662.003/11: Telegram

The Acting Secretary of State to the Ambassador in France (Wallace)

539. Your 614, March 3, 9 p.m.

The Department desires that you transmit to the Minister for Foreign Affairs a communication in the sense of the following and furnish Rathbone copy thereof.

I have the honor to acknowledge the receipt of your communication of March 1, 1920, in which you set forth certain bases for negotiation with the Government of Germany with regard to the collection of German customs duties and with regard to certain other questions in relation to German exports and imports and in which you state that your Government would be pleased to be informed if the Government of the United States adheres to these bases. The Department of State has given careful consideration to your communication and in reply thereto presents the following considerations with respect to questions raised therein.

1. It is stated in your note that the German commercial regime at present contains certain prohibitions and discriminations in relation to exports and imports which should be eliminated, since they are in contravention of Articles 264 to 267 and Article 269 of the Treaty of Peace.

Briefly stated the effect of Articles 264 to 267 is to secure to the Allied and Associated Governments for a period of five years favored nation treatment in all matters relating to exports and imports. And Article 269 fixes a temporary maximum of rates of duty on imports from the Allied and Associated Countries. In the absence of definite information respecting the facts which in the opinion of the French Government constitute a violation of the Treaty, the Department is not in a position to reach any conclusion of its own as to what action may be warranted by such facts. If discriminations and prohibitions in contravention of the Treaty exist, the Allied and Associated Powers would doubtless be warranted in protesting against them.

2. The Department presumes that the French Government does not desire to have set aside the arrangement heretofore arrived at respecting the collection of German customs duties on a gold basis. The Department is not clear regarding the suggestion of your Government that the valorization given to customs duties in order to be equitable should be established at different rates in accordance with the origin of imports. Such a proposal seems in effect to contemplate a regime of discrimination based on local conditions in each of the Allied and Associated countries. The proposal appears clearly to be at variance with the principles underlying Articles 264 and 265 of the Treaty of Peace, the purpose of which is to secure complete equality of treatment among the Allied and Associated countries in the matters relating to imports into Germany. In the opinion of the Department not only would the plan proposed by your Government involve improper discrimination against some [Page 276] countries but it would be impracticable for Germany as it would be for any other country to carry out any such plan.

3. The Department is in accord with the proposition that in case prohibition of certain Articles should be recognized as necessary, this prohibition should affect equally all the Allied and Associated Powers, it being understood by the Department that the meaning of this proposition is that Germany is not permitted to discriminate in any way against any Allied or Associated Power in matters relating to exports or imports. The Department is not entirely clear respecting the statement in your note to the effect that if derogations are admitted they should be authorized according to a contingent to be divided among the exporting countries in proportion to their pre-war exportations. The Department could not by any informal agreement waive the treaty rights of nationals of the United States relating to exports from or imports into Germany.

4. It is stated in your note that “the special derogation given by the offices of foreign commerce or by the imperial commissioner or by the offices for the establishment of prices should disappear”. If the practices referred to are discriminatory so as to be in contravention of stipulations of the Treaty, they evidently should, as stated in your note disappear. Germany appears to have established through legislation and administrative action some control over importation and exportation. Such control in order not to contravene treaty stipulations must be general and uniform in its application. If exercised in harmony with this standard, it would appear that complaint based on the ground of treaty violation could not properly be made against it, since under the Treaty Germany is evidently permitted to exercise the ordinary sovereign rights over importation and exportation except as concerns the prohibitions contained in Article 248 with regard to the exportation of gold and subject to the stipulations contained in Chapter 1 of part X of the Treaty. The economic situation of Germany doubtless renders such control imperative. It may be to the interest of the Allied and Associated Governments that such control be exercised.

5. The proposals in paragraph 5 of your note with regard to measures to be taken with a view to assuring the execution of reparation clauses in the Treaty appear to involve certain questions of expediency and of legal rights which require careful consideration. The Allied and Associated Powers would apparently have no strict legal right to object to the exportation from Germany of articles which she is obliged to restore in kind, unless Treaty obligations in respect of the delivery of such articles should not be fulfilled. With regard to the proposal relative to the publication of export duties, it may be observed that there would apparently be no legal basis for making any such requirement on Germany. However it might doubtless be expected that such appropriate action will be taken by the German Government.

The steps to be taken to secure the execution by Germany of the Treaty must evidently be determined upon from time to time in the light of the German Goverment’s attitude toward its obligations arising thereunder.