711.932/2–1645

The Secretary of State to the Ambassador in China ( Hurley )

No. 48

Sir: Reference is made to the Embassy’s despatch no. 2572 of May 17, 1944, containing comments upon the draft of a proposed convention of friendship, commerce and navigation with China, which was transmitted to the Embassy with Department’s memorandum instruction no. 609 of April 22, 1944.2

With the present instruction there is sent a revised draft treaty. The Embassy is requested to examine the draft, to transmit as soon as possible any comments which it may have, and to let the Department know whether any objection is perceived to communicating it to the Chinese Government.

An accompanying memorandum provides comments upon the provisions of the draft, especially as to those articles which represent variations from standard articles in this type of treaty or concerning which the Embassy has previously made suggestions, or which for some other reason seem to require explanation which can be communicated to the Chinese. A separate accompanying memorandum3 contains some further information which is for the use of the Embassy.

Since there has been some change in the order of articles since the earlier draft was sent to the Embassy, there has been included, at the end of the memorandum for use of the Embassy, a sheet3 on which there is an indication, for each numbered article in the revised draft, of the corresponding number or numbers in the earlier draft. With the present instruction are also sent copies of the principal treaties and executive agreements4 which are referred to in the two memoranda.

Certain articles in the draft treaty are still under discussion between this Department and other Departments of the Government. Final [Page 1259] clearances may necessitate telegraphic instructions to the Embassy as to changes in wording. The Embassy is requested to advise the Department by telegraph of the receipt of the draft, and to await telegraphic instruction from the Department before actual presentation to the Chinese Government.

Very truly yours,

For the Secretary of State:
William L. Clayton
5
[Enclosure 1]6

draft treaty of friendship, commerce and navigation between the united states of america and the republic of china 7

The United States of America and the Republic of China, desirous of strengthening the bond of peace and the ties of friendship which have happily long prevailed between the two countries by arrangements designed to promote friendly intercourse between their respective territories through provisions responsive to the spiritual, cultural, economic and commercial aspirations of the peoples thereof, have resolved to conclude a Treaty of Friendship, Commerce and Navigation, and for that purpose have appointed as their Plenipotentiaries,

The President of the United States of America:

. . . . . . . . . . . . . . . . . . . . . . . . . . . .

and,

The President of the National Government of the Republic of China:

. . . . . . . . . . . . . . . . . . . . . . . . . . . .

Who, having communicated to each other their full powers found to be in due form, have agreed upon the following Articles:

[page 2]

Article I

1.
There shall be constant peace and firm and lasting friendship between the United States of America and the Republic of China.
2.
The Government of each High Contracting Party shall have the right to send to the Government of the other High Contracting Party duly accredited diplomatic representatives, who shall be received and, upon the basis of reciprocity, shall enjoy in the territories of such other High Contracting Party the rights, privileges, exemptions and immunities accorded under generally recognized principles of international law.

[page 3]

Article II

1. The nationals of either High Contracting Party shall be permitted to enter the territories of the other High Contracting Party, and shall be permitted freely to reside, travel and carry on trade throughout the whole extent of such territories. In the enjoyment of the right to reside, travel and carry on trade, the nationals of either High Contracting Party shall not be subject, within the territories of the other High Contracting Party, to any interference, nor shall they be required therein to apply for travel visas or to apply for or carry any travel documents, other than (a) valid passports or (b) other documents of identification issued by the competent authorities of their respective countries.

2. The nationals of either High Contracting Party shall, throughout the whole extent of the territories of the other High Contracting Party, be permitted, without interference, to engage in commercial, manufacturing, processing, financial, professional, scientific, educational, religious and philanthropic work; to carry on every form of commercial activity which is not forbidden by the laws and regulations enforced by the duly constituted authorities; to acquire, hold, erect or lease, and occupy appropriate buildings, and to lease appropriate lands, for residential, commercial, manufacturing, processing, financial, professional, scientific, educational, religious, philanthropic and mortuary purposes; to employ agents or employees of their choice regardless of nationality; to do anything incidental to or necessary

[page 4]

for the enjoyment of any such rights and privileges; and to exercise all these rights and privileges, in conformity with the applicable laws and regulations, if any, which [Page 1261] are or may hereafter be enforced by the duly constituted authorities, upon the same terms as nationals of such other High Contracting Party.

3. The nationals of either High Contracting Party shall not in any case, in the enjoyment of the rights and privileges provided by paragraphs 1 and 2 of this Article, receive treatment with respect to such rights and privileges less favorable than the treatment which is or may hereafter be accorded to the nationals of any third country.

4. Nothing in this Treaty shall be construed to affect existing statutes of either High Contracting Party in relation to immigration or the right of either High Contracting Party to enact statutes relating to immigration; provided however, that nothing in this paragraph shall prevent the nationals of either High Contracting Party from entering, traveling and residing in the territories of the other High Contracting Party in order to carry on trade between the United States of America and the Republic of China, or to engage in any commercial activity related thereto or connected therewith, upon terms as favorable as are or may hereafter be accorded to the nationals of any third country entering, traveling and residing in such territories in order to carry on trade between such other High Contracting Party and such third country or to engage in commercial activity related to or connected with such trade; and provided further

[page 5]

that nothing in the provisions of Section 3 of the Immigration Act of the United States of America dated February 5, 1917,8 which delimit certain geographical zones for the purpose of restricting immigration, shall be construed as preventing admission into the United States of Chinese persons and persons of Chinese descent.

[page 6]

Article III

1. As used in this Treaty the term “corporations and associations” shall mean corporations, companies, partnerships and other associations, whether or not with limited liability and whether or not for pecuniary profit, which have been or may hereafter be created or organized [Page 1262] under the applicable laws and regulations enforced by the duly constituted authorities.

2. Corporations and associations created or organized under the applicable laws and regulations enforced by the duly constituted authorities within the territories of either High Contracting Party shall be deemed to be corporations and associations of such High Contracting Party and shall have their juridical status recognized within the territories of the other High Contracting Party whether or not they have a permanent establishment, branch or agency therein.

3. Corporations and associations of either High Contracting Party shall, throughout the whole extent of the territories of the other High Contracting Party, be permitted, without interference, to exercise all the rights and privileges enumerated in paragraph 2 of Article II, in conformity with the applicable laws and regulations, if any, which are or may hereafter be enforced by the duly constituted authorities, upon the same terms as corporations and associations of such other High Contracting Party. The preceding sentence, and all other provisions of this Treaty according to corporations and associations of the Republic of China

[page 7]

rights and privileges upon the same terms as corporations and associations of the United States of America, shall be construed as according such rights and privileges, in any state, territory or possession of the United States of America, upon the same terms as such rights and privileges are or may hereafter be accorded therein to corporations and associations created or organized in other states, territories or possessions of the United States of America.

4. Corporations and associations of either High Contracting Party shall not in any case, in the enjoyment of the rights and privileges provided by this Article, receive treatment with respect to such rights and privileges less favorable than the treatment which is or may hereafter be accorded to corporations and associations of any third country.

[Page 1263]

[page 8]

Article IV

1. The nationals, corporations and associations of either High Contracting Party shall enjoy, within the territories of the other High Contracting Party, rights and privileges with respect to organization of and participation in corporations and associations of such other High Contracting Party, including the enjoyment of rights with respect to promotion and incorporation, the purchase, ownership and sale of shares and, in the case of nationals, the holding of executive and official positions, in conformity with the applicable laws and regulations, if any, which are or may hereafter be enforced by the duly constituted authorities, upon the same terms as nationals, corporations and associations of any third country. Corporations and associations of either High Contracting Party, organized or participated in by nationals, corporations and associations of the other High Contracting Party pursuant to the rights and privileges enumerated in this paragraph shall be permitted to exercise the functions for which they are created or organized, in conformity with the applicable laws and regulations, if any, which are or may hereafter be enforced by the duly constituted authorities, upon the same terms as corporations and associations that are similarly organized or participated in by nationals, corporations and associations of any third country.

2. The nationals, corporations and associations of either High Contracting Party shall be permitted, in conformity with the applicable laws and regulations, if

[page 9]

any, which are or may hereafter be enforced by the duly constituted authorities within the territories of the other High Contracting Party, to organize, control and manage corporations and associations of such other High Contracting Party for engaging in commercial, manufacturing, processing, mining, scientific, educational, religious and philanthropic work. Such corporations and associations so organized, controlled and managed shall be permitted to engage in such commercial, manufacturing, processing, mining, scientific, educational, religious and philanthropic work within such territories, in conformity [Page 1264] with the applicable laws and regulations, if any, which are or may hereafter be enforced by the duly constituted authorities, upon the same terms as corporations and associations of such other High Contracting Party organized, controlled and managed by its own nationals, corporations, and associations.

[page 10]

Article V

The nationals, corporations and associations of either High Contracting Party shall be permitted throughout the whole extent of the territories of the other High Contracting Party to explore for and to exploit mineral resources, in conformity with the applicable laws and regulations, if any, which are or may hereafter be enforced by the duly constituted authorities, upon the same terms as nationals, corporations and associations of any third country.

[page 11]

Article VI

1. Throughout the whole extent of the territories of each High Contracting Party the nationals of the other High Contracting Party shall receive the most constant protection and security for their persons and property, and shall enjoy in this respect the full protection and security required by international law. To these ends, persons accused of crime shall be brought to trial promptly, and shall enjoy all the rights and privileges which are or may hereafter be accorded by the laws and regulations enforced by the duly constituted authorities; and nationals of either High Contracting Party, while within the custody of the authorities of the other High Contracting Party, shall receive reasonable and humane treatment. In so far as the term “nationals” where used in this paragraph is applicable in relation to property it shall be construed to include corporations and associations.

2. The property of nationals, corporations and associations of either High Contracting Party shall not be taken within the territories of the other High Contracting Party without due process of law and without the prompt payment of just and effective compensation. If such compensation is not paid in terms of the currency [Page 1265] of the High Contracting Party of which the owner of such property is a national, corporation or association, such owner shall be permitted without restraint or interference, at any time within a period of three years after payment is made, to obtain as compensation or in return for the

[page 12]

currency received as compensation, foreign exchange in terms of any currency or currencies which such national, corporation or association may elect, upon the most favorable terms applicable to such currency or currencies at the time such exchange is obtained.

3. The nationals, corporations and associations of either High Contracting Party shall throughout the territories of the other High Contracting Party receive protection and security with respect to the matters enumerated in paragraphs 1 and 2 of this Article, upon compliance with the laws and regulations, if any, which are or may hereafter be enforced by the duly constituted authorities, no less than the protection and security which is or may hereafter be accorded to the nationals, corporations and associations of such other High Contracting Party and no less than that which is or may hereafter be accorded to the nationals, corporations and associations of any third country.

