893.50 Recovery/6–548: Telegram

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

861. Following comments re Embtels 1010 and 1015, June 5 with numbered paragraphs corresponding:

Preamble. Highly desirable that full text Sec. 402 be used. Request Embassy attempt persuade FonMin accept present draft and report again on strength Chinese objection before forcing issue.
Article II. Dept agrees Embassy.
Article III. Dept believes separate Art. necessary this subject but further comments must be deferred for time being. Request Embassy so indicate to FonMin and state that presentation text Art. III to Chinese was premature and should not be regarded as firm proposal.
Article V, Para. 1 (a). FonOff suggestion has merit, but Embassy should defer comment pending further instructions since paragraph 1 (a) being reconsidered here.
Article V, Para. 1 (b). MFN treatment for occupied areas must be negotiated all agreements. For your info, language paragraph 1 (b) may be changed as result reconsideration paragraph 1 (a).
Article VI, Para. 3. Chinese redraft unacceptable. Previous deletion “except to such extent as hereafter may be agreed by the two governments” was made in consultation with Treasury for all agreements because it implied possibility US assistance mobilization assets. This particularly undesirable in case Chinese assets which are unblocked whereas numerous European assets remain blocked.
Article VII, Para. 2 (c). FonOff revision acceptable. Order [Page 546] of reference Govts in last phrase second sentence should be reversed for English text. Dept assumes that last sentence paragraph 2 (c) remains as drafted.
Article XIII. Dept not clear what “machinery, existing or projected,” FonOff has in mind. In any case, Dept unable approve recommendation deletion Article XIII in view statutory mandate, Sec.115 (b) (10) of Title I.