711.932/7–1448: Telegram

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

1039. Urtel 1292, July 14. Impossible prepare thorough comparative analysis provisions FCN treaty, GATT, and ITO Charter for use Chinese Govt before adjournment Legislative Yuan. Treaty provisions [Page 759] relating exchange goods represent generally principles US policy Dept endeavored incorporate in GATT and ITO Charter, but to obtain general acceptance multilateral agreements it was necessary in many instances include greater detail and in some cases depart from strictness of treaty rules. For example, multilateral permit utilization quantitative restrictions in discriminatory manner to protect balance of payments, whereas treaty precludes their use in this manner, and multilaterals contain more flexible provisions than treaty relating integration economies two or more countries by means customs unions and free trade areas.

Generally, GATT and Charter (1) spell out in greater detail by means supporting, extending, or qualifying provisions the general principles included in the treaty; (2) provide for controlling, coordinating, or consultative action in certain cases by the ITO or parties to GATT acting jointly; (3) deal with certain matters that are dealt with only partially, inferentially, or not at all in treaty, e. g., cinematographic films, export subsidies, customs valuation, marks of origin, etc.; (4) require certain action not required in treaty, e. g., negotiations between members to reduce tariffs (as were participated in by both China and US at Geneva), and abolition of quantitative restrictions except in exceptional circumstances.

Dept in proposing exchange notes relating GATT and ITO, seeks for US no advantages except general ones that will accrue to both countries from having multilaterals in unimpeded operation. It is thought that the unqualified treaty rules would be preferable in some respects insofar as specific US interests are concerned. The more flexible provisions in GATT and Charter regarding quantitative restrictions would presumably be more advantageous to China than the stricter treaty provisions. Purpose of proposed understanding is merely to remove any possibility treaty interfering with operation of multilaterals. This objective is wholly in acord with commitment of China and US in Arts XV and XXVI (3c) of treaty. Exchange notes would not commit either party to treaty to become or remain party to GATT or member ITO.

In reply to inquiry referred to in penultimate paragraph Embtel 1292, it may be stated that general practice of US Govt is not to agree to substantive reservation to a treaty on the part of some other nation without first obtaining consent of Senate. Understandings reached pursuant to specific provisions of a treaty, such as that proposed with regard to Trust Territory of Pacific Islands, or an understanding such as that relating to GATT and ITO are not considered reservations and consequently are not considered as requiring Senate action.