811.42700 SE/9–2447: Telegram

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

1223. Dept greatly pleased Embs progress negotiations Fulbright agreement outlined Embtel 1986 Sept 24. Comments follow:

Art 1. Should FonOff make counter proposal to retain reference to American law and eliminate reference to Chinese law, Dept prepared accept, and Emb authorized concede.

Art 4. Dept concurs Embs revision second sentence.

Art 5. Emb authorized determine acceptable maximum number advisers in consultation with FonOff.

Art 11. Dept approves new wording second sentence with slight alterations as follows: “Thereafter commencing with January 1, 1948, the Govt of China shall during each calendar year, deposit with the Treasurer of the U. S. upon demand of the Govt of the US amounts of Chinese national currency not to exceed the equivalent of one million dollars in any given year, and in aggregate totalling the equivalent of $20,000,000. The first deposit of Chinese national currency equivalent to $250,000 shall be considered as part of the deposit for the calendar year 1948.”

This wording substitutes “US Govt” for “Foundation” and eliminates reference to 1967 as concluding year. Thus if Foundation finds it necessary spend less than million dollars one year it can draw less than million dollars following year and reduce cash on hand. Fulbright Act limits expenditures to one million annually. Proposed language affords further precaution against inflation. Dept still accepts first [Page 1290] sentence Art 4 and does not consider this proposal inconsistent therewith.

Dept approves Embs wording third sentence Art 11 and concurs Embs recommendation eliminate second paragraph re exchange guarantee in view new provisions in Articles 4 and 11.

Reftel makes no mention informal understanding FonOff substance Article 12. Dept believes important obtain informal assurances that Central Govt taxation be waived or that it not seriously handicap Foundation. Dept also hopes assurances on substance Article 13 obtainable. Emb authorized accept best obtainable assurances both points. Informal verbal assurances on these points adequate since Dept informed any exchange of notes must be registered UN25 and would therefore involve same difficulties presented by inclusion in agreement.

Dept hopes early signature possible in view present agreement all controversial points.

  1. United Nations.