4. The nationals, corporations and associations of either High Contracting Party shall enjoy freedom of access to the courts of justice and to administrative tribunals and agencies in the territories of the other High Contracting Party, in all degrees of jurisdiction established by law, both in pursuit and in defense of their rights; shall be at liberty to choose and employ lawyers, interpreters and representatives in the prosecution and defense of their rights before such courts, tribunals and agencies; and shall be permitted to exercise all these rights and privileges, in conformity with the

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applicable laws and regulations, if any, which are or may hereafter be enforced by the duly constituted authorities, on terms no less favorable than the terms which are or may hereafter be accorded to the nationals, corporations and associations of such other High Contracting Party and no less favorable than are or may hereafter be [Page 1266] accorded to the nationals, corporations and associations of any third country. However, corporations and associations of either High Contracting Party which do not have a permanent establishment, branch or agency within the territories of the other High Contracting Party shall be permitted to exercise the rights and privileges accorded by the preceding sentence without any requirement of registration or domestication. In the case of any controversy susceptible of settlement by arbitration, which involves nationals, corporations or associations of both High Contracting Parties and is covered by a written agreement for arbitration, such agreement shall be accorded full faith and credit by the courts within the territories of each High Contracting Party, and the award or decision of the arbitrators shall be accorded full faith and credit by the courts within the territories of the High Contracting Party in which it was rendered, provided the arbitration proceedings were conducted in good faith and in conformity with the agreement for arbitration.

[page 14]

Article VII

The dwellings, warehouses, factories, shops, and other places of business, and all premises thereto appertaining, of the nationals, corporations and associations of either High Contracting Party, located in the territories of the other High Contracting Party, shall not be subject to unlawful entry or molestation. There shall not be made any visit to, or any search of, any such dwellings, buildings or premises, nor shall any books, papers or accounts therein be examined or inspected, except under conditions and in conformity with procedures no less favorable than the conditions and procedures prescribed for nationals, corporations and associations of such other High Contracting Party under laws and regulations enforced by the duly constituted authorities within the territories thereof. In no case shall the nationals, corporations or associations of either High Contracting Party in the territories of the other High Contracting Party be treated less favorably with respect to the foregoing matters than the nationals, corporations or associations of any third country. Any visit, search, examination or inspection which may be [Page 1267] permissible under the exception stated in this Article shall be made with due regard for, and in such a way as to cause the least possible interference with, the occupants of such dwellings, buildings or premises or the ordinary conduct of any business or other enterprise.

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Article VIII

1. The nationals, corporations and associations of the United States of America shall be permitted to acquire, hold and dispose of real and other immovable property throughout the territories of the Republic of China upon the same terms as nationals, corporations and associations of the Republic of China; provided that, in the case of nationals of the United States of America domiciled in, and of corporations and associations of the United States of America created or organized under the laws of, a state, territory or possession of the United States of America which does not accord to nationals, corporations and associations of the Republic of China national treatment with respect to the acquisition, ownership and disposition of real or other immovable property, the Republic of China shall not be obligated to accord treatment more favorable than the treatment which is or may hereafter be accorded within such state, territory or possession to nationals, corporations and associations of the Republic of China.

2. If, on the death of any person holding real or other immovable property or interests therein within the territories of either High Contracting Party, such property or interests therein would, either by the applicable laws in such territories or by testamentary disposition, descend or pass to a national, corporation or association of the other High Contracting Party, whether resident or nonresident and whether or not engaged in business within the territories of the High Contracting Party where such property is or such interests therein are situated, were

[page 16]

such national, corporation or association not disqualified by the laws and regulations enforced by the duly constituted authorities within such territories, then such national, corporation or association shall be allowed a term of three years in which to sell such property or interests therein, this term to be reasonably prolonged if circumstances [Page 1268] render it necessary, and to withdraw the proceeds thereof, without restraint or interference and exempt from the payment of any estate, succession, probate or administrative taxes or charges other or higher than these which are or may hereafter be imposed in like cases

corporations or associations

upon the nationals, Λ of the High Contracting Party in whose territory the property is or the interests therein are situated. The person, corporation or association selling real or other immovable property pursuant to this paragraph shall be permitted, within the period fixed herein, to obtain, in return for the proceeds received therefor, foreign exchange in terms of any currency or currencies which such person, corporation or association may elect, upon the most favorable terms applicable to such currency or currencies at the time such exchange is obtained.

3. Nothing in paragraphs 1 and 2 of this Article shall modify or supersede Article IV of the Treaty of January 11, 1943, between the United States of America and the Republic of China for the Relinquishment of Extraterritorial Rights in China and the Regulation of Related Matters or the paragraph relating to that Article in the exchange of notes accompanying that Treaty.9

4. The nationals of either High Contracting Party

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shall have full power to dispose of personal property of every kind anywhere within the territories of the other High Contracting Party, by testament, donation or otherwise and their heirs, legatees or donees, being persons of whatever nationality or corporations or associations wherever created or organized, whether resident or non-resident and whether or not engaged in business within the territories of the High Contracting Party where such property is situated, shall succeed to such property, and shall be permitted to take possession thereof, either by themselves or by others acting for them, and to retain or dispose of it at their pleasure, exempt from any restrictions, taxes or charges other or higher than those to which the heirs, legatees or donees of nationals of such other High Contracting Party are or may hereafter be subject in like [Page 1269] cases. The nationals, corporations, and associations of either High Contracting Party shall be permitted to succeed, as heirs, legatees and donees, to personal property of every kind within the territories of the other High Contracting Party, left or given to them by nationals of such other High Contracting Party or by nationals of any third country, and shall be permitted to take possession thereof, either by themselves or by others acting for them, and to retain or dispose of it at their pleasure, exempt from any restrictions, taxes or charges other or higher than those to which the nationals, corporations and associations of such other High Contracting Party are or may hereafter be

[page 18]

subject in like cases. In the event of the death of a national of either High Contracting Party the recipients, by testament or otherwise, of his personal property located within the territories of the other High Contracting Party shall be determined by the laws and regulations enforced by the duly constituted authorities at the place of his domicile.

5. The nationals, corporations and associations of either High Contracting Party shall, subject to the exception in paragraph 2 of Article X, receive treatment, in respect of all matters which relate to the acquisition, holding, leasing, possession or disposition of personal property, no less favorable than the treatment which is or may hereafter be received by nationals, corporations and associations of any third country.

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Article IX

The Government of each High Contracting Party shall, throughout its territories, accord to the nationals, corporations and associations of the other High Contracting Party effective protection in the exclusive use of the inventions, trade marks, trade labels and trade names of such nationals, corporations and associations; unauthorized manufacture, use or sale of such inventions, or imitation or falsification of such trade marks, trade labels and trade names shall be prohibited, and effective remedy therefor shall be provided by civil action. The Government of each High Contracting Party shall also, throughout its [Page 1270] territories, accord to the nationals, corporations and associations of the other High Contracting Party effective protection in the enjoyment of rights with respect to the literary and artistic works of such nationals, corporations and associations; unauthorized reproduction, translation, sale, diffusion or use of such literary and artistic works shall be prohibited, and effective remedy therefor shall be provided by civil action. In any case, the nationals, corporations and associations of either High Contracting Party shall enjoy, throughout the territories of the other High Contracting Party, all rights and privileges of whatever nature in regard to copyrights, patents, trade marks, trade labels, trade names and other literary, artistic and industrial property, upon compliance with the applicable laws and regulations, if any, respecting registration and other formalities which are or may hereafter be enforced by the duly constituted authorities, upon terms

[page 20]

no less favorable than are or may hereafter be accorded to the nationals, corporations and associations of such other High Contracting Party, and no less favorable than are or may hereafter be accorded to the nationals, corporations and associations of any third country.

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Article X

1. The nationals of either High Contracting Party residing within the territories of the other High Contracting Party, and the nationals, corporations and associations of either High Contracting Party engaged in business or in scientific, educational, religious or philanthropic activities within the territories of the other High Contracting Party, shall not be subject to the payment of any internal taxes, fees or charges other or higher than these which are or may hereafter be imposed by laws and regulations enforced by the duly constituted authorities upon the nationals, corporations and associations of such other High Contracting Party. Moreover, in the case of corporations and associations specified in the preceding sentence, such taxes, fees or charges shall not be imposed upon or measured by any income, property, capital or other criterion of measurement in excess of that reasonably allocable or apportionable [Page 1271] to the territories of such other High Contracting Party.

2. The nationals, corporations and associations of either High Contracting Party shall not be subject to the payment of any internal taxes, fees or charges imposed by laws and regulations enforced by the duly constituted authorities within the territories of the other High Contracting Party other or higher than those which are or may hereafter be imposed upon the nationals, residents, corporations and associations of any third country, except that the foregoing provisions of this

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paragraph shall not apply to any advantage in respect of internal taxes, fees or charges which is or may hereafter be granted to the nationals, residents, corporations or associations of any third country, either (a) pursuant to legislation extending the same advantage to all countries, or to the nationals, residents, corporations or associations thereof, on the basis of reciprocity, or (b) in a treaty or other agreement concluded with such third country for the avoidance of double taxation or the mutual protection of revenue.

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Article XI

Commercial travelers representing manufacturers, merchants and traders domiciled in the territories of either High Contracting Party shall, on their entry into and sojourn in the territories of the other High Contracting Party and on their departure therefrom, be accorded treatment no less favorable than the treatment which is or may hereafter be accorded to commercial travelers of any third country in respect of customs and other privileges and, subject to the exception in paragraph 2 of Article X, in respect of all taxes and charges of whatever denomination applicable to them or to their samples.

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Article XII

1. The nationals of either High Contracting Party shall, throughout the territories of the other High Contracting Party, be permitted to exercise liberty of [Page 1272] conscience and freedom of worship, and they may, whether individually, collectively or in religious corporations or associations, and without annoyance or molestation of any kind by reason of their religious belief or otherwise, conduct religious services and give religious or other instruction, either within their own houses or within any other appropriate buildings, provided that their religious and educational activities are not contrary to public morals and that their educational activities are conducted in conformity with the laws and regulations, if any, which are or may hereafter be enforced by the duly constituted authorities.

2. The High Contracting Parties declare their adherence to the principles of freedom of the press and of free interchange of information. To this end, nationals, corporations and associations of either High Contracting Party shall have the right within the territories of the other High Contracting Party, to engage in such activities as writing, reporting, and gathering of information for dissemination to the public, and shall enjoy freedom of transmission of material for publication and for the radio. Furthermore, the nationals, corporations and associations of either High Contracting Party shall enjoy freedom of publication in the territories of the other High Contracting Party, in accordance with

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the applicable laws and regulations, upon the same terms as nationals, corporations or associations of such other High Contracting Party. The term “information”, as used in this paragraph, shall include all forms of written communications, printed matter, motion pictures and photographs.

3. The nationals of either High Contracting Party shall be permitted within the territories of the other High Contracting Party to bury their dead according to their religious customs in suitable and convenient places which are or may hereafter be established and maintained for the purpose, subject to the mortuary and sanitary laws and regulations, if any, which are or may hereafter be enforced by the duly constituted authorities.

4. Places of worship and cemeteries shall be held in respect and free from disturbance or profanation.

[Page 1273]

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Article XIII

With respect to that form of protection granted within the territories of either High Contracting Party by the applicable laws establishing civil liability for bodily injuries or for death, and giving to relatives or heirs or dependents of an injured person a right of action or a pecuniary compensation, such relatives or heirs or dependents of the injured person, himself a national of either High Contracting Party and injured within any of the territories of the other High Contracting Party, shall, regardless of their alienage or residence outside of the territory where the injury occurred, enjoy the same rights and privileges as are or may hereafter be granted under like conditions to nationals of such other High Contracting Party.

