893.50 Recovery/6–2448: Telegram

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

922. Following is text note to be proposed for exchange with ChiGovt re MFN treatment occupied areas as indicated Deptel 920.26 Both notes would be in identical language and should be exchanged at time of or prior signature bilateral agreement.

“I have the honor to refer to the conversations which have recently taken place between representatives of our two Govts relating to the territorial application of commercial arrangements between the United States of America and the Republic of China and to confirm the understanding reached as a result of these conversations as follows:

For such time as either the Government of the United States of America or the Government of the Republic of China participates in the occupation or control of any areas in western Germany, the Free Territory of Trieste, Japan or southern Korea, the other Government will apply to the merchandise trade of such area the provisions of the General Agreement on Tariffs and Trade dated October 30, 1947, as now or hereafter amended, relating to most-favored-nation treatment.
The undertaking in point 1, above, will apply to the trade of any area referred to therein only for such time and to such extent as such area accords reciprocal most-favored-nation treatment to the merchandise trade of the country or countries obligated by the undertaking in point 1.
The undertakings in points 1 and 2, above, are entered into in the light of the absence at the present time of effective or significant tariff barriers to imports into the areas herein concerned. In the event that such tariff barriers are imposed, it is understood that such undertakings shall be without prejudice to the application of the principles set forth in the Havana Charter for an International Trade Organization27 relating to the reduction of tariffs on a mutually advantageous basis.
It is recognized that the absence of a uniform rate of exchange for the currency of the areas in Western Germany, Japan or southern Korea referred to ill point 1, above, may have the effect of indirectly subsidizing the exports of such areas to an extent which it would be difficult to calculate exactly. So long as such a condition exists, and if consultation with the Government of the United States of America fails to reach ail agreed solution to the problem, it is understood that it would not be inconsistent with the undertaking in point 1 for the Government of China to levy a countervailing duty on imports of such goods equivalent to the estimated amount of such subsidization, where the Government of China determines that the subsidization is such as to cause or threaten material injury to an established domestic industry or is such as to prevent or materially retard the establishment of a domestic industry.
The undertakings in this note shall remain in force until January 1, 1951, and unless at least 6 months before January 1, 1951, either government shall have given notice in writing to the other of intention to terminate these undertakings on that date, they shall remain in force thereafter until the expiration of 6 months from the date on which such notice shall have been given.

Please accept, Excellency, the renewed assurances of my highest consideration.”

Emb should point out that language of note is identical those being negotiated European countries. Termination date and provisions in Paragraph 5 have been made identical with those in GATT.

  1. June 24, 11 p.m., p. 563.
  2. Approved March 24, 1948, by the United Nations Conference on Trade and Employment; for text, see Department of State Commercial Policy Series No. 114: Havana Charter for an International Trade Organization, p. 23.