Memorandum by the Acting Secretary of State to President Truman

Subject: Proposed Executive Agreement with Philippines

On May 13, 1946, you approved my memorandum to you of May 8 in which, among other things, it was proposed that the Executive Agreement on Trade Relations provided for in the Philippine Trade Act of 1946 and certain other agreements with the Philippines would be entered into after the Philippines became an independent nation on July 4. Mr. McNutt now urgently requests that effort be made to have the Executive Agreement on Trade Relations approved by the Philippine Congress before the date of Philippine independence. His reason is that consummation after the Philippines become independent might require Philippine Senate approval by a two-thirds majority which, in President Roxas’ opinion, might be difficult.

Quite aside from any possible doubts as to the legal validity of such an agreement if consummated prior to independence, the Department strongly believes that this agreement, which will govern our trade relations with the Philippines for 28 years, should not be entered into until the Philippines are an independent nation. There appears to be no doubt as to the acceptability to the Philippines of the central provisions of the proposed agreement covering 8 years of free trade [Page 891] and 20 years of declining preferences. Therefore, while waiting to obtain the approval of the Philippine Congress until after they are independent might result in a final agreement somewhat different in some controversial aspects than if it were pushed through the Philippine Congress prior to that date, attainment of these major objectives of the Philippine Trade Act would not appear to be endangered.

The Department believes that this Trade Agreement should be freely negotiated between two independent governments on a mutually satisfactory basis. Any action which can be construed as an effort on our part to push an agreement through the Philippine Congress while they are still under our Flag and while, under their constitution, we are still in complete control of their foreign affairs will inevitably create a most unfavorable world impression of United States intentions. A considerable body of domestic and foreign criticism has already been directed at certain provisions of the Philippine Trade Act which call for privileged status for United States business interests in the Philippines, and at the methods used for ensuring that the Filipinos enter into the Executive Agreement on Trade Relations, for example, withholding of payments over $500 for rehabilitation until they do so. Continued criticism of this type will be very costly to United States prestige and will do much to impair the laudable record of fair dealing hitherto maintained by the United States in its Philippine relations.

The Department therefore proposes, if you approve, to advise Mr. McNutt that we should not undertake to consummate the Executive Agreement on Trade Relations with the Philippines until after July 4, 1946.48

Dean Acheson
  1. Notation by the Acting Secretary of State: “Approved by the President in conference with Messrs. Acheson & Clayton. 6/26/46. DA.” In telegram 1148, June 26, 8 p.m., to Manila, Mr. Acheson reported the situation to Mr. McNutt and asked him to inform President Roxas that the U. S. Government “believes it in long-term interests both countries that Phil Govt should give appropriate consideration to the trade agreement after July 4. This matter has been discussed with President Truman, who fully approves.” (611.11B31/6–2646)