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Article XIV

1. The nationals of each High Contracting Party shall be exempt from compulsory military or naval training or service under the jurisdiction of the other High Contracting Party, and shall also be exempt from all contributions in money or in kind imposed in lieu thereof.

2. During any period of time when both of the High Contracting Parties are, through military or naval action in connection with which there is general compulsory military or naval service, (a) enforcing measures in pursuance of obligations for the maintenance of international peace and security, or (b) concurrently conducting hostilities, against the same third country or countries, provisions of paragraph 1 of this Article shall not apply. However, in such an event the nationals of either High Contracting Party in the territory of the other High Contracting Party, who have not declared their intention to acquire the nationality of such other High Contracting Party, shall be exempt from military or naval service under the jurisdiction of such other High Contracting Party if within a reasonable time prior to their induction for such service they elect, in lieu of such service, to enter the military or naval service of the High Contracting Party of which they are nationals. In any such situation the High Contracting Parties will [Page 1274] make the necessary arrangements for giving effect to the provisions of this paragraph.

3. Nothing in this Article shall be construed to affect the right of either High Contracting Party to

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debar from acquiring its citizenship any person who seeks and obtains exemption in accordance with the provisions of paragraphs 1 or 2 of this Article.

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Article XV

The High Contracting Parties reaffirm their adherence to a program of purposes and policies, open to participation by all other countries of like mind, designed to bring about an expansion of international trade on a broad basis, and directed to the elimination of all forms of discriminatory treatment and monopolistic restrictions in international commerce. To that end, the High Contracting Parties bind themselves to maintain, as the basis of their commercial relations, the principle in its unconditional and unlimited form of according to each other treatment no less favorable than the treatment which is or may hereafter be accorded to any third country.

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Article XVI

1. In all matters relating to (a) customs duties and subsidiary charges of every kind imposed on imports or exports and in the method of levying such duties and charges, (b) the rules, formalities, and charges imposed in connection with the clearing of articles through the customs, and (c) the taxation, sale, distribution or use within the country of imported articles and of articles intended for exportation, each High Contracting Party shall accord to articles the growth, produce or manufacture of the other High Contracting Party, from whatever place arriving, or to articles destined for exportation to the territories of such other High Contracting Party, by whatever route, treatment no less favorable than the treatment which is or may hereafter be accorded to like articles the growth, produce or manufacture of, or destined for, any third country. If the government of [Page 1275] either High Contracting Party requires documentary proof of origin of imported articles, the requirements imposed therefor shall be reasonable and shall not be such as to constitute an unnecessary hindrance to indirect trade.

2. With respect to the matters referred to in paragraph 1 of this Article, the nationals, corporations and associations of either High Contracting Party shall be accorded, within the territories of the other High Contracting Party, treatment no less favorable than the treatment which is or may hereafter be accorded to the nationals, corporations and associations of such other High Contracting Party, and the nationals, corporations

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and associations, vessels and cargoes of either High Contracting Party shall be accorded, within the territories of the other High Contracting Party, treatment no less favorable than is or may hereafter be accorded to the nationals, corporations and associations, vessels and cargoes of any third country.

3. No prohibition or restriction of any kind shall be imposed by either High Contracting Party on the importation, sale, distribution or use of any article the growth, produce or manufacture of the other High Contracting Party, or on the exportation of any article destined for the territories of the other High Contracting Party, unless the importation, sale, distribution or use of the like article the growth, produce or manufacture of all third countries, or the exportation of the like article to all third countries, respectively, is similarly prohibited or restricted.

4. If the Government of either High Contracting Party imposes any quantitative regulation on the importation or exportation of any article, or on the sale, distribution or use of any imported article, it shall as a customary practice give public notice of the total quantity or value of such article permitted to be imported, exported, sold, distributed or used during a specified period, and of any change in such quantity or value. Furthermore, if either High Contracting Party allots a share of such total quantity or value to any third country, it shall allot to the other High Contracting Party, with respect to any article in which

[Page 1276]

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the latter has an important interest, unless it is mutually agreed to dispense with such an allotment, a share based upon the proportion of the total quantity or value supplied by, or in the case of exports a share based upon the proportion exported to, the territories of such other High Contracting Party during a representative period, account being taken in so far as practicable of any special factors which may have affected or may be affecting the trade in that article. The provisions of this paragraph relating to imported articles shall also apply in respect of limitations upon the quantity or value of any article permitted to be imported free of duty or tax, or at a specified rate of duty or tax.

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Article XVII

1. Laws, regulations of administrative authorities and decisions of administrative or judicial authorities of each High Contracting Party pertaining to the classification of articles for customs purposes or to rates of duty shall be published promptly in such a manner as to enable traders to become acquainted with them. Such laws, regulations and decisions shall be applied uniformly at all ports of the respective High Contracting Parties except as otherwise specifically provided for in statutes of the United States of America with respect to the importation of articles into its insular territories and possessions.

2. No administrative ruling by the Government of either High Contracting Party effecting advances in rates of duties or charges applicable under an established and uniform practice to imports originating in the territories of the other High Contracting Party, or imposing any new requirement with respect to such importations, shall as a general rule be applied to articles the growth, produce or manufacture of the other High Contracting Party already en route at the time of publication thereof in accordance with paragraph 1; provided that, if either High Contracting Party customarily exempts from such new or increased obligations, articles entered for consumption or withdrawn from warehouse for consumption during a period of thirty days after the date of such [Page 1277] publication such practice shall be considered full compliance with this paragraph. The provisions of this

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paragraph shall not apply to administrative orders imposing antidumping duties, or relating to regulations for the protection of human, animal or plant life or health, or relating to public safety, or giving effect to judicial decisions.

3. Each High Contracting Party shall provide some procedure, administrative, judicial or otherwise, under which the nationals, corporations and associations of the other High Contracting Party, and importers of articles the growth, produce or manufacture of such other High Contracting Party, shall be permitted to appeal against fines and penalties imposed by the customs authorities, confiscations by such authorities and rulings of such authorities on questions of customs classification and of valuation of articles for customs purposes. Greater than nominal penalties shall not be imposed by either High Contracting Party in connection with any importation by the nationals, corporations or associations of the other High Contracting Party, or in connection with the importation of articles the growth, produce or manufacture of such other High Contracting Party, because of errors in documentation which are obviously clerical in origin or with regard to which good faith can be established.

4. The Government of each High Contracting Party will accord sympathetic consideration to such representations as the Government of the other High Contracting Party may make with respect to the operation or administration of import or export prohibitions or restrictions, quantitative regulations, customs regulations or formalities,

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or sanitary laws or regulations for the protection of human, animal or plant life or health.

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Article XVIII

1. Articles the growth, produce or manufacture of either High Contracting Party, imported into the territories of the other High Contracting Party, shall be accorded treatment with respect to all matters affecting [Page 1278] internal taxation, or the sale, distribution or use within such territories, no less favorable than the treatment which is or may hereafter be accorded to like articles the growth, produce or manufacture of such other High Contracting Party.

2. Articles grown, produced or manufactured within the territories of either High Contracting Party in whole or in part by nationals, corporations and associations of the other High Contracting Party, or by corporations and associations organized or participated in by such nationals, corporations and associations, shall be accorded within such territories treatment with respect to all matters affecting internal taxation, or the sale, distribution or use therein, or exportation therefrom, no less favorable than the treatment which is or may hereafter be accorded to like articles grown, produced or manufactured therein in whole or in part by nationals, corporations and associations of the High Contracting Party within the territories of which the articles are grown, produced or manufactured, or by corporations and associations organized or participated in by such nationals, corporations and associations. The articles specified in the preceding sentence shall not in any case receive treatment less favorable than the treatment which is or

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may hereafter be accorded to like articles grown, produced or manufactured in whole or in part by nationals, corporations and associations of any third country, or by corporations and associations organized or participated in by such nationals, corporations and associations.

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Article XIX

1. If the Government of either High Contracting Party establishes or maintains any form of control of the means of international payment or of international financial transactions, it shall accord fair and equitable treatment to the nationals, corporations and associations and commerce of the other High Contracting Party with respect to all aspects of such control.

2. The Government establishing or maintaining such control shall impose no prohibition, restriction or delay on the transfer of payment for any article the growth, [Page 1279] produce or manufacture of the other High Contracting Party which is not imposed on the transfer of payment for the like article the growth, produce or manufacture of any third country. With respect to the rates of exchange and with respect to taxes or charges on exchange transactions, articles the growth, produce or manufacture of the other High Contracting Party shall be accorded treatment no less favorable than the treatment which is or may hereafter be accorded to like articles the growth, produce or manufacture of any third country. The provisions of this paragraph shall also extend to the application of such control to payments necessary for or incidental to the importation of articles the growth, produce or manufacture of the other High Contracting Party. In general, any such control shall be administered so as not to influence to the disadvantage of the other High Contracting Party the competitive relationships between articles the growth, produce or manufacture of

[page 39]

such other High Contracting Party and like articles the growth, produce or manufacture of any third country.

3. In all that relates to the transfer of profits, dividends, interest, payments for imported articles, and of other funds, to loans and to any other international financial transactions, between the territories of the two High Contracting Parties or between the territories of the High Contracting Party the Government of which establishes or maintains the control referred to in paragraph 1 of this Article and the territories of any third country, such Government establishing or maintaining the control shall accord to the nationals, corporations and associations of the other High Contracting Party treatment no less favorable than the treatment which is or may hereafter be accorded to its own nationals, corporations and associations, and no less favorable than the treatment which is or may hereafter be accorded to the nationals, corporations and associations of any third country which make or receive like transfers and loans, and which are parties to like transactions, between the territories of the same two countries. Moreover, the Government establishing or maintaining such control shall accord, to the nationals, corporations and associations of the other High Contracting Party in all that relates [Page 1280] to any such transfers, loans and other transactions between the territories of the two High Contracting Parties, treatment no less favorable than the treatment which is or may hereafter be accorded to the nationals, corporations and associations of any third country which

[page 40]

make or receive like transfers and loans, and which are parties to like transactions, between the territories of the High Contracting Party the Government of which establishes or maintains the control and the territories of such third country. The treatment accorded by this paragraph shall apply to the rates of exchange and to any prohibition, restriction, delay, tax or other charge on the transfers, loans and other transactions covered by this paragraph; and such treatment shall apply whether the transfers, loans and other transactions take place directly or through an intermediary or intermediaries in a country or countries not parties to this Treaty. In general, any such control shall be administered so as not to influence to the disadvantage of the other High Contracting Party the competitive relationships between the nationals, corporations and associations of such other High Contracting Party and the nationals, corporations and associations of any third country.

