893.50 Recovery/4–1048: Telegram

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

527. Since negotiation bilateral agreement will take some time, Dept expects, subject to consultation ECA Administrator, exchange letters with Chinese Govt under which China Aid Program can begin operations immediately.

Exchange letters will be designed to raise fewest possible questions, enabling quick action by Chinese Govt.

[Page 492]

For European countries ERP legislation requires commitment by receiving country to conclude agreement incorporating conditions specified in Title I section on bilateral agreement. Also necessary for US to make finding that European countries in fact living up to such conditions. No similar requirement for China exists in Act.

Effect exchanges of letters will be to continue existing PL 84 Foreign Relief Agreement of October 27, 1947 with certain modifications and supplementary understandings. Text proposed US letter follows next cable.90a Request Embassy’s immediate comments.

When nature proposed exchange letters discussed informally Chinese Ambassador and Pei, they emphasized importance from Chinese standpoint to have procedure as similar to European procedure as possible. Department explained European pattern not appropriate to China, since conditions so strict that necessary commitment by Chinese Govt and finding by US Govt could not be made. Important Chinese realize that to insist on conditions like Europe is to insist on agreement much more difficult for Chinese to sign. Proposed letter indicates bilateral agreement must be concluded within 3 months after signing of Act (April 3). This should provide adequate time for negotiations and corollary conversations reference Deptel 519 April 8.91

Would appreciate Embassy’s suggestions soonest re content bilateral agreement for consideration advanced drafting here.

Sent Nanking as 527; repeated Shanghai as 634.

  1. Infra.
  2. Post, p. 506.