all other countries of like
mind, directed to the expansion, by appropriate international and
domestic measures, of production, employment, and the exchange and
consumption of goods, which are the material foundations of the
liberty and welfare of all peoples; to the elimination of all forms
of discriminatory treatment in international commerce, and to the
reduction of tariffs and other trade barriers; and, in general, to
the attainment of all the
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economic objectives set forth” in the Atlantic Charter.87 Article
VII also provides for conversations between the United States of
America and the Union of Soviet Socialist Republics with a view to
determining the best means of attaining these objectives.
Pursuant to Article VII of the Lend-Lease agreement with the United
Kingdom, informal exploratory conversations at the expert level were
held with the British in September and October of 1943.88
In September 1943, prior to the discussions with the British, an
invitation to hold similar discussions was extended to the
Government of the USSR. Additional information was given to the
Soviet Government in a memorandum entitled “Basis of Our Program for
International Cooperation” submitted as Agenda no. 15(c) by Secretary Hull on October 22, 1943 to
the conference of ministers in Moscow.89 However, no discussions
with the Soviet representatives in regard to these subjects have
been held.
Since the original conversations held in Washington, informal
discussions between the American and British technical
representatives have been taking place in London. All of these
discussions have consisted of an exchange of views regarding a
variety of commercial and economic problems.
In the economic and financial discussions which are taking place here
in Washington at the present time, an effort is being made to obtain
general agreement on a variety of trade problems with the
representatives of the Government of the United Kingdom. The
discussions with the British representatives and the views exchanged
with representatives of other governments have been designed to lay
a basis for international agreement on the matters outlined in the
document entitled “Proposal to Establish an International Trade
Organization, July 21, 1945.”90
It is anticipated that this document will be published by the
Secretary of State of the United States, as a statement of American
experts, not later than November 15.91 It is hoped that discussion of the proposal will
develop enough agreement so that a general conference on trade and
employment may be called about June 1946.
The document entitled “Proposals to Establish an International Trade
Organization” (the title of which may later be changed to “Proposals
for Consideration by an International Conference on
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Trade and Employment”) briefly
outlines the purposes and membership of such an organization and
indicates the commercial policy to which member nations would adhere
in the conduct of their trade relations with other member countries.
The Soviet Union, having a complete state monopoly of foreign trade,
might not be primarily affected by provisions dealing with such
matters as quantitative trade restrictions, tariffs, subsidies, and
exchange control; therefore, provisions dealing with state trading
have been included in the general commercial policy statement. These
provisions are designed to establish a nondiscriminatory basis for
trade relations between state-trading economies and free-market
economies. In free-market economies, the principles of
most-favored-nation treatment with regard to legislative acts and
administrative procedures is generally sufficient to assure fair,
equitable and nondiscriminatory treatment, but in the case of a
state monopoly of foreign trade, the matter of assuring
most-favored-nation treatment raises special problems.
The principle of “commercial considerations” which has been developed
for application to state trading (and which has been incorporated in
many of our trade agreements) provides that members engaging in
state trading in any form should undertake to make all foreign
purchases and sales solely on the basis of commercial considerations
such as price, quality, marketability, transportation and terms of
purchase or sale. Acceptance of this principle on the part of the
Soviet Union would be equivalent to the acceptance by other
countries of the most-favored-nation principle with regard to
tariffs and other matters influencing international trade.
The proposed international trade program also contemplates the
substantial reduction of tariffs and the relaxation of other trade
barriers, on the part of private-enterprise countries. As a
counterpart of this it is proposed that members having a complete
state monopoly of foreign trade should undertake to purchase
annually from other members, on the basis of equality of treatment
and commercial considerations, products valued at not less than an
aggregate amount to be agreed upon. This global purchase arrangement
would be subject to periodic adjustment in consultation with the
international trade organization. A precedent for this kind of
arrangement exists in the present commercial agreement between the
United States and USSR.92
It is proposed that the Soviet Union and certain other important
trading nations will be invited, prior to the proposed general
conference, to participate in multilateral negotiations for the
purpose of reaching agreement on concrete measures for the reduction
of trade
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barriers and to
prepare in general for the proposed conference. It is anticipated
that the Soviet Union will find it to its interests to participate
in such negotiations and will benefit by the tariff reductions on
the part of other countries and the most-favored-nation treatment
which will be accorded to its commerce. Other countries will benefit
from the pledge of the Soviet Union that its state monopoly of
foreign trade will be influenced solely by commercial considerations
and will accord equality of treatment to other members. Other
countries will also benefit from the pledge of the Soviet Government
to purchase on a global basis products of a designated minimum
value.
(B) Draft Treaty of
Friendship, Commerce and Navigation.
At the present time the contractual basis for the conduct of
commercial and economic relations between the United States and the
USSR is inadequate, consisting merely of (1) notes exchanged at the
time of recognition,93 and (2) an executive
commercial agreement, in the form of an exchange of notes, whereby
the United States agrees to grant unconditional most-favored-nation
treatment, and the USSR, on its part, undertakes to “increase
substantially the amount of purchases in the United States.94 Considerable
study has been given in the Division of Commercial Policy to the
preparation of a draft of a treaty of friendship, commerce and
navigation which might be acceptable from the point of view of the
United States and the USSR. As a result of this study, it is hoped
that a preliminary draft of such a treaty will be available for
study by the Department of State and other Departments of the
Government concerned. Many changes have been made in the language of
some provisions which would normally be included by the United
States in drafts of such treaties designed for conclusion with
governments whose economic system is based primarily on the
principles of private enterprise. Some changes have been made to
obtain for Americans in the Soviet Union rights and privileges which
are considered to be of primary importance in the development of
better relations between the two countries. One of these provisions
gives American students broad rights as to entering, traveling and
residing in the Soviet Union in order to engage in professional or
academic study or research.
Some of the matters which are expected to be the subject of
provisions in the draft treaty are the following: entry and
activities of foreign nationals; status and activities of foreign
corporations; participation in and operations of domestic
corporations; protection,
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access to courts and commercial arbitration; visit and research [search?] of premises; real and personal
property; industrial and literary property; taxation of persons and
corporations; commercial travelers; religious, intellectual and
mortuary activities; civil liability for injury or death; military
service; commercial objectives; import and export duties and
restrictions; customs administration; treatment of imported
articles; exchange control; government monopolies and contracts;
entry of foreign vessels, imports and exports in foreign vessels;
loading and unloading of vessels; coasting trade and inland
navigation; transit.
(c) Commercial relations
between private American firms and the USSR.
The Department of State and the Department of Commerce are interested
in the problem of developing commercial relations between American
business firms and commercial organizations of the USSR. Since most
private American businessmen are not well informed about the
problems involved in commercial and other economic relations with
the Soviet Union, an effort is now being made to coordinate the
activities of the Departments of State and Commerce in advising
American businessmen about these problems. It is hoped that as a
result of this coordination this Government will, among other
things, be able to obtain from American businessmen information
about the commercial policies and procedures which the Soviet
economic organs may be following. One aspect of this problem is the
technical aid contracts which are now being concluded between
American business firms and Soviet economic organs.