[page 41]

Article XX

1.
If the Government of either High Contracting Party establishes or maintains a monopoly or public agency for the importation, exportation, purchase, sale, distribution or production of any article, or grants exclusive privileges to any agency to import, export, purchase, sell, distribute or produce any article, such monopoly or agency shall accord to the commerce of the other High Contracting Party fair and equitable treatment in respect of its purchases of articles the growth, produce or manufacture of foreign countries and its sales of articles destined for foreign countries. To this end the monopoly or agency shall, in making such purchases or sales of any article, be influenced solely by considerations, such as price, [Page 1281] quality, marketability, transportation and terms of purchase or sale, which would ordinarily be taken into account by a private commercial enterprise interested solely in purchasing or selling such article on the most favorable terms.
2.
The Government of each High Contracting Party, in the awarding of concessions and other contracts, and in the purchasing of supplies, shall accord fair and equitable treatment to the nationals, corporations and associations and to the commerce of the other High Contracting Party as compared with the treatment which is or may hereafter be accorded to the nationals, corporations and associations and to the commerce of any third country.

[page 42]

Article XXI

1.
Between the territories of the High Contracting Parties there shall be freedom of commerce and navigation.
2.
Vessels under the flag of either High Contracting Party, and carrying the papers required by its national law in proof of nationality, shall be deemed to be vessels of that High Contracting Party both within the ports, places and waters of the other High Contracting Party and on the high seas. As used in this Treaty, “vessels” shall be construed to include all vessels of either High Contracting Party whether privately owned or operated or publicly owned or operated. However, the provisions of this Treaty other than this paragraph and paragraph 5 of Article XXII shall not be construed to accord rights to vessels of war or fishing vessels of the other High Contracting Party; nor shall they be construed to extend to the nationals, corporations and associations, vessels and cargoes of, or to articles the growth, produce or manufacture of, such other High Contracting Party any special privileges restricted to national fisheries or to the products thereof.
3.
The vessels of either High Contracting Party shall have liberty, equally with the vessels of any third country, to come with their cargoes to all ports, places and waters of the other High Contracting Party which are or may hereafter be open to foreign commerce and navigation.
[Page 1282]

[page 43]

Article XXII

1. The vessels and cargoes of either High Contracting Party shall, within the ports, places and waters of the other High Contracting Party, in all respects be accorded treatment no less favorable than the treatment accorded to the vessels and cargoes of such other High Contracting Party, irrespective of the port of departure or the port of destination of the vessel, and irrespective of the origin or the destination of the cargo.

2. No duties of tonnage, harbor, pilotage, lighthouse, quarantine, or other similar or corresponding duties or charges, of whatever kind or denomination, levied in the name or for the profit of the government, public functionaries, private individuals, corporations or establishments of any kind, shall be imposed in the ports, places and waters of either High Contracting Party upon the vessels of the other High Contracting Party, which shall not equally and under the same conditions be imposed upon national vessels.

3. No charges upon passengers, passenger fares or tickets, freight moneys paid or to be paid, bills of lading, contracts of insurance or re-insurance, no conditions relating to the employment of ship brokers, of whatever nationality, and no other charges or conditions of any kind, shall be imposed in a way tending to accord any advantage to national vessels as compared with the vessels of the other High Contracting Party.

4. Within the ports, places and waters of each High Contracting Party which are or may hereafter be

[page 44]

open to foreign commerce and navigation, competent pilots shall be made available to take the vessels of the other High Contracting Party into and out of such ports, places and waters.

5. If a vessel of either High Contracting Party shall be forced by stress of weather or by reason of any other distress to take refuge in any of the ports, places or waters of the other High Contracting Party not open to foreign commerce and navigation, it shall receive friendly treatment and assistance and such supplies and materials for repair as may be necessary [Page 1283] and available. This paragraph shall apply to vessels of war and fishing vessels, as well as to vessels as defined in paragraph 2 of Article XXI.

6. In no case shall the treatment accorded to the vessels and cargoes of either High Contracting Party with respect to the matters referred to in this Article be less favorable than the treatment which is or may hereafter be accorded to the vessels and cargoes of any third country.

[page 45]

Article XXIII

1.
It shall be permissible, in the vessels of either High Contracting Party, to import into the territories of the other High Contracting Party, or to export therefrom, all articles which it is or may hereafter be permissible to import into such territories, or to export therefrom, in the vessels of such other High Contracting Party, without being liable to any other or higher duties or charges whatsoever than if such articles were imported or exported in vessels of such other High Contracting Party.
2.
Bounties, drawbacks and other privileges of this nature of whatever kind or denomination which are or may hereafter be allowed, in the territories of either High Contracting Party, on articles imported or exported in national vessels shall also and in like manner be allowed on articles imported or exported in vessels of the other High Contracting Party.

[page 46]

Article XXIV

1. Vessels of either High Contracting Party shall be permitted to discharge portions of cargoes at any ports, places or waters of the other High Contracting Party which are or may hereafter be open to foreign commerce and navigation, and to proceed with the remaining portions of such cargoes to any other such ports, places or waters, without paying other or higher tonnage dues or port charges in such cases than would be paid by national vessels in like circumstances, and they shall be permitted to load in like manner, in the same voyage outward, at the various ports, places and waters which are or may hereafter be open to foreign commerce and [Page 1284] navigation. The vessels and cargoes of either High Contracting Party shall be accorded, with respect of the matters referred to in this paragraph, treatment in the ports, places and waters of the other High Contracting Party no less favorable then the treatment which is or may hereafter be accorded to the vessels and cargoes of any third country.

2. Should either High Contracting Party accord the rights of inland navigation or coasting trade to vessels of any third country such rights would similarly be accorded to the vessels of the other High Contracting Party. The coasting trade and inland navigation of each High Contracting Party are excepted from the requirement of national treatment and are to be regulated according to the laws of each High Contracting Party in relation thereto. It is agreed, however, that vessels of either

[page 47]

High Contracting Party shall enjoy within the territory of the other with respect to the coasting trade and inland navigation treatment as favorable as the treatment accorded to the vessels of any third country.

[page 48]

Article XXV

There shall be freedom of transit through the territories of each High Contracting Party by the routes most convenient for international transit (a) for persons, whether or not they are nationals of the other High Contracting Party, together with their baggage, directly or indirectly coming from or going to the territories of such other High Contracting Party, (b) for persons who are nationals of the other High Contracting Party, together with their baggage, regardless of whether they are coming from or going to the territories of such other High Contracting Party, and (c) for articles directly or indirectly coming from or going to the territories of such other High Contracting Party. Such persons, baggage and articles in transit shall not be subject to any transit duty, to any unnecessary delays or restrictions, or to any discrimination in respect of charges, facilities or any other matter; and all charges and regulations prescribed in respect of such persons, baggage or [Page 1285] articles shall be reasonable, having regard to the conditions of the traffic. Except as agreed by the High Contracting Parties with respect to non-stop flight by aircraft, in the convention signed______________, the Government of either High Contracting Party may require that such baggage and articles be entered at the proper customhouse and that they be kept either under bond or in customs custody, but such baggage and articles shall be exempt from all customs duties

[page 49]

or similar charges if they are exported within one year and satisfactory evidence of such exportation is presented to the customs authorities. Such nationals, baggage, persons and articles shall be accorded treatment with respect to all charges, rules and formalities in connection with transit no less favorable than the treatment accorded to the nationals of any third country, together with their baggage, or to persons and articles coming from or going to the territories of any third country.

[page 50]

Article XXVI

1. Nothing in this Treaty shall be construed to prevent the adoption or enforcement of measures:

(a)
relating to the importation or exportation of gold or silver;
(b)
relating to the traffic in arms, ammunition and implements of war, and, in exceptional circumstances, all other military supplies;
(c)
necessary in pursuance of obligations for the maintenance of international peace and security, or for the protection of the essential interests of the country in time of national emergency; or
(d)
to give effect to Article VII of the International Monetary Agreement drawn up at the United Nations Monetary and Financial Conference at Bretton Woods, July 1 to 22, 1944.10

2. Subject to the requirement that, under like circumstances and conditions, there shall be no arbitrary discrimination by either High Contracting Party against [Page 1286] the other High Contracting Party or against the nationals, corporations, associations, vessels or commerce thereof, in favor of any third country or the nationals, corporations, associations, vessels or commerce thereof, the provisions of this Treaty shall not extend to prohibitions or restrictions:

(a) imposed on moral or humanitarian grounds;

(b) designed to protect human, animal, or plant life or health;

(c) relating to prison-made goods; or

[page 51]

(d) relating to the enforcement of police or revenue laws.

3. The provisions of this Treaty according treatment no less favorable than the treatment accorded to any third country shall not apply to:

(a)
advantages which are or may hereafter be accorded to adjacent countries in order to facilitate frontier traffic; or
(b)
advantages accorded by virtue of a customs union of which either High Contracting Party may, after consultation with the Government of the other High Contracting Party, become a member so long as such advantages are not extended to any country which is not a member of such customs union.

4. The stipulations of this Treaty do not extend to advantages now accorded or which may hereafter be accorded by the United States of America, its territories or possessions or the Panama Canal Zone to one another or to the Republic of Cuba. The provisions of this paragraph shall continue to apply in respect of any advantages which are or may hereafter be accorded by the United States of America, its territories or possessions or the Panama Canal Zone to one another, irrespective of any change which may take place in the political status of any of the territories or possessions of the United States of America.

5. The provisions of this Treaty shall not be construed to accord any rights or privileges to corporations and associations engaged in political activities or with

[page 52]

respect to the organization of or participation in such corporations and associations. Moreover, each High [Page 1287] Contracting Party reserves the right to deny any of the rights and privileges accorded by this Treaty to any corporation or association created or organized under the laws and regulations of the other High Contracting Party which is directly or indirectly owned or controlled, through majority stock ownership or otherwise, by persons who are not nationals of such other High Contracting Party.

[page 53]

Article XXVII

Subject to any limitation or exception provided in this Treaty or hereafter agreed upon between the Governments of the High Contracting Parties, the territories of the High Contracting Parties to which the provisions of this Treaty extend shall be understood to comprise all areas of land and water under the sovereignty or authority of either of the High Contracting Parties, except the Panama Canal Zone.

[page 54]

Article XXVIII

Any dispute between the Governments of the two High Contracting Parties as to the interpretation or application of this Treaty, which is not satisfactorily adjusted by diplomacy, shall be submitted to arbitration or judicial settlement pursuant to any treaty of pacific settlement which may be in force between the High Contracting Parties.

[page 55]

Article XXIX

1. This Treaty shall, upon its entry into force, supersede the following treaties and other agreements between the United States of America and the Republic of China:

(a)
Treaty of Peace, Amity and Commerce, signed at Wang Hiya, July 3, 1844;11
(b)
Treaty of Peace, Amity and Commerce, signed at Tientsin, June 18, 1858;12
(c)
Treaty Establishing Trade Regulations and Tariff, signed at Shanghai, November 8, 1858;13
(d)
Treaty of Trade, Consuls and Emigration, signed at Washington, July 28, 1868;14
(e)
Immigration Treaty, signed at Peking, November 17, 1880;15
(f)
Treaty as to Commercial Intercourse and Judicial Procedure, signed at Peking, November 17, 1880;16
(g)
Treaty as to Commercial Relations, signed at Shanghai, October 8, 1903;17
(h)
Treaty Establishing Rates of Duty on Imports Into China, signed at Washington, October 20, 1920;18 and
(i)
Treaty Regulating Tariff Relations, signed at Peiping, July 25, 1928.19

2. Nothing in this Treaty shall be construed to limit or restrict in any way the rights, privileges and advantages accorded by the Treaty for the Relinquishment of Extraterritorial Rights in China and the Regulation of Related Matters and accompanying exchange of notes

[page 56]

between the United States of America and the Republic of China signed at Washington on January 11, 1943.

