893.50 Recovery/7–948: Telegram

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

1252. To Department, ECA and Agriculture. On assumption exchange of notes suggested by Foreign Office affords basis for negotiation for establishment joint Rural Reconstruction Commission (reEmbtel 1242, July 7, repeated Shanghai as 589), Embassy, in consultation with Moyer and Dawson, has drafted revised versions of notes which believed adequately cover points of original draft agreement (reDeptel 810,May 28) as subsequently revised.

Herewith suggested note from Ambassador to Foreign Minister:

“Excellency: I have the honor to refer to section 407 of the China Aid Act of 1948 passed by the Congress of the United States of America (hereinafter referred to as the Act), which provides, among other things, for the conclusion of an agreement between China and the United States of America establishing a Joint Commission on Rural Reconstruction in China. In pursuance of the general principles laid down in the Act, and in particular section 407 thereof, I have the honor to bring forward the following proposals regarding the organization of the Joint Commission and related matters:

Remains unchanged.
Opening phrase remains unchanged.
Remains unchanged as US interests covered by specific reference to section 407 and by (2) (d) below. Chinese interests covered in (4) below.
and (c) Remain unchanged as they correspond to paragraph (2) and (3), article II of our original draft.
Revised as follows: ‘To establish standards of performance for implementation of the program, including the qualifications, type and number of personnel to be used by cooperating agencies in the program, and to maintain a constant supervision of all phases of the program, with authority to recommend changes in or stoppage of any phase of the program’.
We suggest following: ‘To appoint such executive officers and administrative staff as the commission deems necessary to [Page 618] carry out the program. Salaries, expenses of travel and other expenses incident to the administrative functions of the Commission itself shall be paid from funds made available under section 407(b) of the Act.’ We believe better not to make specific mention of executive and associated directors due some uncertainty advisability Commission having such officers. Above wording allows Commission greater flexibility in arranging for its executive staff. Regarding omitted second sentence from our paragraph (6) article II, we believe it would be difficult and sometimes wasteful of personnel to require application principles of jointness beyond the commission. Also this principle implied in the Commission membership and whole spirit of agreement. If you feel strongly further mention of it needed here, would suggest statement along following lines be inserted into foregoing as second sentence: ‘In making such appointments the Commission will bear in mind the desirability of including citizens of both China and the United States.’
Insert full text our article IV as given Embtel 1087, June 15, with original paragraph (4) omitted according Deptel 907, June 22, and introduced with following revised wording: ‘In formulating this program to be carried out by appropriate agencies, the Commission shall have authority to include in the scope of its operation the following:’
(Embassy note: We recommend remaining paragraphs read as given below. Some unchanged from Chinese, draft; others reworded or represent articles from US draft inserted as numbered paragraphs.)
In respect of any decision of the Commission, the approval of the Government of China shall be obtained prior to its execution if the chairman of the commission deems it necessary.
It is understood that assistance to a project in any province will be contingent upon the willingness of provincial and hsien officials to take steps necessary to an effective implementation of plans for that project.
The Commission shall publish in China and transmit to the Government of the United States of America and the Government of China, in such forms and at such times as may be requested by either of the two governments, full statements of operations, including a statement on the use of funds, supplies and services received, and will transmit to the two governments any other matter pertinent to operations as requested by either of the Governments. The Government of China will keep the people of China fully informed of the intended purpose and scope of the program and of the progress achieved by the Commission in implementing the program, including the nature and extent of assistance furnished by the Government of the United States of America.
The Government of China will upon appropriate notification of 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.
All supplies imported into China for use in the program shall be free of fiscal charges, including customs duties, conservancy dues [Page 619] and other charges normally imposed by the Government of China on similar supplies which are imported through regular commercial channels. The Government of China will afford expeditious clearance by the Chinese customs of supplies imported for use in the program.
The Government of the United States of America and the Government of China will consult with respect to problems incident to the interpretation, implementation and possible amendment of the terms of the agreement embodied in this exchange of notes whenever either of the two Governments considers such action appropriate.
The Government of the United States of America reserves the right at any time to terminate or suspend its assistance, or in any part thereof, provided under this exchanges of notes, and also reserves the right at any time to withdraw the United States members of the Commission.
This note and Your Excellency’s reply accepting the above proposals on behalf of the Government of China will constitute an agreement between the two Governments in the sense of section 407 of the Act. Subject to the provisions of paragraphs (9) and (10), this exchange of notes will remain in force until June 30, 1949, or, upon the request of either Government at least 2 months before June 30, 1949, until the date of termination of the Economic Aid Agreement between the two Governments concluded on July 3, 1948. [”] (End of suggested note from Ambassador.)

Regarding suggested note from Foreign Minister, we believe this acceptable as given Embtel 1242.

While we consider inclusion preamble in Ambassador’s note desirable, we believe essential points covered in his note especially in opening paragraph and in (3) and in closing paragraph of Foreign Minister’s note. Regarding registration exchange of notes with UN, Foreign Office interposes no objection. Does Department desire have this point incorporated in exchange of notes?

Embassy planning give Foreign Office our former article IV as revised in (3) of Ambassador’s note above. Before submitting to Foreign Office additional material or comment, we will await receipt your comments and instructions on our suggested exchange of notes cited herein.

Sent Department 1252, repeated Shanghai 600.