sions relating to quotas and monopolies which were taken from the recent trade agreements concluded by this Government, an example of which is that signed on November 15, 1935, between the United States and Canada."

As an alternative basis for negotiation there is being prepared a second counterdraft based upon the Siamese draft but incorporating no important variations from the first counterdraft.

The counterdrafts being prepared by the Department are, of course, not regarded as necessarily final, and it is understood that either of the Governments concerned may propose further changes at any time during the course of the negotiations.

It is believed desirable and it is requested that no publicity be given to the foregoing information.

711.922/84

The Secretary of State to the Siamese Minister (Abhibal Rajamaitre)

WASHINGTON, September 14, 1937.

SIR: I have the honor to refer to your note of November 5, 1936,7 giving notice in regard to the termination for your Government's part of the Treaty of Friendship, Commerce and Navigation, and Annex, of December 16, 1920, and to your recent oral discussions with Mr. Sayre regarding a note from the Siamese Foreign Office of November 5, 1936, to the American Legation at Bangkok," with which was enclosed the draft of a proposed treaty of friendship, commerce and navigation between the United States and Siam."

This Government has given careful consideration to the proposals of the Siamese Government and desires to offer comments as follows: The problem of the adequate expression of the obligations normally set forth in commercial treaties is one to which the authorities of this Government have, over a period of fifteen years, been giving especial attention with a view to arriving at the best methods of meeting present-day needs. In the opinion of this Government the standard draft thus developed warrants the earnest consideration of your Government as the basis of a treaty between the two countries. I should like to recommend the adoption of this form in the ensuing negotiations for a new commercial treaty between the United States and Siam. A draft treaty, prepared on the basis of the standard draft and adapted for use in the present negotiations, is enclosed

7 See Foreign Relations, 1935, vol. II, pp. 18 ff.

Ta Ibid., 1936, vol. iv, p. 999.

Ibid., 1921, vol. II, p. 867.

9 Missing from Department files.

herewith in the hope that it may meet with your Government's approval. It is marked "Draft (1) ".10

Should such approval be withheld, however, this Government is willing to negotiate on the basis of the draft which your Government has submitted, altered to meet the necessities of this Government in the manner indicated by the enclosed document marked "Draft (2)"," The following paragraphs are limited to a discussion of Draft (2).

Article 1 of Draft (2) is substantially identical with Article 1 of the original Siamese draft. Two changes have been made in the first paragraph of Article 1, both of which have the effect of restoring the wording of the existing treaty. In speaking of the right to lease land, the Siamese draft adds to the words "for residential, commercial, industrial, religious, charitable" the words "and other lawful purposes". This Government prefers not to elaborate the existing commitment.

It is noted that in the same sentence the promise of national and most-favored-nation treatment relates only to trade. It would seem to be highly desirable to relate such a promise to all of the enumerated privileges, and hence the word "trade" has been replaced by the phrase "the enjoyment of any of the foregoing privileges".

The third change in the opening paragraph of Article 1 consists of striking out the new condition "in so far as may be permitted by local law" and restoring the existing condition: "submitting themselves to the laws and regulations there established". The new condition suggested by the Siamese draft would make the grant largely illusory, as the existence of any particular right would be determined by local law. The condition which this Government proposes be restored admits the existence of the right but stipulates that in the manner of enforcing it local laws and regulations shall be obeyed.

It is suggested that in the first sentence of the last paragraph of Article 1 the words "industrial pursuits, and to" be omitted. The sentence would then relate only to callings and professions. Having stipulated with respect to commerce, manufacture and trade in the first paragraph, it would seem to be unnecessary to include the words "industrial pursuits" in the last paragraph.

The second sentence of the last paragraph of Article 1 is accepted, but some elaboration and clarification of the sentence has been suggested.

With regard to the proposal which appears in the last sentence of the last paragraph of Article 1 of the Siamese draft relating to rights of acquisition, possession and disposition of immovable property, this Government is giving consideration to the subject therein dealt with

and expects to present at a later date a counter-proposal in regard to that subject.

In connection with the commitment to accord national treatment in the protection of persons and property, I wish to suggest the addition, at the end of the third paragraph of Article 1, of two sentences which are standard in the treaties of the United States:

"They shall also enjoy in this respect that degree of protection and security that is required by international law. Their property shall not be taken without due process of law or without payment of just compensation."

In view of the foregoing suggested provisions, it would seem unnecessary to make further provision as to compensation in the next paragraph. In connection with the provisions relating to forced military contributions and military requisitions, contained in the fourth paragraph of Article 1, I wish to point out that these provisions seem to be broad enough to prohibit a recently devised form of military contribution or requisition. I refer to a requirement made of persons engaged in business to carry stocks of merchandise above and beyond their normal business needs. An indication whether your Government concurs in this interpretation would be welcomed.

A new paragraph bearing upon rights in connection with mineral resources has been added. Provisions on this subject are customary in the commercial treaties of the United States.

Article 2 of the Siamese draft is acceptable. Slight changes have been made in order to accomplish more effectively the evident purpose of the article.