[page 57]

Article XXX

1.
This Treaty shall be ratified, and the ratifications thereof shall be exchanged at ______________ as soon as possible.
2.
This Treaty shall enter into force on the day of the exchange of ratifications, and shall continue in force for a period of five years from that day.
3.
Unless one year before the expiration of the aforesaid period of five years the Government of either High Contracting Party shall have given notice to the Government of the other High Contracting Party of intention to terminate this Treaty upon the expiration of the aforesaid period, the Treaty shall continue in force thereafter until one year from the date on which [Page 1289] notice of intention to terminate it shall have been given by either High Contracting Party.

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IN WITNESS WHEEEOF the respective Plenipotentiaries have signed this Treaty and have affixed hereunto their seals.

DONE in duplicate, in the English and Chinese languages, both equally authentic, at Chungking, this

  • day of _________, one thousand nine hundred forty-five, corresponding to the day _________ of the
  • month of the thirty _______ year of the Republic of China.

[Enclosure 2]

Memorandum to the Embassy at Chungking for Use in Negotiating Treaty of Friendship, Commerce and Navigation

Preamble

The preamble follows in general the form used in a number of commercial treaties, e. g. that with Germany, 192320 (44 Stat. (pt. 3) 2132), with Hungary, 192521 (44 Stat. (pt. 3) 2441), with Finland, 193422 (49 Stat. (pt. 2) 2659), with Liberia, 193823 (54 Stat. (pt. 2) 1739).

Article I

  • Par. 1. Although there have been comparable provisions in many of the older treaties of the United States and in some recent executive agreements, it has not been customary to include such a paragraph as this one in treaties of friendship, commerce and navigation to which the United States is a party. However, the inclusion of the paragraph is appropriate in view of the close political relations between China and the United States.
  • Par. 2. According to present practice of the United States, provisions concerning diplomatic representation are not ordinarily included in treaties of friendship, commerce and navigation. The paragraph has been included in the present draft treaty partly in view of the fact that China has comparable provisions in some of her new commercial treaties. As the language indicates, the standards [Page 1290] for determining the “rights, privileges, exemptions and immunities” is international law. The word “accorded” emphasizes the element of actual international practice.

Article II

Par. 1. The statement as to the right of entry is qualified by the provisions in paragraph 4 of the same article. Reference to the “whole extent” of the territories of each party follows closely the wording of Article V of the Treaty for the Relinquishment of Extraterritorial Rights in China, signed January 11, 1943, and emphasizes that the provisions of the proposed treaty would be applicable throughout all territories under Chinese jurisdiction and not limited to specific areas. The statement of the right to “carry on trade” is a reassertion of what is provided in Article V of the Treaty for the Relinquishment of Extraterritorial Rights in China. The right to reside, travel and carry on trade is to be enjoyed without any interference in the form of governmental action inconsistent with the right. In the United States aliens must have registration cards with them at all times, just as an American citizen registered under the Selective Service Act of the United States must have his draft card and be able to present it at all times. A change of residence by a registered alien in the United States must be reported. The registration certificate is not, however, a “travel document” in the sense in which these words are used in the treaty. It is a document of identification. The requirement that such identification document be carried is not necessarily restricted to the category of emergency measures.

Par. 2. The phrase “without interference” is used in substantially the same sense as in paragraph 1. Rights to engage in certain types of activities, such as agriculture, mining, public utility enterprises, and the ownership and operation of vessels of United States registry, are not included. (Mining is the subject of provisions in Article IV, paragraph 2, and in Article V.) “Processing” is intended to include manipulation short of manufacturing.

It is inadvisable to omit the word “regulations” and refer only to “laws”, as even in time of peace there are in the United States many administrative regulations to which both nationals and aliens are subject. The words, “if any,” should preclude an interpretation which would deny the right as to engagement in an activity with respect to which there are no laws or regulations actually enforced.

The right of nationals of one party in the territory of the other party to employ agents or employees “of their own choice” is accorded under a number of commercial treaties of the United States. The additional words, “regardless of nationality,” would, of course, imply no right of a national or corporation of either party to send into the [Page 1291] territory of the other party, or to maintain there, an alien of a country which did not have, by treaty or otherwise, the right for its nationals to reside and travel in the territory of such other party.

Provisions in existing treaties of the United States comparable with this paragraph have been held by American courts not to accord the right of employment on public works. It is not intended that the present paragraph should give rights to aliens as contractors with, or employees of, governmental agencies, such as educational or public works authorities.

Par. 3. The inclusion of this paragraph has the effect of according national treatment or most-favored-nation treatment, whichever is more favorable to the beneficiary. This is in harmony with treaties which the United States has signed with a number of countries, beginning with the treaty concluded with Germany in 1923.

Par. 4. The exception concerning immigration is usual in commercial treaties of the United States.

The words “trade between the United States of America and the Republic of China” are comparable with those in the treaty with Finland, 1934, by which nationals of each party acquire in the territory of the other rights of entry, travel and residence “for the purpose of carrying on trade between the two countries” (49 Stat. (pt. 2) 2659). The word “trade” is used in the present paragraph because it is the term used in the United States Immigration Act of 1924 as amended (43 Stat. 154; 47 Stat. 607; 54 Stat. 711; 8 U.S.C. 203) which permits the entry of so-called treaty aliens for the purpose indicated.

The final clause in the paragraph is desirable in order to preclude the application to Chinese persons and persons of Chinese descent of the so-called “barred zone” provisions of the Act of February 5, 1917, which might become operative as the result of the termination of the Immigration Treaty of 1880 (22 Stat. 826) as provided in Article XXIX of the present draft.

Article III

  • Par. 1. Rights of corporations and associations as set forth in the draft are broader than those agreed upon in previous commercial treaties of the United States. The language of the draft which defines corporations and associations is designed for use in post-war commercial treaties generally, not merely in that with China.
  • Par. 3. The last sentence of the paragraph is new in American commercial treaties. It is designed to give to Chinese corporations treatment as favorable as that accorded by the states of the Union to corporations organized under the laws of sister states. The position of such corporations is governed by state law, as limited to some extent by American constitutional law.
[Page 1292]

It is intended that the provisions of this Article shall apply to the activities of governmental corporations of one party within the territory of the other party. However, the intention is that the standard of treatment for foreign corporations (and also for foreign-controlled domestic corporations under Article IV) shall be the rights and privileges accorded to domestic private corporations, and shall not include special privileges granted only to domestic corporations which are owned or controlled by the government.

Article IV

  • Par. 1. In keeping with the general effort, through the treaty, to promote business activities in corporate as well as other forms, there is in this Article a broad provision as to participation, by nationals and corporations of one party, in corporate enterprise in the territory of the other party. As used in this paragraph, the words, “in conformity with the applicable laws and regulations … upon the same terms as nationals, corporations and associations of any third country,” are intended to mean only such laws as do not discriminate against nationals, corporations or associations of either party in the territories of the other, as compared with aliens of other nationalities.
  • Par. 2. The first sentence proposes a right for one party’s nationals, corporations or associations to organize, control and manage domestic corporations of the other engaged in described kinds of enterprises (which do not include certain activities such as shipping, public utilities or agricultural) in the other party’s territories. The right is exercisable in conformity with applicable laws and regulations, which limitation would permit distinctions between nationals and aliens, provided the latter were allowed actually to control through some lawful means, such as “dummy incorporators”, voting trusts or other common corporate practices.

The remainder of the paragraph relates to the carrying on of the listed types of corporate enterprise, and here the standard is national treatment. “Mining”, as here used, is intended to include extraction of petroleum products. “Applicable” laws and regulations means applicable not solely to corporations in which aliens have some control, but to all corporations engaged in the mentioned activities.

Article V

In this most-favored-nation provision on the subject of “exploration for and exploitation of” mineral resources, the quoted language is adopted from the legislation of the United States and has been used in past treaties. It is intended to have the same meaning as the word “mining”, as that word occurs in the last paragraph of the preceding article.

[Page 1293]

Article VI

Par. 1. The paragraph has been so drafted as to record adherence to international law as a standard of protection, but without making the second sentence coterminous in scope with the first. The specifically-mentioned safeguards to accused persons are fewer than those in such a treaty as that with Peru, signed in 188724 (25 Stat. 1444; Article XV). Specific reference to certain rights of accused persons is not to be understood as excluding others which may be had under international law (since the words “to these ends” emphasize that the protection indicated in the first sentence of the paragraph is not restricted to that indicated in the second sentence, or to that under the “laws and regulations enforced”).

Par. 2. The first sentence is declaratory of international law on the subject matter. The statement is different from the standard provision found in other commercial treaties of the United States only in the addition of “prompt” before “payment” (a reasonable application of the substantive rule), and “effective” before “compensation” (which is intended to mean that the compensation shall comprise reparation sufficient to place the expropriated person in a position substantially as good as that in which he was before the taking of his property). This is essentially an application of the law on the general subject as applied by the Permanent Court of International Justice in the Cherzow Factory Case (Permanent Court of International Justice Publications, Series A, No. 17, pp. 4, 27).

The provision concerning the right of nationals of either party to obtain foreign exchange, after an expropriation by the other party, is designed to give point to the rule concerning reparation. It is the plan of this Government to include such a provision in its postwar commercial treaties. The phrase “without restraint or interference” would not prevent the collection of a non-discriminatory income tax upon profit which an alien might make by reason of his receiving, for property taken, compensation substantially greater than the price paid for the property.

Par. 3. Whereas in the first paragraph of the Article the standard is a combination of international law treatment and specific rights of individuals, and in the second paragraph the standard is an absolute one, the third paragraph requires that this treatment may never be less favorable than national treatment and most-favored-nation treatment.

Par. 4. Provisions for access to courts follow logically the relinquishment by the United States of its rights of extraterritoriality in China. The present provision is an elaboration of the provision in [Page 1294] Article IV of the treaty with Thailand, signed November 13, 1937,25 with an additional provision according to which corporations and associations which have no representatives, in the territory of the other party, or which have representatives there only transiently, are not to be required to go through the process of registration or domestication merely in order to receive the benefit of the rule concerning judicial remedies which the paragraph asserts.

The final sentence, concerning commercial arbitration, is new in a treaty of this type, but is expected to be a feature of draft commercial treaties which the United States will propose to other countries in the post-war period. The rule asserted is to apply in the case of a controversy susceptible of settlement by arbitration and which is covered by a written agreement for arbitration. Furthermore, to come within the treaty provision, the controversy must involve both Americans and Chinese as parties in interest. The final proviso leaves to any court, wherein an arbitral agreement or award of the kind indicated in the treaty is invoked, competence to protect against fraud and to see that proceedings leading to an award have been in conformity with the parties’ agreement.

