611.914/6–1554
The Ambassador in India (Allen) to the Department of State
No. 1956
Subject:
- FCN Treaty With India
In a letter dated March 31, 1954 addressed to Mr. N. R. Pillai, Secretary General of the Ministry of External Affairs (Enclosure No. 1 to Embassy Despatch No. 1549 of April 2, 1954), Ambassador Allen expressed the desire of the Government of the United States to proceed with the negotiation of the proposed Treaty of Friendship and Establishment between the United States and India. Mr. Pillai has now replied to the Ambassador’s letter in a letter dated June 6, 1954 (see Enclosure No. 1 to this despatch).
In his letter Mr. Pillai states that, although agreement had been reached on a number of important points of the draft treaty, “there are certain other provisions on the draft which require further negotiations [Page 1760] at the official level.” After listing the points in question he suggested that representatives of the Government of India Ministries and of the Embassy meet to discuss these points “so that the possibilities of reaching agreement over the whole range of provisions may be explored.”
During a conversation with Ambassador Allen on June 14, Mr. Pillai said that he was most anxious that negotiations on this treaty should not be broken off or allowed to lapse.
It was agreed that Embassy officials would meet shortly with the interested Government of India officials to resume discussions. Although Mr. K. G. Ambegaokar, Secretary, Ministry of Finance, is on sick leave and is not expected back at his desk before early July, the Embassy hopes that at least a preliminary review of the situation may be initiated before then.
It is of some interest that a staff member of the Indian Federation of Chambers of Commerce and Industry called the Embassy recently to request copies of commercial treaties which the United States had concluded with other countries. He was informed that the Embassy did not have any such copies at hand but that it would endeavor to obtain copies of one or two such treaties for use by the Chamber. The Department is requested to forward copies of several such treaties, if available, for the use indicated.
It is possible that the request of the Indian Commerce Federation in this respect was stimulated by the recent remarks of Consul General Turner in Bombay who, in an address to the Bombay Rotary Club, urged the early conclusion of a treaty of Friendship, Commerce and Navigation between India and the United States. Should the Indian business community become interested in the treaty, it might spur the Government of India to a more active interest.
Acting for the Counselor for Economic Affairs
Article II of the draft Treaty of Friendship and Establishment between the United States and India reads as follows:
- “1. Nationals of either Party shall be permitted to enter the territories of the other Party and to remain therein: (a) for the purpose of carrying on trade between the territories of the two Parties and engaging in related commercial activities; (b) for the purpose of developing and directing the operations of an enterprise in which they have invested, or in which they are actively in the process of investing, a substantial amount of capital; and (c) for other purposes, subject to the immigration laws. Such nationals, within the territories of the other Party, shall be permitted: (a) to travel therein freely, and to reside at places of their choice; (b) to enjoy liberty of conscience; and (c) to hold both private and public religious services.
- “2. The provisions of the present Article shall be subject to the right of either Party to apply measures that are necessary to maintain public order and protect the public health, morals and safety.”
Paragraph 1 of Article V reads as follows:
“1. Neither Party shall take unreasonable or discriminatory measures that would impair the legally acquired rights or interests within its territories of nationals and companies of the other Party in the enterprises which they have established, in their capital, or in the skills, arts or technology which they have supplied.”
Paragraphs 1, 2, and 5 of Article X read as follows:
“1. Nationals and companies of either Party shall be accorded by the other Party national treatment and most-favored-nation treatment with respect to payments, remittances and transfers of funds or financial instruments between the territories of the two Parties as well as between the territories of such other Party and of any third country.
“2. The Parties recognize the desirability of refraining from the imposition of exchange restrictions and of eliminating exchange restrictions as soon as conditions permit. If either Party impose exchange restrictions, it shall, after making whatever provision may be necessary to assure the availability of foreign-exchange for goods and services essential to the health and welfare of its people, make reasonable provision, having regard to the circumstances necessitating exchange restrictions, for the withdrawal, in foreign exchange in the currency of the other Party, of: (a) the compensation referred to in Article V, paragraph 3, of the present Treaty, (b) earnings, whether in the form of salaries, interest, dividends, commissions, royalties, payments for technical services, or otherwise, and (c) amounts for amortization of loans, depreciation of direct investments, and capital transfers to the extent feasible, giving consideration to special needs for other transactions.”
“5. It is understood that the provisions of the present Article do not alter the obligations either Party may have to the International Monetary Fund or preclude imposition of particular restrictions whenever the Fund specifically authorizes or requests a Party to impose such particular restrictions.”
Paragraph 4 of Article XIII reads as follows:
“4. Neither Party shall impose any measure of a discriminatory nature preventing or hindering the importer or exporter of products of either Party from obtaining marine insurance on such products in companies of either Party.”
Paragraph 2 of the Protocol reads as follows:
“2. The Parties recognize that conditions of competitive equality should be maintained in situations in which publicly owned or controlled trading or manufacturing enterprises of either Party engage in competition, within the territories thereof, with privately owned and controlled enterprises of nationals and companies of the other Party. Accordingly, such private enterprises shall, in such situations, be entitled to the benefit of any special advantages of an economic nature accorded such public enterprises, whether in the nature of subsidies, tax exemptions or otherwise. The foregoing rule shall not apply, however, to special advantages given in connection with: (a) manufacturing goods for government use, or supplying goods and services to the Government for government use; or (b) supplying, at prices substantially below competitive prices, the needs of particular population groups for essential goods and services not otherwise practically obtainable by such groups.” (611.914/4–2953)
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