Foreign Relations of the United States, 1948, The Far East: China, Volume VIII

893.50 Recovery/6–548: Telegram

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

Nanking, June 5, 1948—2 p.m.
[Received June 5—8:34 a.m.]

1015. For Department and ECA. Re Embtel 1010, June 5, containing Chinese proposal for revisions of draft bilateral aid agreement. Meeting conducted in friendly atmosphere with Tung Ling expressing opinion that general language of draft agreement acceptable to Foreign Office. He indicated desire have negotiations proceed as rapidly as possible in order to get approval of Legislative Yuan prior to June 30 when that organ scheduled to end session. Herewith comments on proposals given numbered paragraphs reference telegram which Embassy officers said would be sent Department with Embassy’s comments:

1. Preamble. Tung said Foreign Office objected to quoting section 402 of China Aid Act in toto on grounds that unilateral statements of policies and objectives contained therein not in accord with spirit of bilateral agreement. Embassy officers held out little hope that Department would agree to drop quotation, but offered suggest to Department on Chinese behalf that point be covered in agreement by specific reference to section 402 in revised version of preamble.

2. We oppose suggested change.

3. Embassy does not recommend approval suggested deletion article III as revised paragraph d of article II too general and vague. Suggest question article III be held open until Department and ECA in position submit concrete proposals.

4. Suggestion revision subparagraph a, article V, paragraph 1, explained by Tung as reasonable in view fact China and US have both signed protocol to GATT whereas ITO charter unsigned. Statement made relevant provisions ITO charter and GATT are identical. Embassy officers expressed sympathy for this viewpoint, but stated question of revision would have to be referred to Department.

5. Tung explained Foreign Office position re suggested deletion paragraph b, article V, by stating that question of trade other than Sino-US appeared to be subject to special agreements which had no place in bilateral agreement this type. Objection also made to Chinese giving MFN treatment to Japan and Korea. He also alluded to present Chinese sensitiveness with regard US policies with respect to Japan as being important consideration in this regard. Embassy officers took no position beyond stating that this paragraph appeared in agreement being negotiated with European countries.

6. Tung said Foreign Office objected to omission phrase “except to such extent as hereafter may be agreed between the two Governments”, adding that proposed revision paragraph 3, article VI, drawn up to put provision in positive rather than negative language. Tung stated further that the Chinese Government could not expect to do much in the way of locating, identifying and putting into appropriate use Chinese assets in US unless US Government cooperated. Unless Department perceives objection, we believe Chinese objective would be reached by replacing above cited phrase into draft.

7. Suggested revision second sentence, subparagraph c, paragraph 2 of article VII retains original language this article given in first draft of agreement made available to Foreign Office but with substitution of phrase “which shall be determined at time of deposit by the Government of the US of A in consultation with the Government of China” by the phrase “computed at a rate of exchange to be agreed upon between the Government of China and the Government of the US of A.[”] Tung stated that proposed unilateral action by US unpalatable to Chinese and would probably give rise to criticism by Legislative Yuan. He recommended for our consideration as alternative inclusion provision for determining rate of exchange patterned after provision contained in last two sentences first paragraph, article XII of agreement signed Nanking November 10, 1947,⁹² entitled “agreement between the Government of US of A and the Government of the Republic of China for use of funds made available in accordance with article VI b (1) of the Surplus Property Sales Agreement of August 30, 1946”.⁹³ Embassy believes this provision cumbersome and otherwise undesirable. Embassy recommends acceptance Chinese specific language contained reference telegram since Department phrase “in consultation with” presumably implies reaching agreement as result of such consultation.

8. Tung stated suggested deletion article XIII based upon machinery, existing or projected, for arbitrating matters of type envisaged here. Embassy recommends deletion.

Sent Department 1015, repeated Shanghai 452.

Stuart

92. Treaties and Other International Acts Series No. 1687, or 61 Stat. (pt. 4) 3582. For correspondence on negotiation of this agreement, see Foreign Relations, 1947, vol. vii, pp. 1263 ff.
93. Signed at Shanghai; Department of State, Report to Congress on Foreign Surplus Disposal, October, 1946, pp. 40–45. For correspondence on negotiation of this agreement, see Foreign Relations, 1946, vol. x, pp. 1033 ff.