893.50 Recovery/5–2948: Telegram

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

814. Dept has pouched72 copies latest draft China agreement (ECA/China/2) for verification text Deptel 774, May 24. Also pouched72 copies Master Economic Cooperation Agreement for ERP countries (ECA/1), together with modifications (ECA/5) and analysis thereof (ECA/3 and 4), for background info Emb.

Chi Emb has been given copies China draft (ECA/China/2) and Master European draft on request. Dept and Emb should avoid catering Chinese desire identical treatment European ctrys. Defensive US position re China draft on grounds comparability Master European would undermine US position on Art IV re principles distribution. China draft should be interpreted, insofar as possible, on its own merits as necessary implementation of quite distinct Act. Actually, Chinese should be happy that certain rigid standards re financial stability and production goals in ERP not applied China. However, Dept believes question comparability China and Master draft will have to be met squarely and suggests Emb explain when appropriate, in following sense, which has been communicated, in general terms, to Chinese here:

China draft attempts maintain principles Title I of Act by applying provisions which logically fit Chinese situation as well as European and, for this purpose, language of certain European articles has been adopted almost verbatim. Other provisions Title I incorporated European draft have not been used China draft or have been applied in modified form. This explained in various instances either because radically different situation China (e. g., ECA/China/2, Article II re financial stability and certain aspects Art. VII re Special Account) or because technically inapplicable China (e. g., ECA/1 Articles [Page 533] relating joint recovery program). Finally, China draft contains unique provisions dictated by Title IV (e. g Art. III re commercial relations) or legislative history China Aid Act (e. g. Art. IV re distribution).

More detailed comments individual articles will be sent as soon as possible in separate telegram.73

ECA/China/2 incorporates certain minor drafting changes indicated for master agreement in ECA/5. These changes should be made in text Deptel 774 May 24 as follows:

  • Article V, para 1 (a), last sentence, “adherence to” replaced by “compliance with”.
  • Article VI, para 1, “are owned or beneficially owned by” replaced by “belong to”.
  • Article VI, para 2, “owned or beneficially owned by” replaced by “which belong to”.
  • Article VI, para 3, delete “except to such extent as hereafter may be agreed between the two Governments”.
  • Article VII, para 1, insert “only” after “shall apply” and before “with respect to”.
  • Article VII, para 2 (c), first sentence, “furnished” replaced by “made available” immediately preceding “to China on a grant basis”. Second sentence, insert “any such” after “indicated dollar cost of” and immediately preceding “commodities, services”, and delete “so furnished” immediately after “technical information”.
  • Article X, insert “the provision of” after “including” and immediately preceding “duty-free treatment”. Concluding phrase should read “and of relief packages originating in the United States of America and consigned to individuals residing in China”.
  • Article XI, para 4, qualifying clause “upon request” changed to read “upon the request of the Government of the United States of America”.
  • Article XIV, para 1, second sentence, insert “a date” after “or until” and immediately preceding “6 months after”. Third sentence, concluding phrase changed to read “shall be governed by their own terms”.

  1. Instruction No. 97, May 27, not printed.
  2. Instruction No. 97, May 27, not printed.
  3. Infra.