Article VII

This article follows substantially the language which has become standard in commercial treaties. Reference may be made to Article III of the Treaty with Norway, 192826 (47 Stat. (pt. 2) 2135) and to Article III of the Treaty with Liberia, 1938 (54 Stat. (pt. 2) 1739).

Article VIII

  • Par. 1. The language is designed to cover all rights as to real or other immovable property not covered elsewhere in the treaty. In many of the states of the American Union Chinese nationals now receive the same treatment as American nationals in the matter of real property. In return, the United States proposes national treatment in China for the nationals, corporations and associations of the United States, but with a permissive exception as to those identifiable (through domicile in the case of natural persons, and incorporation in the case of artificial persons) with states, territories and possessions which do not accord national treatment in this respect to Chinese. As to nationals, corporations and associations coming within the exception, China’s obligation under the treaty would be measured by what Chinese nationals, corporations and associations receive in the respective states, territories and possessions of the United States.
  • Par. 2. The greater part of this paragraph consists of material which has become standard in commercial treaties of the United States (e. g. that with Norway, 1928 (47 Stat. (pt. 2) 2135), and Poland, 193127 (48 Stat. (pt. 2) 1507), Article IV, paragraph 1 in each case) except that provision has been made for clearly indicating that the rule covers corporations and associations, as well as individuals, receiving such property. The final sentence is designed to assure that what is provided in the preceding part of the paragraph shall not be illusory. The matter of exchange control is the subject of comment in this memorandum on paragraph 2 of Article VI and on Article XIX of the draft treaty.
  • Par. 4. The paragraph follows substantially the standard language (as in the second paragraph of Article IV of the Treaty with Norway, 1928), except that the provisions are somewhat broadened by the extension of rights to corporations or associations, and, in the second sentence, by granting rights with respect to property received from nationals of a third country. The provisions of the first sentence would allow a non-Chinese heir of a Chinese national to inherit upon the same terms as he might inherit from an American national, and would not make residence or the carrying on of business within the territory a condition of benefiting from the treaty rule. The general formula differs from the language of the Norwegian treaty to the extent that it specifies that in certain cases the law of domicile of the decedent shall govern in deciding questions of descent. Although such a provision has not appeared in recent treaties of the United States, it is planned to include it in proposals to other countries.
  • Par. 5. Most-favored-nation treatment is here specified with respect to personal property in general, including those matters with respect to which national treatment has been proposed; most-favored-nation treatment would become the standard in the event aliens of any other nationality should receive better than national treatment.

Article IX

For inventions, trade marks, trade labels and trade names there is asserted (1) a general standard of “effective” protection in “exclusive use”, against unauthorized reproduction or sale, and (2) “in any case”, national treatment in these matters. In a somewhat shorter form, national treatment was provided for in the Thailand Treaty of 1937 (53 Stat. (pt. 3) 1731, Article IX), and in the treaty of 1911 with Japan28 (37 Stat. [(pt. 2)] 1504, Article XV).

The basic differences between industrial property and property in “literary and artistic” works justifies a separate statement concerning [Page 1296] the latter, and to this extent the plan followed is different from that of the treaty with Thailand. Nationals of one party who are owners of works copyrighted in the territories of the other party are to be protected there against the reproduction of such works by any means and against translations. The treaty reference to laws and regulations concerning registration and other formalities does not admit of a construction which would assert conditions for alien applicants which would be different from those applied to nationals in like circumstances.

The scope of “literary and artistic works” may be indicated by reference to the language of the Bern Convention (77 Br. & For. St. Paps., 22, 123 L.N.T.S. 233), or by reference to a description drafted by a group of authors and users, and adopted by a research committee set up by the Rockefeller Foundation in 1938. This description was as follows:

“… The terms ‘literary and artistic works’ include all productions in the literary, scientific, and artistic domain, whatever the mode or form of expression, such as: Books, pamphlets, composite works, encyclopedic works, directories, gazetteers, and other compilations; Periodicals, including newspapers and similar serial publications containing miscellaneous matter and issued at regular intervals of less than one year; Lectures, sermons, addresses, and works of like nature prepared for oral delivery; dramatic or dramatico-musical compositions and dramatizations; Musical compositions with or without words; Drawings, plans, sketches or plastic works of a scientific or technical character; maps and geographic charts; Works of art, drawings, paintings, engravings, sculptural works; models or designs for works of art; and reproductions thereof; Photographs; Prints, pictorial illustrations and lithographs; Scenarios, continuities, programs and other works prepared for radio broadcasting, radio facsimile, wired radio, telephony, television or any other means of transmitting or communicating the same; Scenarios and continuities for motion pictures; Motion pictures, with or without sound; Works of architecture, or models, or designs for architectural works, insofar as they embody artistic character and are not processes or methods of construction; Choreographic works and pantomimes, the scenic arrangement and acting form of which is fixed in writing.”

The word “reproduction” includes reproduction by any photographic or photo-offset process. Authorized reproduction would normally imply that the name of the author and of the publisher of the original work would appear on the copy, as on the original work. The reference to “translations” is intended to assert that permission must be obtained from the owner or author before there could be a first translation, and that no subsequent translation could be made without similar consent. Use of the word “sale” is intended to connote, as it does in the practice of copyright in the United States, that the author [Page 1297] or owner of a literary or artistic work, in his contract for publication, could retain all other rights to use or authorize the use of a work, e. g. to dramatize it or reproduce it as a motion picture.

Article X

Par. 1. This article is an elaboration of a provision which has long been standard in American commercial treaties (illustrated in the first article of various treaties, such as those with Germany, 1923, Poland, 1931, Thailand, 1937). The purpose of the first sentence is to provide national treatment with respect to all taxes or fiscal regulations in the case of corporations as well as of individuals. The second sentence of the paragraph applies only to corporations and associations, and is designed to preclude the imposition upon a foreign bank or corporations of taxes based upon income, property or capital greater than that which is reasonably allocable or apportionable to the business or other activity within the taxing country. It does not necessarily preclude the taxing state’s taking into account the fact of the entire income, property or capital of an enterprise, but is designed to prevent the measurement of taxes by reference to what is outside the taxing country, and to assure that property outside the country or income from outside the country will not afford a valid reason for unreasonably increasing domestic taxes.

The carrying on of business by foreign corporations has been the subject of comment in connection with Article III of the present draft treaty. The requirement of national treatment would not permit discriminatory taxation of such branches by reason of their local activity.

Par. 2. The term “residents” is included in this paragraph because in laws and treaties privileges as to tax matters are frequently accorded in terms of residence rather than nationality.

To the most-favored-nation provision there is an exception to permit purely reciprocal treaties with third states of the type which the United States has now made with a number of countries for the purpose of avoiding double taxation and preventing fiscal evasion in the case of income taxes (e. g. the convention and protocol signed with Canada, March 4, 1942,29 56 Stat. [(pt. 2)] 1399), and to permit comparable reciprocal exemptions pursuant to general provision in fiscal legislation.

Article XI

This follows the short form of the standard provision on the subject. The exception is justifiable on the grounds which sustain the exception in Article X, paragraph 2.

[Page 1298]

Article XII

  • Par. 1. Except for the clause providing against activities contrary to public morals, the liberty of conscience and freedom of worship are on an unconditional basis, as they are under comparable provisions of other treaties, e. g. Article I, paragraph 5 of the treaty with Thailand, and Article V of the treaty with Liberia. Educational activities are, however, to be conducted “in conformity with the laws and regulations …”
  • Par. 2. Objectives of this paragraph are accordant with the First Amendment of the United States Constitution and with Article 13 of the Chinese Constitution promulgated May 5, 1936. Provisions concerning the principles of freedom of the press and of free interchange of information do not appear in previous commercial treaties of the United States. They are in harmony with a resolution adopted by the United States Senate on September 21, 1944 (Cong. Rec., V. 90, p. 5155 [8044]), and with the official endorsement by the Chinese Information Minister of the principle of free interchange of news among all nations (Associated Press dispatch from Chungking, September 22, 1944). While the right of writing, reporting and gathering of information for dissemination to the public is proposed in unqualified form, the right of publication is on a national treatment basis under “applicable laws and regulations”, i. e. laws applicable to both treaty aliens and nationals. The phrase, “for the radio”, at the end of the second sentence is not intended to imply any right of nationals of one party to operate a broadcasting station within the territory of the other party.
  • Par. 3. The provision concerning sepulture is not substantially different from standard provisions on this subject.
  • Par. 4. This addition to the usual form of language does not appear in recent treaties made by this country, but is a desirable provision supplementary to what appears in the preceding paragraph.

Article XIII

The purpose of the Article is primarily to extend benefits of workmen’s compensation legislation to nationals of one of the parties in the territories of the other. The language is broad enough to cover compensation as required by general law in the other fields of liability insurance. The present provision is substantially similar to that of other treaties of the United States, e. g. that with Norway, 1928 (47 Stat. (pt. 2) 2135), and that with Finland, 1934 (49 Stat. (pt. 2) 2659).

Article XIV

  • Par. 1. This paragraph is not substantially different from the provisions of certain other commercial treaties of the United States, e. g. [Page 1299] that with the Argentine Republic, 185330 (Article X), that with Spain, 190231 (Article V, par. 1) and that with Thailand, 1937 (Article I, par. 4). Some treaties made in recent years, e. g. that with Germany, 1923 (Article VI) gave the right, in the case of war with a third state, for either party state to draft nationals of the other party state who have their permanent residence in its (the belligerent state’s) territory, if such persons have declared their intention to acquire the nationality of that state by naturalization, and unless such persons depart from the territories of the state in which they are resident within sixty days after a declaration of war. The exception proposed in the present paragraph applies to nationals of either party within the other party’s jurisdiction, regardless of whether they have declared intention to acquire the citizenship of the state of residence.
  • Par. 2. This is in harmony with the Proposals for the Establishment of a General International Organization, which China and the United States, together with Great Britain and the Union of Soviet Socialist Republics, agreed upon at Washington on October 9, 1944,32 as tentative bases for subsequent discussion in conference. In order to bring into operation the rules of the paragraph, both of the parties must be engaged in action for these purposes (or “concurrently conducting hostilities”, an alternative which would apply to continuance of the present war against the common enemies), against the same third country or countries. By its terms, the paragraph would only apply to a party which resorted to general conscription. The plan of the paragraph is consistent with the plan of bilateral agreements for military service which the United States has since 1941 concluded with twenty other United Nations, including China.33 It is conceivable that, in a situation such as that envisaged in this paragraph, the laws of the two co-operating states would be divergent in the matter of age requirements, physical standards of fitness for military service, etc. It is also possible that for a period of time there might be a practical impossibility of returning from one country to the other for the purpose of joining the army of an individual’s own country. In either set of circumstances, the individual would not forfeit the rights set forth in the paragraph. His mere election to serve in the armies of the state of his nationality would be sufficient to gain for him an exemption from involuntary military service in the other country.
  • Par. 3. It has long been the policy of the United States to deny the privilege of naturalization to aliens who, being within its territories when the United States is at war, have declined to serve in its armies under a law providing for compulsory military service. It will be noted that, in order to come under the provision concerning debarment in this paragraph, an individual must seek and obtain the exemption.

