471.006/10–2750
Memorandum by the Secretary of
State to the President
1
confidential
Washington
, October 27,
1950.
Memorandum for the President
Subject: Reference of the Question of United States
Treaty Rights in French Morocco to the International Court of
Justice at The Hague
The ECA Appropriations Act prohibits
the use of any of the ERP funds for
aid to any country if, “in the opinion of the President”, a
dependent area of that country is failing to comply with any treaty
between the United States and such dependent area.
This amendment is directed at French Morocco and requires a final
resolution of long-smoldering differences between us and the French
as to the extent of United States treaty rights there. With [Page 1755] State Department and
ECA approval, the French have
decided to refer the issues to the International Court of
Justice.
I recommend that you withhold an expression of opinion regarding
compliance with the treaties, pending the Court’s decision. It is
appropriate for you to await the Court’s decision before you express
an opinion on the issues before it.
Attached hereto is a memorandum giving a summary of the background of
this matter and a press release which will be issued by the
Department, if you concur.
[Annex A]
Background Memorandum Prepared by the Office
of the Legal Adviser
confidential
[
Washington
, undated.]
Background Memorandum Regarding Moroccan
Treaty Problem
The French Government has advised us that it intends to submit to
the International Court of Justice the question of the extent
and interpretation of our treaty position in the French Zone of
Morocco. United States treaty rights in Morocco stem from a
series of treaties beginning with the treaty of 1836 with the
Sultan. Under these treaties the United States has exercised the
right of extraterritorial jurisdiction, and is entitled to
most-favored-nation treatment for United States commerce and
“economic liberty without any inequality”. In view of our treaty
position, it has been customary for the French Protectorate
Government of Morocco to obtain this Government’s assent before
considering local laws or decrees as being applicable to
American citizens.
In 1939, the French Protectorate Government, in line with similar
measures taken in France at the outbreak of war, instituted
through various decrees a system of exchange and import controls
in French Morocco. At that time, the United States reserved its
position on these controls and withheld its assent to their
application to Americans. In 1944, however, we assented to the
exchange controls but this did not cover import controls. The
withholding of our assent to the latter permitted Americans,
most of whom established themselves in the import and export
business in Morocco following the end of World War II, with
their eyes on the liberal treaty rights, to import more or less
freely from the United States provided they did not ask the
French Protectorate for an official allocation of dollars to pay
for such imports. Americans doing business in French Morocco
have illegally transferred their franc earnings to Tangier to
exchange them for dollars. Some thirty-seven Americans who
established themselves in [Page 1756] Morocco after the war (mostly American
veterans) were thus able to do (according to their own figures)
ten million dollars worth of business in 1948 alone. The French
asserted that this situation was exerting pressure on the franc
and exercised a strong attraction for dollars to move out of the
hands of the French exchange control system. The French
Protectorate Government, therefore, promulgated a decree on
December 30, 1948, which had the effect of limiting those
imports which do not require an official allocation of exchange
to a list of essential items (this “free list” now includes
twenty items), and subjected imports of these items to the
requirement of an import license. Allocations of official
dollars are, for the most part, made under a competitive bidding
procedure in which Americans have an equal opportunity to
participate. The controls apply to persons of all nationalities
and to imports from all monetary zones with the exception of
imports from the franc area (the French and Moroccan franc are
freely interchangeable).
We have recognized the temporary necessity for these import
controls since their purpose is consistent with the objectives
of the ERP and they conform to
France’s commitments in its ECA
bilateral agreement to take all steps necessary to stabilize the
economy of the franc area and so forth. On this basis it was
decided that temporary assent to their application to Americans
was necessary even though the controls conflicted with the full
realization of our asserted treaty rights in Morocco.
At the same time we recognized that Americans in Morocco had
legitimate complaints against certain aspects of the
administration of French trade restrictions in Morocco and,
accordingly, before assent was given to these controls,
negotiations were conducted with the French for the purpose of
eliminating these practices and for obtaining the best possible
treatment for Americans consistent with ERP objectives. These negotiations resulted in an
agreement incorporating certain concessions for Americans and
establishing a joint consultative group to handle further
complaints regarding administration of the controls. This group
has effectively handled all matters brought to its attention.
Since the inception of this agreement we have continued to seek
the best possible treatment of Americans and to protect them
against discrimination. Special investigations in the field have
convinced us that there is now no ground to allege
discrimination against Americans. If such should be discovered,
adequate authority to deal with it would be found in the
Connally amendment to the ERP
law, which was specifically directed at discrimination.
