Current Economic Developments, Lot 70D467
Extract From Bulletin No. 227, October 23, 1950
New Abridged Draft Commercial Treaty
The draft “Treaty of Amity and Economic Relations” recently submitted to Ethiopia as a basis for negotiation is the first example of our new and shortened commercial treaty draft. It is especially designed for use in a limited number of countries, largely in the Near East, which are not sufficiently advanced in governmental and economic organization to be ready for the full standard treaty of Friendship, Commerce and Navigation. This draft represents an effort to meet the negotiating need, encountered in such countries, for something less complex and more confined to fundamentals than the drafts from which the recent Irish and Uruguayan treaties were derived.
By abridging or restating many provisions and by dropping certain provisions of secondary consequences, the subject matter has been reduced from 26 articles plus Protocol in the current standard, draft to 13 articles of shorter average length, plus four new articles. The new draft is about one-fifth the length of the so-called “long” draft which was used in the negotiations with Italy and China immediately following World War II, and is less than half the length of the shorter model used more recently in negotiations with Ireland and Uruguay. In spite of its brevity, the draft remains, with one possible exception, the same as the standard in purpose and primary principles. This [Page 687] exception is that rules governing the initial establishment of business enterprises are omitted; thus, to the extent that business is conducted in the corporate form, the draft reverts to US treaty policy of the period between the two World Wars.1 Rule-making on business activities is confined to the more essential question of the treatment to be accorded to those enterprises which are, or may become, established within the country. This should alleviate any fears that the treaty is proposing to lay the country open to dominating penetration by foreign capital, or to embarrassing demands on the part of feared third powers who might insist under the most-favored-nation principle on securing rights equal to those granted the US. The abridged draft remains as pertinent as the standard draft to the promotion of private investment, currently the major emphasis of the treaty program; but it places this emphasis more patently in the context of the broader interests that treaties of this nature are calculated to serve and adjusts it to the simpler requirements of countries most removed from the stream of western progress. Special attention is given to the basic personal rights of those who enter the country or establish there. Since standards of law, justice and administration prevailing in the countries for which the draft is designed tend to be deficient, treaty assurances as to the protection and security of persons and property are especially in order if Americans are to go there in furtherance of the treaty’s objective of enhanced trade, investment and intercourse generally.
The total coverage of the draft has been expanded by the addition of an article setting forth certain elementary precepts of international cooperation and peaceful relations, and of three articles relating to diplomatic and consular privileges. These four articles, which commence the treaty, visibly give evidence of the treaty’s essentially friendly purpose and give it a more traditional, ceremonial cast than is the case with the standard draft. Included in the new draft are provisions on: general friendly relations; treatment of diplomatic officials; reception of consular officials; taxation of goods and property, diplomatic and consular; entry and basic personal rights; juridical status of companies; access to courts; commercial arbitration; protection and security of property and other legal interests; rights to engage in business; rights in real and personal property; industrial property; taxation of persons and companies; exchange control; entry and treatment of goods; customs administration; navigation; state trading; general exceptions; settlement of disputes; and ratification and termination.
- For a list of such treaties concluded during the period 1920–1940, see the Department of State Bulletin, March 22, 1954, p. 443.↩