711.9327/0–2546: Telegram

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

1538. Powell to Norton. Your telegram of 19 September37 concerning possibility of inclusion of verbiage of Bermuda agreement in route annex of Chinese agreement was garbled in transmission and has not yet been cleared. However, I understand the general purpose of your message. For the following reasons it is my earnest recommendation that no attempt be made at this time to write Bermuda verbiage into the Chinese agreement:

Acting upon the policy that it was desired to achieve a clear-cut agreement along the lines of Chicago standard form, without complicating it with rate and frequency control provisions such as were included in Bermuda agreement unless driven to it, I have conducted negotiations in that way. When Bermuda provisions were raised by Chinese negotiators for explanations I have discouraged their inclusion in Chinese agreement on grounds that they were not necessary in this situation and would needlessly complicate the agreement. Having done this I am not now in position to completely reverse myself by requesting inclusion of Bermuda verbiage in Chinese agreement. Such action would destroy my effectiveness in further negotiations here because in Chinese mind it would cause complete loss of face. Quite frankly I would not like being put in that position, since it would tend to discredit me and cast doubt upon my good faith with my friends on the other side of the table.
There is nothing in provisions of proposed Chinese agreement which is inconsistent with the principles of Bermuda agreement. There are no provisions preventing fair and equal opportunity to operate air services, no formulae for predetermination of frequencies, capacity or division of traffic are included; there is nothing which prevents adjustment of fifth freedom traffic in the light of traffic requirements of countries of origin and destination, or in the light of requirements of through traffic after discussing local and regional services. This could not be said of Argentine and other British bilateral agreements. There, the undesirable situation ought [thought?] to be corrected by your 19 September arrangement with the British has no application to the proposed Chinese agreement.
In view of the tenor and advanced state of the Chinese negotiations and attempt now to amend proposed Chinese agreement by including Bermuda verbiages simply because of this new arrangement with the British could very well be attacked in this country as an attempt on the part of the US and Britain to dictate the terms of bilateral air arrangements of third countries notwithstanding Chicago agreement. For this reason your 19 September press release is being withheld from distribution here but it is bound to trickle in from other sources and might well have a prejudicial effect.
Based on your telegram 14 September 1946,38 in which signing of agreement was authorized, Chinese representatives were advised that the requested amendment to the letter concerning the connection of Pan American route at Canton was the final point to be negotiated. It was difficult to persuade them to accept even that small change because they had already completed their translation and secured final approval of Ministry of Communications. It was the understanding of all concerned that upon acceptance of that change negotiations had been concluded; that there would be no further change in the language of the agreement and that its formal approval by the Executive Yuan would be expedited. This all took place prior to the 19 September 1946 agreement with the British concerning the inclusion of Bermuda verbiage in future bilateral air transport agreements. I believe that any attempt to write in at this time the verbiage of Bermuda agreement would result in complete re-negotiation of the whole transaction, thus delaying its signing to an interminable time in the future and opening the door to a number of undesirable provisions and limitations that the Chinese have wanted and which are still being pressed by other ministries of the government.

In view of the foregoing it is my recommendation that the British be advised of the situation that exists in connection with the Chinese agreement and that because of this situation we proposed to formally execute the Chinese agreement in its present form. They should be assured, of course, that we will not sanction any attempted practices under this agreement which would be inconsistent with the Bermuda principles and, if necessary, at some propitious time in the future an attempt would be made to amend the Chinese agreement so as to incorporate therein the verbiage of the Bermuda agreement. [Powell.]

Please repeat reply to Shanghai.

  1. Telegram No. 766, supra.
  2. Telegram No. 754, p. 1244.