The American businessmen concerned have refused to recognize that
important controls are necessary in Morocco for balance of
payments reasons and allege that the controls discriminate
against them. They have consistently opposed this Government’s
position on this matter. [Page 1757] Having failed to influence the Executive to
change its position on this problem, they turned to Congress
where their efforts culminated first in an enlargement of the
Connally amendment and later in the passage of the following
amendment to the ERP
Appropriations Act:
“… Provided further, that after November 1, 1950, no
funds herein appropriated shall be made available to any
nation of which a dependent area fails, in the opinion
of the President, to comply with any treaty to which the
United States and such dependent area are parties.”
Full-fledged compliance with the treaties as interpreted by the
sponsors of this amendment would require the French to lift
import restrictions based on balance of payments requirements
and to grant Americans in Morocco more favorable tax treatment
than persons of other nationalities. Not only would it be
inconsistent with our objectives in France in connection with
ERP to ask the French to
agree to such proposals, but the French would not be expected to
concur.
The French have contended during all recent negotiations on this
subject that some of the treaty rights on which the Americans in
Morocco have been relying are nonexistent or have been lost
through the operation of law or custom. As a matter of law, our
position respecting these treaty rights is uncertain. Last year
the French wanted to take the issues to the International Court
of Justice. We urged them not to do so because we felt that more
satisfactory results would be obtained through mutual
concessions made as a result of direct negotiations. The French
agreed. The Hickenlooper amendment, however, is clearly intended
to prevent us from assenting to restrictions that are not fully
consistent with the treaties as we have interpreted them in the
past. The French have now decided to take the case to the
International Court of Justice. In discussions held before this
decision was made, we told them that if this step were taken,
the President would probably not make a finding of noncompliance
while the issues were pending in the Court.
The Legal Adviser’s Office of the Department of State has
examined the question and has expressed the opinion that the
President does not have to formulate an opinion on compliance
while the case is pending before the Court.
[Annex B]
Draft Press Release Prepared in the Department
of State
(Not to be released before application has been submitted to the
International Court of Justice by the French Government and
until cleared by the President.)
[Page 1758]
Yesterday, the French Government filed an application with the
International Court of Justice at The Hague for adjudication of
United States treaty rights in Morocco. This action has followed
the passage, during the last session of Congress, of an
amendment to the ERP
Appropriation which provides that after November 1, 1950, none
of the funds appropriated may be used for aid “to any nation of
which a dependent area fails, in the opinion of the President,
to comply with any treaty to which the United States and such
dependent area are parties”. This amendment was adopted by
Congress following complaints of a group of Americans, most of
whom started business in Morocco after World War II, that trade
restrictions imposed by the French Protectorate officials have,
in violation of treaties between Morocco and the United States,
limited their opportunity to carry on their businesses.
The treaty rights of the United States in Morocco are based on a
number of treaties and conventions starting with the treaty of
1836 between the Sultan of Morocco and the United States. One of
the rights which the United States has regarded these treaties
as granting to Americans is exemption from the jurisdiction of
any courts in Morocco other than United States Consular Courts.
In recognition of this fact, it has long been the understanding
of the United States Government that Moroccan laws and
regulations are not applicable to Americans unless the assent of
the United States Government is first obtained. The French
Government has submitted for the United States assent a number
of recent decrees promulgating, among other things, import
licensing restrictions and certain taxes. The United States
Government considered that without its formal assent, these
decrees were not applicable to its ressortissants. The French
pointed out that, aside from the question of our treaty rights,
these recent laws and regulations were temporarily necessitated
by post-war economic conditions. It was also pointed out that
the import licensing and foreign exchange restrictions are
required by the French undertakings in the Economic Cooperation
Agreement with the United States wherein the French Government
agreed to take steps to maintain the stability of its
currency.
The French Government maintains that the United States treaty
position in French Morocco is anachronistic, that certain of our
treaty rights have ceased to exist, or have been superseded by
later agreements and practices. In December of 1949 when
negotiations with the French regarding the conditions of
continuing United States assent to import regulations were
meeting with difficulties, the French took [Page 1759] steps to bring the whole
problem before the International Court of Justice. However,
France and the United States were able to reach an agreement
respecting the terms of our assent and therefore the French
application was not actually submitted to the Court. The recent
amendment to the Act appropriating ERP funds has presented the question whether United
States assent can be continued on the terms previously agreed
upon. The French Government has, therefore, again proposed that
the entire matter be submitted to the International Court of
Justice in order to determine just what treaty rights exist and
whether or not there is compliance. The United States is
committed to submit to the compulsory jurisdiction of the Court
in cases of this type, and it is recognized that this is
essentially an appropriate and democratic way of resolving the
dispute. Accordingly, it is felt that a Court decision will
provide the best means of establishing the rights of the
interested parties. The French Government has agreed that the
decision to take the case to the Court will not affect the
position of Americans under the present agreement regarding the
application of import controls to them in Morocco.
In view of the fact that these very questions are pending before
the International Court of Justice, the President2
will not make a determination regarding compliance with our
treaties until the decision of the Court has been received.
