800.50 TA/2–849
The Secretary of State to Mr. Robert F. Loree, Chairman of the Board, National Foreign Trade Council, Inc.
My Dear Mr. Loree: I refer to your letter of February 8, 1949 expressing concern that any program to foster capital investment in underdeveloped countries shall not operate so as to injure American private investments in such countries. Your letter also suggests in some detail certain principles and policies which your Organization believes would provide necessary safeguards for such investment.
The Department is in full accord with the view of your Council as to the desirability of protecting American investments abroad and agrees that such protection is essential to the stimulation of overseas investment. The Department appreciates the detailed suggestions you have made toward that end and is studying them with considerable interest.
As will be seen by an examination of the Treaty of Friendship, Commerce and Navigation with Italy, which we hope will soon be in force, the Department has been seeking to negotiate assurance of the general sort mentioned in your letter, to the extent compatible with the nature of this kind of instrument.1 This treaty contains more extensive assurances for the encouragement and protection of investments than any hitherto concluded by this Government; and we have been much encouraged by the favorable reaction your Organization has had to it. The substance of the Italian treaty provides the point of departure for drafts prepared for negotiation with other countries, pursuant to the active program now under way to modernize outstanding commercial treaties and to conclude new ones with countries with which there [Page 636] are none in existence. However, we are constantly considering what may be done to improve and strengthen the provisions of our basic draft. Two particular points on which we are presently endeavoring to formulate more extensive assurances are in connection with the employment of essential personnel and the withdrawal of returns from investments. You will appreciate, however, that a number of perplexing problems arise in attempting to go beyond the Italian treaty on these two points.
In previous discussions with your Council it has indicated its appreciation of the fact that there are limits to what can be accomplished in a treaty of this kind, owing to its broad, long-term, strictly mutual nature and the circumstance that it is not negotiated in a climate of quid-pro-quo bargaining. Because of these limits, the Department gives attention also to other more specialized agreements, such as double tax conventions, for example, which provide more elaborate or more specific treatment of particular subject matters than is possible in the Treaties of Friendship, Commerce and Navigation.
The assumption that the President’s Fourth Point would be amplified by further public statements has, of course, been realized to some extent in the past few weeks. Enclosed for your information is an address which I delivered before the Economic and Social Council and a Departmental release on the same subject by the Office of Public Affairs.2
If your Council desires, I should be glad to arrange a meeting at your convenience with appropriate officers of the Department, with a view to discussing these subjects at greater length.
Sincerely yours,
Assistant Secretary
- Treaty and protocols signed at Rome, February 2, 1948; ratifications were exchanged at Rome on July 26, 1949 and the treaty entered into force on that date: for text, see Department of State Treaties and Other International Acts Series (TIAS) No. 1965, or 63 Stat. 2225. This FCN treaty with Italy was the first to be negotiated and to enter into force in the program initiated by the Department of State after World War II to update and modernize the commercial treaties of the United States.↩
- Regarding Assistant Secretary Thorp’s address to the United Nations Economic and Social Council on February 25, 1949, concerning an expanded program for technical assistance, see footnote 5, p. 768.↩