Memorandum by the Director of the Office of Economic Defense and Trade Policy (Leddy) to the Assistant Secretary of State for Economic Affairs (Thorp)


Subject: Means for the more effective promotion of the F.C.N. Treaty Program

I submit the following ideas and reactions of officers of EDT regarding possible methods for expediting the development of the program for the negotiation of treaties of friendship, commerce, and navigation. You may wish to pass this on to Mr. Webb.

1. A more active emphasis upon the negotiation of additional treaties is desirable, and holds a promise of being moderately productive. However, the promotion of the treaty program should not be “aggressive” in the sense of indiscriminate pressure upon foreign governments to accept or consider our proposals. Such a method produces antagonistic reactions abroad which are difficult to overcome. Our experience indicates that the most promising policy is to pursue a selective program, always prepared to exploit favorable opportunities to the utmost. Overemphasis upon treaties as sure means for stimulating foreign investment is not good salesmanship. Perhaps our objectives could be best promoted if we should think of the treaty [Page 1237]program not as a campaign for pressing treaties upon all countries, but as a program for seeking out or creating and exploiting favorable opportunities for the negotiation of treaties.

2. It is thought that greater utilization of “personal” diplomacy may make substantial contributions to the advancement of the program. If the higher officers of the Department would utilize their personal contacts with high officers of foreign governments and with influential foreign ambassadors in Washington to create a receptive attitude toward or a personal interest in the negotiation of treaties, the possibility of initiating a number of new negotiations is good. A few examples will illustrate the point. Mr. Willoughby’s talks with Mr. Politis of Greece during the trade negotiations at Annecy prepared the way for our present very promising negotiation at Athens. His personal contacts with Mr. Hosais [?]1 of Pakistan, at the same time may still result in a fruitful negotiation with that country. Our successful negotiation with Uruguay owed a great deal to the friendly relations established by our First Secretary of Embassy, John Hoover, with Mr. Gonzales, head of the economic section of the Uruguayan Foreign Office. Again, Ambassador Garrett’s cordial relations with the Irish Minister made a major contribution to the expeditious conclusion of the treaty with Ireland. Informal personal diplomacy of this nature can be quite effective in overcoming the inertia or initial hostility that often obstructs treaty projects when bureaucratic channels in foreign capitals are depended upon. The higher officers of the Department could not only contribute personally in this way, but they could possibly influence some of our ambassadors to make greater efforts along the lines suggested. Even the approach here suggested should be pursued with discrimination, however. There is a considerable list of countries where our proposals, no matter by whom or how made, would fall upon barren soil, and it would be best to avoid making any approach at all to these countries.

3. There are two other points, in addition to preparing a friendly reception for the idea of a treaty negotiation, at which the intervention of high-level Department officials might be helpful. The first is when the technical negotiators have narrowed the issues to a small number of problems of major difficulty. They could then, in some instances, make an important contribution to solving the problems. The second point is at the end of the negotiation when the problem is to induce the high political officers of the foreign government to proceed to signature. The delays at this point are sometimes serious and can result in the necessity for renegotiation, or in the loss of the treaty because of changes in governments or other vicissitudes.

4. It would be desirable to study the possibility of a more systematic exploitation for treaty purposes of the situations that result from the [Page 1238]action taken by the United States that is advantageous to foreign countries; e.g., the making of loans, grants, technical aid arrangements, etc. It is not suggested, of course, that an effort be made to purchase treaties by means of loans, etc. However, the making of such concessions to foreign governments creates psychological or moral situations favorable for the initiation of treaty negotiations or for their prompt conclusion.

5. In general, there is no need for any high officer to give his personal attention to the detailed negotiation of these treaties. Usually ninety percent of a treaty can be worked out by the technicians without undue difficulty. The legal and policy limitations under which the Department works makes it necessary for the treaty technicians and the legal officers to exercise close control over all discussions. In other words, there is very limited leeway in which negotiators may work. If our Embassy abroad has a reasonably alert and intelligent commercial counselor and a sympathetic and forceful Ambassador, the negotiating situation is likely to be ideal. In case the former type of officer is lacking, an experienced technician can usually be sent from the Department.

6. It is not feasible to attempt to prepare statistical or other factual data to demonstrate the effectiveness of an FCN treaty in encouraging investment. Two of the three new treaties that have been ratified since World War II are with countries poor in natural resources, and for that and other reasons not particularly attractive to investors. The treaty with China is not effective, for obvious reasons. The pre-war FCN treaties do not provide any basis for correlation with economic development. A correlation of the growth of investment with the existence of legal and institutional climates favorable to investment, such as the treaties are intended to promote, would probably be a more practical exercise. It is doubtful that it would be very useful as an argument for treaties, however, because of the retardation of foreign investment by economic factors during the past two decades.

7. Aggressive propaganda in support of the treaty program either abroad or at home is not desirable. The sort of statements of purposes and aims that would appeal to practical businessmen would sound the wrong note abroad where nationalistic and communistic elements misrepresent our treaties as instruments of imperialism. Our treaty with China was made much use of by the communists in appealing to the anti-foreign sentiments of the Chinese people. In Italy, the communists somehow obtained a copy of our confidential proposals and made great propaganda out of them. In Uruguay a very aggressive communist campaign against the treaty has been in progress since signature.

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