Article XV

The first sentence is, in terms a reaffirmation of “purposes and policies”. In an agreement signed June 2, 1942,34 concerning Principles Applying to Mutual Aid in the Prosecution of the War Against Aggression (56 Stat. [(pt. 2)] 1494), the United States and China envisaged (in Article VII) agreed action looking to “the elimination of all forms of discriminatory treatment in international commerce”, to “the reduction of tariffs and other trade barriers”, and to “the attainment of economic objectives identical with those set forth in the Joint Declaration made on August 4 [14]|, 1941, by the President of the United States of America and the Prime Minister of the United Kingdom”.35

The policy of the United States is that of a strong advocate of private enterprise and of freedom from monopolistic restrictions, which would welcome advocacy of such enterprise, and of such freedom from monopolistic restrictions, by all other states. In a letter of September 6, 1944, to the Secretary of State, President Roosevelt said,36 in part:

“During the past half century the United States has developed a tradition in opposition to private monopolies. The Sherman37 and Clayton38 Acts have become as much a part of the American way of life as the due process clause of the Constitution. By protecting the consumer against monopoly these statutes guarantee him the benefits of competition.

“This policy goes hand in glove with the liberal principles of international trade for which you have stood through many years of public service. The trade agreement program has as its objective the elimination of barriers to the free flow of trade in international commerce; the anti-trust statutes aim at the elimination of monopolistic restraints of trade in interstate and foreign commerce.”

In the same letter, President Roosevelt said that, “Cartel practices which restrict the free flow of goods in foreign commerce will have to be curbed.” A letter of President Roosevelt to Mr. Crowley39 of the [Page 1301] Foreign Economic Administration, made public on September 29, 1944,40 contained the following paragraph:

“International trade on as full and free a basis as possible is necessary not only as a sound economic foundation for the future peace, but it is also necessary in order that we may have fuller production and employment at home. Private industry and private trade can, I am sure, produce a high level of international trade, and the Government should assist to the extent necessary to achieve this objective by returning international commerce to private lanes as rapidly as possible.”

The language of Article XV of the proposed bilateral treaty with China is accordant with these objectives. It is capable of integration with the general commercial treaty policy of the United States. That policy is indicated in Mutual-Aid Agreements with a number of countries (including the Union of Soviet Socialist Republics41), which contain language similar to that quoted above from the Mutual Aid Agreement with China, and in the United Nations Declaration of January 1, 1942,42 (55 Stat. (pt. 2) 1600), to which China and the United States are parties.

Article XVI

Par. 1. This Article is an adaptation of what appears in a number of trade agreements in force, e. g. that with the Argentine Republic, 194143 (56 Stat. [(pt. 2)] 1685), Article III, and that with Mexico, 194244 (57 Stat. [(pt. 2)] 833), Article III. The language here used is somewhat broader, in its coverage of goods intended for exportation, than the standard language of commercial treaties and trade agreements of the United States. The words, “from whatever place arriving,” as to imports (which words have been included in some trade agreements, e. g. that with the United Kingdom,45 54 Stat. (pt. 2) 1897), and the new language, “by whatever route”, are intended to assure that provisions of the paragraph shall apply both to goods continuously in transit and to goods which have been or will be unloaded and reloaded, repacked, reloaded, repacked and warehoused, whether or not shipment to territories of either party was contemplated when the articles left the country of origin.

The sentence concerning documentary proof of origin is limitative in purpose with respect to requirements which may be enforced in connection [Page 1302] with imports. While comparable statements do not appear in trade agreements, provisions along this line are in Article VI, par. 10 of the treaty of 1931 with Poland. The rule of the present paragraph does not expressly state that the most-favored-nation treatment mentioned therein is unconditional (as has been done in most recent commercial treaties and agreements of the United States). However, here and in other parts of the treaty where there are references to most-favored-nation treatment, such treatment is intended to be unconditional except where the contrary is clearly indicated (see Article X, par. 2). Article XV indicates that the commercial articles are based on the principle of unconditional most-favored-nation treatment.

Par. 2. This paragraph is designed to assure to nationals, corporations and associations of one party within the other party’s territories the benefits of both national and most-favored-nation treatment with respect to the matters relating to importation and exportation covered in the preceding paragraph. Most-favored-nation treatment is also accorded to the vessels and cargoes of one party within the jurisdiction of the other. The most-favored-nation provisions of this paragraph are comparable with provisions in several commercial treaties (e. g. in Article VII, par. 7, of the treaty of 1928 with Norway), except for a broader coverage as to the treatment of imported goods and for the extension of rights to corporations and associations. Although the provision as to national treatment has not appeared in recent treaties, this Government expects to propose it to other governments in the future; such treatment is referred to in Article I, par. 2, of the 1928 tariff treaty between the United States and China46 (45 Stat. [(pt. 2)] 2742).

Par. 3. Articles forbidding the imposition of “prohibitions” which are not applicable to the products of third countries have been in many commercial treaties and agreements, including the treaty of 1815 with Great Britain47 (8 Stat. 228; 18 Stat. (pt. 2) 292). In recent years this rule has been applied to “restrictions” as well as to prohibitions.

Par. 4. This follows in substance the standard provisions in trade agreements as to publicity relating to quotas and the allocation thereof. The words, “in which the latter has an important interest,” mean that an allocation need not be made to one party if the imports therefrom to the other party’s territories are negligible. It is the policy of the United States to use quotas only in exceptional circumstances. For allocating a quota on imports, a “representative period” would be any period during which the distribution of imports of the product among the various sources of supply may be considered generally typical of [Page 1303] the distribution which would normally exist in the absence of a quota. For example, in describing the executive order of August 21, 194148 allocating the coffee quota for countries not signatories to the inter-American Coffee Agreement of November 28, 194049 (55 Stat. 1143) the Department explained:

“The quotas are expressed as percentages of the total quota … The percentages correspond to the proportion of coffee imports into the United States from countries which are not signatories of the Agreement supplied during the four-year period 1937–40 by each of the groups of countries to which allocations are made by the executive order.

“The allocations established by the executive order are designed to afford each non-signatory country an opportunity to supply a fair share of the total quota for such countries and, at the same time, to ensure adequate supplies of certain special types of coffee needed in this country for blending purposes.” (6 [5] Department of State Bulletin, 148, Aug. 23, 1941.)

Article XVII

  • Par. 1. This follows the language of the trade agreement with Mexico (Article VI, par. 1) except that since the treaty covers territorial possessions of the United States outside its customs territory and hence not covered by the trade agreement, the exception to the requirement of uniformity here applies to all insular territories and possessions instead of to Puerto Rico alone. (The requirement of publication should be read in relation to the comment on public notice in paragraph 4 of Article XVI.)
  • Par. 2. This follows substantially the language of Article VI, paragraph 2 of the trade agreement with Mexico, except that the words, “shall be effective retroactively”, are omitted, and there is a more specific provision as to articles en route at the time of advances in existing rates of duty or at the time of the imposition of any new requirement. The qualifying words, “as a general rule”, permit some exceptions in the administration of laws and regulations in exceptional circumstances.
  • Par. 3. Provision for an appeal procedure is in terms sufficiently broad to allow of some choice of means, provided the substantive rule be applied. Those parts of the final sentence applicable to foreign goods follow language which has been used in several trade agreements.
  • Par. 4. This, in general, follows the wording which has become standard in trade agreements (illustrated in Article VI, par. 1 of the trade agreement signed with the Argentine Republic in 1941).
[Page 1304]

Article XVIII

Par. 1. This proposes national treatment as the standard for the taxation and other treatment, in the territory of one party, of goods imported from the other. Most-favored-nation treatment with respect to such matters is provided for in Article XVI, par. 1. The provisions together constitute an expansion of the rule which has become standard in commercial treaties (e. g. that of 1928 with Norway, Article VIII, and that of 1938 with Liberia, Article XIII) and trade agreements (e. g. that of 1942 with Mexico, Article II) as to taxation, in the territory of one party, of imports from the other party’s territory.

The provisions of this paragraph are not intended to prevent legislative provisions giving domestic goods a preference in governmental purchases, considerations here being similar to those which determine that Article II does not apply as to employment by either government. (Rules applicable to government purchases are stated in Article XX.)

Par. 2. This paragraph proposes national treatment (or most-favored-nation treatment, if that is more favorable than national treatment) in the internal taxation of, and with respect to other matters relating to, articles grown, produced or manufactured within one party state by nationals, corporations or associations of the other party, or by domestic corporations controlled by such nationals, corporations or associations.

Article XIX

  • Par. 1. The formula, “fair and equitable treatment”, which appears in this paragraph, states a general principle, to which effect is sought to be given in the following paragraphs of the Article.
  • Par. 2. With slight changes of language this follows Article IV, paragraph 2 of the trade agreement with Mexico and is designed to prevent exchange discrimination by one party against goods coming from the other. This purpose may generally be achieved by according most-favored-nation treatment, but some matters, such as exchange rates, do not lend themselves to a simple application of such a rule. The final sentence of the paragraph, therefore, reiterates the basic purpose that exchange control shall not be made the means of giving a competitive advantage to any third country.
  • Par. 3. This paragraph sets forth in some detail rules as to nondiscriminatory treatment, for the nationals and corporations of one party, in the application of exchange controls by the other party. A few recent treaties and agreements of the United States have contained general statements as to exchange treatment of nationals (e. g. Article X of the treaty of 1938 with Liberia). It is intended to propose more detailed provisions, as here used, for inclusion in future treaties. Both national and most-favored-nation standards are applicable for the [Page 1305] nationals and corporations of one party carrying on transactions (such as the transmission of profits) between the territory of the two parties, or between the territory of one of them and that of a third state. Furthermore, a national or corporation of one party who transmits dividends between the territories of the two parties is to be accorded, by the other party, treatment comparable with that accorded to the national or corporation of a third state who similarly transmits dividends between the territory of such other party and that of the third state. These rules cover both direct payments and payments made through an intermediary in another country.

Article XX

  • Par. 1. This is, in slightly expanded language, a provision which has become standard in trade agreements and also in general commercial treaties of recent date.
  • Par. 2. This follows closely the wording of Article V, paragraph 2, of the trade agreement with the Argentine Republic (1941) and of that with Mexico (1942), except that, in view of the fact that a general commercial treaty accords rights to nationals and corporations as well as to commerce, the present language has been changed accordingly.

Reference has been made, in the comments relative to Articles II and XVIII, to the fact that the rules in those articles do not cover transactions with governmental bodies within either party, such as contracts for employment in certain activities or for the purchase of imported articles. The present article does apply to such transactions.

Article XXI

This article is generally comparable with standard language of commercial treaties but there are a number of changes. The right stated in the first sentence of paragraph 2 is here proposed for vessels instead of for nationals, indicating clearly that the right is not extended to vessels which are owned by nationals of one of the parties but which are registered in a third state. There is a sentence on the meaning of “vessels” and a statement as to non-extension of special privileges under this treaty (other than paragraph 2 of this Article and paragraph 8 of Article XXII) to vessels of war or fishing vessels. Neither party is bound to extend to nationals or products of the other party, any special privileges restricted to national fisheries or to the products thereof.

