893.50 Recovery/6–1548: Telegram
The Secretary of State to the Ambassador in China (Stuart)
907. Reurtel 1087 June 15, subject Rural Reconstruction Agreement. In view of fact that China Aid Act 1948 expressly provides that Rural Reconstruction Commission shall, subject to the direction and control of the Administrator, formulate and carry out a program for reconstruction in rural area of China; and since ECA has no authority to proceed with rural reconstruction programs except pursuant to terms of Act, Dept and ECA are concerned about change proposed ureftel. In this connection, refer to Deptel 920 of May 20  to Shanghai,93 repeated Nanking as 737. As regards question of sovereignty involved, believe act of making an agreement is itself an exercise of sovereignty and not abandonment of it.[Page 612]
If Embassy is certain, as a matter of law, that the language suggested reftel means the same thing as language in original draft Rural Reconstruction Agreement, and if Embassy believes change in language at this time is not prejudicial to such an interpretation, and if Chinese thoroughly understand this point, then Dept and ECA would be agreeable to substitution of phrase “subject to the provisions of the Act, and in particular Section 407 thereof” for the phrase “subject to the direction and control of the Administrator for Economic Cooperation and subject to the other provisions of the Act”.
Your proposed language para 1 of Art. 2 is not acceptable since it indicates execution of Commission programs can take place only by and through Chinese Govt. Suggest reversion to original language this para, which also seems more consistent with general line of policy in Toeca 31,94 with which Embassy associated itself in Embtel 1074 June 12.95
Addition of specific elements of program you proposed in new Art. 4 seem excellent and are approved.
While it is realized that new suggested Art IV lists items “to consider and make recommendations on”, Dept wishes point out para (4) this Art might lead to Commission concerning itself with problems enactment hsien self-govt laws, rights initiative and referendum and elections. If Commission itself is to “formulate and carry out” “program as provided in Act, para (4) open to question and might cause Chinese resentment. This matter would seem to be more logically one for inclusion in corollary discussions with Chi Govt to obtain desired undertakings without having it included in bilateral.
Following additional changes in Rural Reconstruction Agreement necessary to make it conform with master ERP agreement and general China bilateral:
- Art V, para (1), should read: “The Govt of China will, upon appropriate notification from the Ambassador of the United States of America in China, consider the United States members and personnel of the Commission as part of the Embassy of the United States of America in China for the purpose of enjoying the privileges and immunities accorded to that Embassy and its personnel of comparable rank.”
- Art VIII should read: “This Agreement shall be registered with the Secretary-General of the United Nations.” If, however, rural reconstruction agreement is to take form exchange notes, this article re-registration with UN unnecessary and should be deleted and Chi Govt should be informed reDeptel 875 June 13 that Dept will effect necessary registration.
Repeated AmConsul, Shanghai for Lapham from ECA as Ecato.96