Foreign Relations of the United States, 1946, Council of Foreign Ministers, Volume II

C.F.M. Files: Lot M–88: Box 2065: Deputies Documents

Report by the Committee of Economic Experts on Italy⁴⁷

secret
C.F.M.(D) (46) 167

Paris, 12 June, 1946.

Peace Treaty With Italy

General Economic Relations

Part I.	Agreed provisions.
Part II.	Subjects for which the Committee agreed that provisions were necessary in the treaty, but on which agreement was not reached.
Part III.	Proposed provisions on which the Committee did not reach agreement regarding the necessity of inclusion in the treaty.

Note.—Although throughout this Report paragraphs are numbered consecutively in each Part, this is done for convenience of reference and in no way indicates the final order of articles in the Treaty.

Part I. Agreed Provisions

1. Pending the conclusion of commercial treaties or agreements between Italy and the United Nations, the Italian Government shall, during the [^*] years following the entry into force of this Treaty, grant to each of the United Nations which, in fact, reciprocally grant similar treatment in like matters to Italy, the following treatment [with respect to commerce]^†:

2. In all that concerns duties and charges on importation or exportation, the internal taxation of imported goods, and all regulations pertaining thereto, the United Nations shall be granted [unconditional]⁴⁸ most-favored-nation treatment.^‡

3. In all other respects, to make no arbitrary discrimination against goods the produce or manufacture of any territory of any of the United Nations as compared with like goods the produce or manufacture of any other territory of the United Nations or of any other foreign country.

4. Natural and legal persons who are nationals of any of the United Nations shall be granted national and most-favored-nation treatment in all matters pertaining to commerce, industry, shipping and other forms of business activity within Italy.^§

5. The foregoing undertakings by Italy shall be understood to be subject to the exceptions customarily included in commercial treaties concluded by Italy before the war; and the provisions with respect to reciprocity granted by each of the United Nations shall be understood to be subject to the exceptions customarily included in the commercial treaties concluded by that Power.

Part II. Subjects for Which the Committee Agreed That Provisions Were Necessary in the Treaty, but on Which Agreement Was Not Reached

The U.S. representative proposed to adopt the following text:

“The property in Italy of natural and legal persons who are nationals of any of the United Nations shall not be taken except by due process of law and upon the payment of just and effective compensation”.

The Soviet representative considered it necessary to give to this paragraph the following wording:

“The Property in Italy of natural and legal persons who are nationals of any of the United Nations shall not be taken except by due process of law and on conditions equal both for Italian nationals and United Nations nationals”.

The U.K. and French representatives agree with the U.S. proposal.

Part III. Proposed Provisions on Which the Committee Did Not Reach Agreement Regarding the Necessity of Inclusion in the Treaty

1. The U.S. representative proposed that the following sentence be added to the text quoted in Part I, para. 4 of the present Report:

“It is further understood that this paragraph shall not apply to Civil Aviation, but that Italy will grant no exclusive or discriminatory right to any country with regard to the operation of civil aircraft in international traffic and will afford all the United Nations equality of opportunity in obtaining international commercial aviation rights in Italian territory.”

The U.S. representative considered such a provision essential because the concept of non-discriminatory treatment which is embodied in the most-favored-nation clauses has in international practice a special application in the field of civil aviation and because an exception should be made in this case from the provision for national treatment.

The U.K. representative doubts whether the principles of most-favored-nation treatment evolved in the past for application to other forms of commercial activity would necessarily be applicable, automatically and without qualification, to a new activity like civil aviation. He accordingly associates himself with the U.S. proposal.

The Soviet representative expressed himself against the inclusion in the Peace Treaty of a paragraph on civil aviation and considered that the question of civil aviation should be a subject of special bilateral agreements.

The French representative entirely reserved his position on the subject.

2. The Committee have not considered the question relating to United Nations’ property referred to in their report to the Deputies (C.F.M.(D) (46) 133, Part III, para. 6).⁴⁹ They propose to make a separate report on this matter at a later date.

47. This Report, which was originally submitted to the Deputies, was subsequently included as Appendix IV of the Draft Peace Treaty with Italy, C.F.M. (D) (46) 177, June 13, 1946, not printed. Portions of the Report were considered by the Council of Foreign Ministers at its 20th Meeting, June 17, and its 22nd Meeting. June 19. For the United States Delegation Records of these meetings, see pp. 509 and 538.

48. The U.K. representative considers that a period of three years is not too long to allow for the negotiation of the series of long-term commercial agreements which will be necessary to allow the resumption of relations on a normal basis between Italy and all other countries concerned. To secure agreement, he would, however, have been prepared to accept a two year period for the currency of the interim arrangements contained in this Article.

    The Soviet representative considers that the time-limit should be one year, as it is essential that the temporary provisions laid down by the Peace Treaty should be replaced by commercial agreements between Italy and United Nations countries as soon as possible.

    The U.S. representative proposed three years, but indicated his willingness to consider two.

    The French representative suggests two years as a compromise. [Footnote and brackets in the source text.]

49. The question of the words [with respect to commerce] is to be considered later. [Footnote and brackets in the source text.]
48. Brackets appear in the source text.
49. The Soviet representative considers it unnecessary to include the word “unconditional”, which should be deleted. [Footnote in the source text.]

50. The Soviet representative insisted on the addition of the following words to this paragraph (C.F.M.(46) 97, Part IV, subparagraph (c)) as an integral part thereof:

    “Excluding certain branches where, in accordance with the internal legislation of the country, private enterprise does not take place”.

    The three other representatives doubt whether it is necessary to insert a provision disclaiming rights of United Nations Nationals to engage in enterprises restricted to the Italian State. They would however offer no objection to a pro vision drafted as an interpretation of the Article. They will consider a suitable form of words later. [Footnote in the source text.]

49. Part III of C.F.M. (D) (46) 133 is not printed.