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560.M2/10 : Telegram

The Acting Secretary of State to the Minister in Switzerland

(Wilson)

WASHINGTON, September 17, 1927–3 p. m. 80. Your despatch No. 56, August 4, 1927. Please communicate the following to the Secretary General of the League of Nations in the usual informal manner:

“The Secretary of State of the United States of America refers to the note of the Deputy Secretary General of the League of Nations, dated April 2, 1927, in which he was good enough to invite the Government of the United States of America to attend an international conference with a view to framing an international convention for abolishing import and export prohibitions and restrictions. The Government of the United States is glad to accept the invitation of the League of Nations and to participate in this Conference, which, it is informed will convene at Geneva on October 17, 1927. The President has appointed Mr. Hugh Wilson, American Minister to Switzerland to attend the Conference as the representative of the United States. He will be assisted by one or more advisers whose names will be communicated to you as soon as possible.” Full instructions will be transmitted to you later.

CARR

560.M2/18a

The Secretary of State to the Minister in Switzerland (Wilson) [No.] 65

WASHINGTON, October 6, 1927. SIR: The President has instructed me to inform you of his desire that you should represent this Government at the forthcoming conference on import and export prohibitions and restrictions to be held at Geneva beginning October 17, 1927, to consider the adoption of an agreement for the abolition of such prohibitions and restrictions. You will be assisted by H. Lawrence Groves, Commercial Attaché at Vienna; Charles E. Lyon, Commercial Attaché at Berne; Henry F. Worley, of the Treasury Department; and Percy W. Bidwell, one of the European representatives of the Tariff Commission. Mr. S. P. Tuck, American Consul at Geneva, will serve as secretary of the delegation.

The Department desires you to be governed by the following instructions as representative of the United States at the forthcoming Conference on Import and Export Prohibitions and Restrictions, which convenes at Geneva October 17, 1927.

The subject matter of the Conference is the preliminary draft agreement prepared by the Economic Committee of the League. The following comments are made in relation thereto.

Article 1

Having in mind that the object of the conference is to abolish the system of prohibitions and restrictions, it appears that the undertaking in the first paragraph to abolish "all import and export prohibitions and restrictions" could probably not be construed as extending to import duties imposed for the purposes of revenue or protection to domestic producers. The Department, however, feels it essential to dispel any possible doubt on that score. It is believed that most if not all the other governments will share that view. The Department therefore desires that an appropriate modification to that effect be embodied in the agreement. If an appropriate amendment is proposed by one of the other delegations you may support it. If not, you may suggest that the following be included as a separate article:

“Nothing in this Agreement shall be construed as affecting the right of any contracting state to impose import duties; or to adopt measures to prevent or counteract dumping or to offset bounties or subsidies paid to foreign producers."

It would appear preferable that the proposal of such an amendment, if found necessary, be made in the latter stages of the conference, in order to avoid giving opportunity for the suggestion to be made that import duties be brought within the scope of the conference.

Article 2

No observations appear to be called for.

Article 3

The provisions of Article 3 of the International Convention for the Simplification of Customs Formalities of November 3, 1923, should be incorporated in the Article rather than merely included by reference. Since the United States is not a party to that Convention, it is the more desirable that any agreement to be signed at the present Conference be complete in itself.

You will recall that Article 3 of the Convention of November 3, 1923, is quoted on page 21 of Document C.I.A.P.1,98 which contains the draft agreement under discussion at the present conference.

It is suggested that the introductory paragraph of Article 3 of the draft Agreement should read as follows:

“In he case of any prohibitions or restrictions which may be applied within the limits set by the present Agreement, the contracting States shall in the matter of licenses comply strictly with the following provisions :"

There should then be inserted paragraphs (a) to (d) inclusive of Article 3 of the Convention of November 3, 1923. The Department

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feels, however, in the light of its experience in endeavoring to protect American trade with countries having a system of licenses, that paragraph (e) of that Convention needs to be revised and broadened in order to prevent possible abuses. There is transmitted herewith for your information a copy of the draft form of Article 7 which is being inserted in commercial treaties now being negotiated by the United States. You will note that the fourth paragraph of Article 7 deals with the issue of licenses.

The Department feels that sub-paragraph (e) should be revised, to read as follows:

“(e) That, in the event of the fixing of rations or quotas, no conditions or formalities shall be imposed or required, in connection with the allocation of licenses for restricted goods authorized for importation or exportation, that may prevent according to each other contracting state an equitable share of such importation or exportation, having regard to the normal volume of trade of the respective countries in the particular class of goods in question. In the application of the provisions of this paragraph no distinction shall be made between direct and indirect shipments.”

It may be added for your information in connection with paragraph (e) of Article 3 of the convention of November 3, 1923, that the Department has considered the possible bearing of the practice and requirements of the Federal Narcotics Board, which allocates among American importers permits to import narcotics. The Department understands that the reference in paragraph (e) to "equitable allocation”, refers to allocation in respect of foreign sources of supply, and not to allocation among domestic importers, since the latter is obviously an internal question. In order to avoid any possible question, it is important that the language adopted on this point be entirely clear.