Article XXII

  • Pars. 1–2. The language follows rather closely that of standard language in commercial treaties, except that there is no restriction to private vessels and cargoes (as, for example, in Article XIV of the [Page 1306] treaty of 1938 with Liberia), and that the term “ports, places and waters”, is used instead of “territorial waters and harbors”.
  • Par. 3. This paragraph proposes further protection against discrimination in specific matters. Although it is more detailed than comparable provisions in past treaties have been, this Government intends to include similar language in proposals for future commercial treaties.
  • Par. 4. References to pilotage duties or charges have frequently been included in commercial treaties (e. g., in Article IX of the 1923 treaty with Germany). The present paragraph refers to the availability of pilots, without committing the parties to any duty of compensating pilots for services to vessels of the other party.
  • Par. 5. This paragraph, the provisions of which apply to vessels generally, without the exclusion of war and fishing vessels, is proposed as a reasonable rule to cover situations growing out of entry because of force majeure.

Article XXIII

Except that it is expressed in a somewhat shorter form, this is essentially what has appeared in many commercial treaties to which the United States is a party (e. g. in Article II of the treaty of 1815 with Great Britain, and in Article VII of that of 1928 with Norway).

Article XXIV

  • Par. 1. This is substantially the same as the provision which has long been included in American treaties (e. g. in Article XI of the treaty of 1923 with Germany), except that to the usual national treatment provision has been added a most-favored-nation clause.
  • Par. 2. The language of this paragraph is taken almost without change, from the exchange of notes50 accompanying the treaty of 1943 for the relinquishment by the United States of its extraterritorial rights in China. It has long been customary to specify most-favored-nation treatment in the subject matter.

Article XXV

As compared with the article on transit which was long standard in American treaties (illustrated in Article XVI of the treaty with Germany, 1923), this article proposes freedom of transit not merely for persons and goods which have come from or may be going to the territory of the other contracting state, but also for nationals of either party desiring transit for themselves or their baggage across the territory of the other, regardless of whether such nationals and their baggage have come from or may be going to the territory of the state of which the persons are nationals.

[Page 1307]

As compared with the corresponding part of the treaty of 1938 with Liberia (Article XXI), the present article is considerably shorter, since some of the exceptions mentioned in the treaty with Liberia (e. g. those relating to emergency situations, and as to traffic in arms, munitions and military equipment) are covered in a general exceptions article (XXVI) of the present draft treaty.

It is not intended, through the present article, to create any rights for vehicles. On the other hand, it is not intended to preclude the making of an agreement for non-stop flight across national territory by aircraft, and therefore an exception clause has been inserted, which makes allowance for a possible air navigation convention with China or a multilateral convention on air navigation to which China and the United States may become parties. The permissive statement as to keeping articles either under bond or in customs custody, and the specification of one year as a time limit in connection with reexportation, follow in general the requirements of present United States law.

Article XXVI

Par. 1. The first two subsections of this paragraph follow the language of the general exceptions article in the treaty with Liberia. Subsection (b) has been worded so as to cover traffic in arms, ammunition and implements of war generally; it is not restricted to export of such materials.

The first part of subsection (c) has been substituted for a reference to “war” inserted in order that the treaty may be accordant with the proposals referred to in the comment on paragraph 2 of Article XIV of the present draft. The latter part of the subsection, in which there is a reference to measures for “protection of the essential interests of the country in time of national emergency”, follows the language of the trade agreement of 1942 with Mexico (Article XVII (h)).

Subsection (d) has for its purpose to keep the treaty in harmony with the Bretton Woods (International Monetary) Agreement, but is restricted to action which a state that is a party to that multilateral instrument may take under a single article of the agreement (the article concerning scarce currencies declarations by the International Monetary Fund which may authorize state-imposed limitations on the freedom of exchange operations in the scarce currency, and permissive limitations in pursuance thereof).

Par. 2. The substance of these exceptions is common to both commercial treaties and trade agreements (as illustrated in Article XXII, par. 2 of the treaty of 1938 with Liberia, and Article XV (b) through (c), of the trade agreement of 1941 with Argentina).

[Page 1308]

Pars. 3–4. This, with minor changes, follows standard language in commercial treaties and in trade agreements of the United States (e. g. in Article XXII, par. 3 and 4 of the treaty of 1938 with Liberia, and Article XVI of the trade agreement of 1942 with Mexico).

Par. 5. The restriction with respect to corporations and associations engaged in political activities should be read especially in relation to Articles II, III, and IV. The draft treaty proposes no definition of a corporation engaged in political activity, nor formula which might distinguish such a corporation from one engaged in commercial activity. Standard provisions in recent commercial treaties of the United States (e. g. Article XVIII of the treaty with Liberia, 1938) state that provisions as to the organization of, and participation in, domestic corporations and associations accord no rights as to political associations. It is not intended that a government-owned corporation or a municipal corporation should necessarily be regarded as engaged in political activities, and a corporation engaged in political activities merely by reason of some incidental act not essential to its principal purpose would not necessarily be classified as a corporation engaged in such activities for the purpose of this provision.

The permissive exception as to corporations created or organized under the laws and regulations of one of the parties, but owned or controlled by persons not nationals of such party, is to be read especially in connection with Article III. The exception is considered a desirable and necessary limitation, in view of the broad rights for corporations proposed throughout the draft treaty.

Article XXVII

This follows substantially the language of the 1938 treaty with Liberia, except that for the words “claim and exercise dominion as sovereign”, has been substituted the phrase, “under the sovereignty or authority …” The latter wording is used in Article XV of the trade agreement of 1942 with Mexico.

It is customary in those parts of commercial treaties and trade agreements which relate to territorial application, to except the Panama Canal Zone (as illustrated in Article XXXI of the treaty with Finland, 1934, and Article XIII of the trade agreement with Canada, 193551).

Article XXVIII

This Article has been so drafted as to envisage the acceptance in the future by China and the United States, of possible new engagements, either in bilateral or multilateral instruments, for the arbitral or judicial settlement of disputes as to treaty interpretation or application. [Page 1309] The method of referring disputes and other matters pertinent to the actual carrying out of the general commitment in the present Article, would presumably be provided for in such treaty or treaties of pacific settlement. Until the parties enter into new agreements on the subject, the Treaty of Arbitration signed by China and the United States June 27, 193052 (47 Stat. (pt. 2) 2213) would apply, in so far as it is applicable.

The inclusion of this (compromissory) clause in a general commercial treaty marks a departure from previous practice of the United States in concluding such treaties.

Article XXIX

Par. 2. Because of the relative importance of the Treaty for the Relinquishment of Extraterritorial Eights in China, and of the fact that the present treaty is proposed pursuant to a provision of that treaty, it is thought important to make clear that no limitation or restriction upon the earlier treaty is intended.

Article XXX

It is proposed that the initial period for which the treaty shall be in force shall be five years, with provision for indefinite continuance thereafter, subject to termination on notice. This is the common rule in general commercial treaties of the United States.

  1. Neither printed.
  2. Not printed.
  3. Not printed.
  4. Department of State Treaty Series Nos. 285, 646, 692, 725, 748, 852, 857, 862, 868, 940, and 956; Executive Agreement Series Nos. 277 and 311.
  5. Assistant Secretary of State.
  6. Filed separately under 711.932/1–1845.
  7. For convenience of reference, this document is printed line for line as in the original, and the page numbers of the original document are indicated in brackets.
  8. 39 Stat. 874.
  9. Signed at Washington. Department of State Treaty Series No. 984, or 57 Stat. 767.
  10. Agreement signed at Washington December 27, 1945, Department of State Treaties and Other International Acts Series No. 1501, or 60 Stat. (pt. 2) 1401.
  11. Hunter Miller (ed.), Treaties and Other International Acts of the United States of America, vol. 4, p. 559.
  12. Ibid., vol. 7, p. 793.
  13. Ibid., vol. 8, p. 21.
  14. William M. Malloy (ed.), Treaties, Conventions, etc., Between the United States of America and Other Powers, 1776–1909 (Washington, Government Printing Office, 1910), vol. i, p. 234.
  15. Ibid., p. 237.
  16. Ibid., p. 239.
  17. Foreign Relations, 1903, p. 91.
  18. Ibid., 1921, vol. i, p. 459.
  19. Ibid., 1928, vol. ii, p. 475.
  20. Signed at Washington, December 8, 1923, Foreign Relations, 1923, vol. ii, p. 29.
  21. Signed at Washington, June 24, 1925, ibid., 1925, vol. ii, p. 341.
  22. Signed at Washington, February 13, 1934, Department of State Treaty Series No. 868.
  23. Signed at Monrovia, August 8, 1938, ibid., No. 956.
  24. Signed at Lima, August 31, 1887, Malloy, Treaties, 1776–1909, vol. ii, p. 1431.
  25. Signed at Bangkok, Department of State Treaty Series No. 940, or 53 Stat. (pt. 3) 1731.
  26. Signed at Washington, June 5, 1928, Foreign Relations, 1928, vol. iii, p. 646.
  27. Signed at Washington, June 15, 1931, Foreign Relations, 1931, vol. ii, p. 938.
  28. Signed at Washington, February 21, 1911, Foreign Relations, 1911, p. 315.
  29. Signed at Washington, Treaty Series No. 983.
  30. Signed at San José, July 27, 1853, Miller, Treaties, vol. 6, p. 269.
  31. Signed at Madrid, July 3, 1902, Malloy, Treaties, 1776–1909, vol. ii, p. 1701.
  32. See Department of State Bulletin, October 8, 1944, p. 367.
  33. The Military Service Agreement with China was effected by exchanges of notes signed at Washington, November 6, 1943, and May 11 and June 13, 1944, Department of State Executive Agreement Series No. 426, or 58 Stat. [pt. 2] 1442.
  34. Department of State Executive Agreement Series No. 251.
  35. Department of State Bulletin, August 16, 1941, p. 125.
  36. Department of State Bulletin, September 10, 1944, p. 254.
  37. Approved July 2, 1890; 26 Stat. 209.
  38. Approved October 15, 1914; 38 Stat. 730.
  39. Leo T. Crowley, Administrator of the Foreign Economic Administration.
  40. Department of State Bulletin, October 1, 1944, p. 354.
  41. Signed at Washington, June 11, 1942, Department of State Executive Agreement Series No. 253, or 56 Stat. (pt. 2) 1500.
  42. Signed at Washington, Department of State Executive Agreement Series No. 236.
  43. Signed at Buenos Aires, October 14, 1941, ibid., No. 277.
  44. Signed at Washington, December 23, 1942, ibid., No. 311.
  45. Signed at Washington, November 17, 1938, ibid., No. 164.
  46. Signed at Peking, July 25, 1928, Foreign Relations, 1928, vol. ii, p. 475.
  47. Signed at London, July 3, 1815, Miller, Treaties, vol. 2, p. 595.
  48. Executive Order No. 8863, 6 Federal Register, 4320.
  49. Signed at Washington, Department of State Treaty Series No. 970.
  50. See Department of State Treaty Series No. 984, pp. 16 ff.
  51. Signed at Washington, November 15, 1935, Department of State Executive Agreement Series No. 91, or 49 Stat. 3960.
  52. Signed at Washington, Foreign Relations, 1930, vol. ii, p. 313.