The first paragraph of Article 3 of the Siamese draft is acceptable, but in the interest of clarification it is suggested that the condition of most-favored-nation treatment be specified in such manner that the paragraph would read as follows:

(new matter underscored)

"The nationals of each of the High Contracting Parties, equally with those of the most favored nation, shall have liberty freely to come with their ships and cargoes to all places, ports and rivers in the territories of the other which are or may be opened to foreign commerce and navigation, subject always to the laws of the country to which they thus come."

The first and second sentences of the second paragraph of Article 3 are satisfactory. While this Government readily concurs in the principle expressed in the third sentence that, in the event quotas are established, the country establishing such quota must grant the other an equitable share in the allocation of the global amount, it believes that an effort should be made to clarify the meaning of equitable treatment in quota allocation.

205655-54-53

It is suggested, therefore, that the third sentence of the second paragraph be eliminated and a new paragraph near the end of Article 3 be added, reading as follows:

"If either High Contracting Party establishes or maintains import or customs quotas or other quantitative restrictions on the importation of any article in which the other High Contracting Party has an interest, or regulates the importation of any such article by means of licenses or permits, the High Contracting Party taking such action shall, upon request, inform the other High Contracting Party of the total quantity of any such article permitted to be imported and shall allot to the other High Contracting Party a share of the total permissible imports of such article equivalent to the proportion of the total importation of such article which the other High Contracting Party supplied during a previous representative period, unless it is mutually agreed to dispense with such allotment."

You will observe that the second category of exceptions relating to restrictions on the trade in arms and munitions, has been removed from the list of exceptions and made the subject of a separate paragraph preceding that list. Gold and silver have been added to the new paragraph. The effect of this change is to make this provision of Draft (2) correspond to Draft (1) which this Government prefers. To the list of exceptions appearing in Article 3, it is suggested that the following be added:

"(4) Prohibitions or restrictions relating to prison-made goods, or imposed on moral or humanitarian grounds.'

At the very end of Article 3 you will note that provisions in respect of foreign exchange control have been added which are identical with the foreign exchange control provisions in Article VIII of Draft (1).

This Government has examined with interest the fourth exception of the Siamese draft which reserves complete freedom in respect of monopolies, and desires to show its good will toward the Siamese Government by agreeing at once to the inclusion of this provision. It will view the passing of the provision in Article III of the existing treaty forbidding monopolies with no concern, because of its confidence that the Siamese Government would not take American property without compensation in order to establish such monopolies or deny American producers an equal opportunity to supply such monopolies after they have been established.

In order that there may be no misunderstanding in the future in regard to this matter, it is suggested that there be incorporated an article dealing with monopolies in exactly the form found in practically all of the trade agreements to which the United States is a party:

"In the event that the Government of the United States of America or the Government of Siam establishes or maintains a monopoly for

the importation, production or sale of a particular commodity, or grants exclusive privileges, formally or in effect, to one or more agencies to import, produce or sell a particular commodity, the Government of the country establishing or maintaining such monopoly, or granting such monopoly privileges, agrees that in respect of the foreign purchases of such monopoly or agency the commerce of the other country shall receive fair and equitable treatment. To this end it is agreed that in making its foreign purchases of any product such monopoly or agency will be influenced solely by those considerations, such as price, quality, marketability, and terms of sale, which would ordinarily be taken into account by a private commercial enterprise interested solely in purchasing such product on the most favorable terms."

Article 4 of the Siamese draft is acceptable. A slight change in the order of words is suggested.

This Government perceives no objection to the provisions contained in the first and second paragraphs of Article 5, but prefers the provisions suggested in the enclosed Draft (2). The third paragraph of this article deals largely with rights of corporations in the ownership of movable and immovable property. This matter has been covered in the new paragraph proposed for Article 1.

In connection with the provision for national treatment in respect of transit duties, warehousing, et cetera, in Article 6, it is suggested that the paragraph be broadened to include goods as well as persons and to cover bounties. The object of this suggestion is merely to make the article more precise and to obtain conformity with other treaty provisions already in force. Your attention is invited to the addition of the words "internal taxes". This is an important addition but one which you will recognize as being intrinsically equitable and standard in modern commercial treaties. The article would read as follows:

"The nationals and goods, products, wares and merchandise of each High Contracting Party within the territories of the other shall receive the same treatment as nationals and goods, products, wares and merchandise of the country with regard to internal taxes, transit duties, charges in respect to warehousing and other facilities and the amount of drawbacks and export bounties."

Article 7 of the Siamese draft proposes most-favored-nation treatment in important aspects of treatment of shipping, such as tonnage, harbor and lighthouse dues. The policy of this Government since its foundation has been to ask for and to accord national treatment of shipping, exception being made of the coasting trade. It is, however, prepared to agree to both national and most-favored-nation treatment. Additions have been made to Article 7 of the Siamese draft which would accomplish this result.

Article 8 of the Siamese draft, which provides for most-favorednation treatment as to importation and exportation, is one of the