Article 4 With respect to the reference in the introductory sentence to the possibility that prohibitions and restrictions may have a concealed economic purpose, the Department calls attention to the circular instruction recently issued on this subject, copy of which is transmitted herewith. This instruction sets forth the position in the matter of the United States Department of Agriculture.

The United States has in force certain prohibitions or restrictions coming within all the ten categories of suggested exceptions excepting numbers 5, 8 and 10. The views of the Department concerning each of the proposed exceptions are as follows:

Not printed; but see art. 7, par. 4, of the draft treaty submitted to France, vol. 11, pp. 639, 642.

* See the Department's diplomatic serial No. 660, Sept. 19, 1927, vol. II, p. 734.

Point 1. The legislation of the United States in relation to helium gas, copies of which are enclosed, comes under this point, and the maintenance of this exception is necessary from the standpoint of the United States.

Point 2. American prohibitions or restrictions on grounds of public health relate, for example, to the importation of viruses or serums, or of hay and straw not disinfected. The maintenance of this exception is thus obviously necessary.

Point 3. American prohibitions or restrictions designed to protect animal and plant life relate to foreign plants, fruits, seeds, bulbs, wild animals, eggs, etc. as well as to the prohibition of importation of seal skins from seals and otters taken in prohibited waters. The maintenance of this exception is thus necessary.

Point 4. American prohibitions or restrictions imposed for moral or humanitarian reasons or to suppress improper traffic relate inter alia to intoxicating liquors, smoking opium and narcotic drugs, lottery tickets, obscene and immoral articles, counterfeits, pictorial representations of prize fights and the plumage of certain birds. The maintenance of this exception is therefore necessary.

Point 5. The United States has no prohibitions or restrictions for protection of “national treasures of artistic, historical or archaeological value”, but has no objection to this exception.

Point 6. American prohibitions or restrictions to protect industrial, literary and artistic property or unfair competition relate to infringements of trade marks, trade names and copyrights, and also include the requirements of the United States regarding marking of the foreign origin of imported goods.

The Department considers that the language of point 6 requires modification in order to cover the necessary prohibitions or restrictions enforced in the United States. In connection with this matter, reference is made to Section 316 of the Tariff Act of 1922, which relates to unfair competition. Reference is also made to the requirements of American law that certain classes and kinds of imports be marked to show the country of origin (see the customs regulations of the United States, index under “Marking”; a copy of the Customs Regulations is among the documents left at the American Consulate at Geneva by the American delegation to the Economic Conference). It is of course impracticable for the United States to require that domestic products for sale in the United States be marked in the same manner as similar imported products.

The Department therefore considers that point 6 should be amended to read as follows:

* Not printed; see the act of Mar. 3, 1927, 44 Stat. (pt. 2) 1387. 42 Stat. 858, 943.

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"Prohibitions or restrictions intended, in conformity with national legislation or international conventions, to protect industrial, literary and artistic property, and to prevent unfair competition in regard to the false marking or appellation of origin, on condition that an analogous protection or supervision (except in the case of marking or appellation of origin) is applied to national products."

Point 7. American prohibitions or restrictions extending control equivalent or analogous to that applied to domestic products apply, for example, in the case of intoxicating liquors. This exception is thus necessary.

Point 8. The United States has no prohibitions or restrictions such as those enumerated under point 8, i. e. in relation to monopolies. It may be observed that while State monopolies in foreign countries are frequently felt to be detrimental to American interests, their establishment is in the last analysis a matter of internal policy for the country in question, and the Department accordingly feels that it is not in a position to offer any objection to the proposed exception.

Point 9. While the Department has no objection to the exceptions embodied in the draft of point 9, it considers that these exceptions should not be limited to those made necessary pursuant to international conventions relating to traffic in arms, opium, etc., or unfair methods of competition.

In this connection, reference is made to the Joint Resolution of Congress approved January 31, 1922,4 authorizing the President to prohibit or restrict the exportation of arms or munitions of war to countries in which the United States exercises extraterritorial jurisdition, or in which conditions of domestic violence exist. A copy of this resolution is transmitted herewith, together with copies of a ruling of the Department of State dated May 3, 1927, concerning the kinds of articles requiring individual export licenses when destined to Mexico. A copy of the President's proclamation of January 7, 1924, concerning the restriction of exports of arms or munitions to Mexico is also transmitted herewith.

The Department accordingly considers that Point 9 should be amended to read as follows:

“Prohibitions or restrictions established in pursuance of international conventions or domestic legislation regulating traffic in arms, opium, or other forms of trade which give rise to dangers or abuses, or relating to methods of unfair competition.”

Point 10. The United States has no prohibitions applicable to "coins, gold, silver, currency notes or securities". While the establishment of prohibitions such as would appear possible under the exception set

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