611.004/3–2250
Memorandum Prepared in the Bureau of Economic Affairs 2
Present Status of Program for Negotiating Treaties of Friendship, Commerce and Navigation
I
Since the last report on the status of the commercial treaty program (October 25, 1949),3 treaties have been signed with Ireland and Uruguay; signature of the treaty with Lebanon is expected in the near future; a formal proposal for negotiations has been made to Denmark; treaty projects have been instituted with respect to Argentina and Sweden; preliminary negotiating meetings have been held with Brazil and Colombia; informal approaches with regard to possible negotiations have been made to Israel and Paraguay; and substantial progress has been made with several existing projects. Brief summaries of the present status of existing treaty projects and of certain significant factors affecting the program as a whole are set forth below:
Function of FCN Treaties
During the past several months there has been evidence of a broader general understanding of the functions of treaties of friendship, commerce and navigation. Clarifications of policy with respect to the Point Four program and the signing of the treaties with Ireland and Uruguay have tended to focus attention upon the role of these treaties in promoting the investment of private capital in foreign countries [Page 682] and thus in furthering one of the major objectives of Point Four.4 Concurrently, there has been growing appreciation of the value of those provisions in commercial treaties which provide assurances respecting fundamental personal rights and of the way in which such provisions contribute to the development of a favorable climate for investment. It has been noted that private business interests are particularly aware of the importance of assurances of this kind and of their direct relation to actual business operations abroad.
Negotiating Problems
The main negotiating problem continues to be the reluctance of many foreign countries to grant national treatment for a wide variety of economic activities. In a large number of cases this reluctance still is given practical expression in the desire to maintain a “screening” process in order to permit the exclusion of enterprises which for one reason or other are not welcome on the same basis as locally controlled enterprises. In some cases screening and other devices for avoiding grants of national treatment appear to be based upon straightforward considerations of economic nationalism. In a number of cases, however, the attitude of foreign countries appears to be conditioned by their existing commitments to other countries under the most-favored-nation clause. As a rule foreign countries avow that they are willing to accord extensive establishment rights to American citizens and enterprises but are equally anxious to avoid the necessity of extending those rights to certain third countries. In addition to these perplexing problems, questions involving expropriations and exchange control have continued to present a substantial degree of negotiating difficulty.
[Page 683]Negotiation with France
The lack of tangible progress in negotiations with France, which were started in April, 1948 and suspended in November of that year, may be creating a situation with serious implications for the future development of the treaty program. The issue of national treatment, which brought about the impasse in negotiations, was considered during the visit of Foreign Minister Schumann to Washington in September, 1949 and a formula for its solution was worked out. The French thereupon indicated their satisfaction with the treaty commitments on national treatment and stated their intention to resume the negotiations within the near future, in the expectation of an early conclusion. Since that time, however, the French Government has made no constructive effort to revive the negotiations; and there is ground for supposing that its former attitude of opposition, and even hostility, to the fundamental principles of liberal economic intercourse embodied in the FCN treaty persists. This attitude raises implications affecting the commercial treaty program generally, as other European countries are known to be cognizant of the nature of the issues involved in the French negotiations and may become inclined to shape their own policies accordingly, especially in view of current efforts to coordinate national economic policies through the OEEC mechanism. The French attitude also would appear to have bearing on the extent to which long-term objectives of United States economic foreign policy are likely to be realized. French reluctance to give reasonable assurances as to nondiscriminatory treatment for American citizens, enterprises and investments would appear to be at variance with the purposes for which France has become a major recipient of ECA assistance and a prospective colonial beneficiary of Point Four.
Consultation with Private Business Groups
During the past several months contact has been maintained with responsible organizations representing private business interests, although the current circumstances of the treaty program have not necessitated extensive consultations. It may be noted that a number of private business groups have indicated their approval of the treaty with Uruguay, particularly as an aid to investment, and have expressed the hope that this treaty will encourage other Latin American countries to enter into similar arrangements with the United States.
- Forwarded on March 22 by the Deputy Assistant Secretary for Economic Affairs (O’Gara) to the Under Secretary of State (Webb).↩
- Not printed, but see Foreign Relations, 1949, vol. i, p. 647.↩
- For text of the January 21, 1950, treaty of friendship, commerce, and navigation with Ireland, which entered into force upon the exchange of ratifications September 14, 1950, see Department of State Treaties and Other International Acts Series (TIAS) No. 2155. For text of the November 23, 1949, treaty of friendship, commerce, and economic development with Uruguay, which the United States Senate approved on August 9, 1950, but which the President delayed ratifying pending approval of the treaty by the Uruguayan Government, see Department of State Bulletin, September 25, 1950, pp. 502 ff. See also the statement made before the Senate Foreign Relations Committee on May 4, 1950, by Willard L. Thorp, Assistant Secretary of State for Economic Affairs, entitled “Economic Treaties with Uruguay and Ireland,” ibid., May 22, 1950, pp. 811 ff. Mr. Thorp cited these treaties as examples of the new types of economic development and investment treaties which the United States was interested in negotiating with certain countries. Regarding the Point IV program, see pp. 846 ff.↩