FW 711.002/11–546

Memorandum Prepared in the Division of Commercial Policy7

The modern commercial treaty is designed to provide a legal framework, based upon liberal principles and adapted to modern conditions affecting international intercourse, for mutually advantageous relations between two countries over a long period of time. The trade-agreements program and the program directed to the conclusion of a multilateral agreement for the elimination of trade barriers and the establishment of an international trade organization are intended primarily to expedite the flow of goods between nations.8 The commercial treaty, on the other hand, deals largely with the rights of persons and corporations and with instrumentalities by means of which the flow of goods and services is carried on. Its usefulness is not limited to economic enterprise in the narrow sense, but extends to the encouragement of cultural interchange by establishing standards [Page 1369] for cooperation in education, the exchange of professional and technical skills, and for the dissemination of information.

The articles of a general commercial treaty may be classified according to subject matter into those relating to (1) establishment, (2) commerce, (3) navigation, (4) general and miscellaneous provisions.

Establishment provisions include rules as to entry, travel, residence, and the carrying on of specified activities by individuals; the status, organization, and activities of corporations; freedom of worship; acquisition, disposition and protection of property; access to courts; freedom from unreasonable searches and seizures; and freedom from compulsory military service.

Commercial provisions in treaties of this type relate to the general principles that should govern the application of import and export duties, internal taxation of imported articles, the making of import and export quota allocations, the regulation of foreign exchange, and the operation of monopolies and the granting of public contracts and concessions as they affect trade. In this field, the commercial treaty makes effective for a relatively long period the general rules relating to trade that have been worked out in twelve years of experience in the making and administration of reciprocal trade agreements.

Navigation provisions deal with such matters as the right of entry of vessels into ports, freedom from discriminatory port charges, assistance to vessels in case of distress, and general non-discriminatory treatment of shipping in all respects.

A general exceptions article is so phrased as to allow necessary freedom of action in national emergencies and to keep the treaty in harmony with the programs of the specialized agencies of the United Nations, such as the International Monetary Fund. Additional provisions deal with such matters as commercial arbitration, freedom of information, and the settlement by pacific means of disputes arising under the treaty, including ultimate appeal to the International Court of Justice.

The standard of treatment specified with respect to the various subjects dealt with in a commercial treaty vary with the nature of the case. In some instances international law is the standard recorded. In certain cases, unqualified rights are specified. In other cases, the rule bars, by means of a most-favored-nation provision, discrimination as between nationals of different countries; in still others the standard is established of giving the alien the same treatment accorded to the nationals of the country in which he is a visitor.

  1. Forwarded on November 5 by the Chief of the Division of Commercial Policy (Brown) to the Under Secretary of State for Economic Affairs.
  2. This refers to the commercial policy encompassed generally in the United States draft proposals for the establishment of an International Trade Organization under the auspices of the United Nations; see pp. 1263 ff.