The Conference refers to the principle of equal treatment of commerce enunciated in Article 23 of the Covenant of the League of Nations and strongly recommends the reestablishing of commercial relations on the basis of commercial treaties resting, on the one hand on the system of reciprocity adapted to special circumstances and containing, on the other hand, as far as possible, the most-favored-nation clause.1

The definite adoption of a policy of unconditional mostfavored-nation treatment is seen in many bi-lateral conventions entered into during the last few years. The situation as a whole indicates a tendency toward the re-establishment of the ante-bellum most-favored-nation régime. Aggressive assertion of such a policy by a single powerful country would stand an excellent chance of being crowned with successful leadership in effecting its general adoption.'

63. VITALITY OF THE UNCONDITIONAL MOST-FAVORED

NATION PRINCIPLE

From the point of view of the new American commercial policy the facts outlined in this chapter have much significance. In the first place unconditional most-favored-nation arrangements had, before the World War, become the traditional method of establishing commercial relations. In the second place this traditional policy has proven to be so firmly established that not even the debacle of war could destroy it. In the general wreck of Europe it also was wrecked and for a time it seemed to be abandoned. Recent months have, however, disclosed long strides toward its rehabilitation. Excepting in France and a few other countries, the restoration of its vitality and integrity seems not impossible but rather to be hoped for with some confidence.'

1Article 9, see Mills, J. Saxon, The Genoa Conference, p. 420 (London). See also chap. xi, infra.

See Chalmers, Henry, "European Tariff Policies Moderating," Commerce Reports, Feb. 11, 1924, p. 359.

Those who in a spirit of narrow caution or short-sighted desire for advantage would oppose this open-door liberality are reminded of the example of Germany in the treaty of Frankfurt. The mutual most-favored-nation clause appears to have been inserted at the request of France. But, says the above-quoted passage from the London Spectator, “most French people seem to be agreed that it was Germany who drew the greatest advantage from it." Germany was then a country of expanding industry and needed to be guaranteed against discrimination in the markets of all countries. Bismarck was wise enough to see this and to be liberal with defeated France in obtaining it. Can there be any real doubt that the wisdom of Germany in 1871 is a good example for the victorious nations of the world today?

CHAPTER XI

THE RECONCILIATION OF AMERICAN POLICY WITH OTHER SYSTEMS OF COMMERCIAL TREATIES

64. AMERICAN POLICY

The policy of a strong, victorious commercial nation, if set in the direction of reasonable liberalism, is almost certain not only to assist other countries in their commercial progress, but greatly to enhance its own prosperity. In Chapter III the confident conclusion was reached that the future policy of the United States, not only under apparent mandate of law, but as a matter of sound political economy, should seek the negotiation of treaties containing assurances of unconditional most-favored-nation treatment. At the close of the chapter a list was given of some of the countries with which such treaties seem immediately desirable. The convention of commerce and navigation between the United States and Serbia (1881) contains an unconditional most-favored-nation clause.1 It may be considered to have been extended so as to be operative with the new and ex

2

'Malloy, Treaties, p. 1613. Article VI is as follows: "As to the amount, the guarantee and the collection of duties on imports and exports, as well as regards transit, re-exportation, warehousing, local dues and customhouse formalities, each of the two High Contracting Parties binds itself to give to the other the advantage of every favour, privilege or diminution in the tariffs on the import or export of the articles mentioned or not in the present convention, that it shall have granted to a third power. Also every favour or immunity which shall be later granted to a third power shall be immediately extended, and without condition, and by this very fact to the other Contracting Party."

By note of Oct. 24, 1922, the minister of the Kingdom of the Serbs, 479] 269

[480 panded Kingdom of the Serbs, Croats and Slovenes, and it provides a precedent for unconditional most-favored-nation treatment long existent in the treaty system of the United States. Its unconditional assurances have not, however, been tested in practice.

If new treaties incorporating unconditional most-favorednation provisions are to be negotiated, the matter of framing an adequate most-favored-nation clause becomes important. An effort to meet the need for such a clause is readily seen to involve several considerations:

(1) In view of the interpretation which American diplomats and courts have placed upon most-favored-nation clauses the language of which is neither expressly conditional nor expressly unconditional, care must be taken to make the unconditional obligation of the new treaties clear beyond peradventure of doubt.

(2) The complexity of the customs and other duty barriers that have been set up in the path of commerce makes of probable necessity a rather detailed statement of mostfavored-nation guarantees.

(3) The relations of the United States with Cuba and with the Philippines, Guam, the Virgin Islands and American Samoa (American dependencies having their own customs laws), are clearly preferential and hence discriminatory against other nations. As there is no provision in the statute law of the United States authorizing a change, and no perceptible movement in favor of it, and as the reciprocity treaty between this country and Cuba1 makes the preferCroats and Slovenes informed the Secretary of State that all trade treaties and conventions concluded between the former Kingdom of Serbia and other countries and still in force had been made applicable to the whole territory of the Kingdom of the Serbs, Croats and Slovenes. The Department of State expressed no dissent.

1Concluded Dec. 11, 1902. See Art. VIII. Malloy, Treaties, pp. 353, 355-356.

ences exclusive, there appears to be no practicable alternative to the necessity of noting an exception of the treatment of the products of Cuba, and also of the above-named dependencies with respect to trade both with the United States and among themselves. It would seem essential that exception with respect to the dependencies should be specifically stated in order that the expression "most-favorednation treatment", unmodified, may develop the absolute meaning required by the definition of "foreign country" in Section 317 of the Tariff Act of 1922, and that the foundation may be laid for dealing with the colonial preferential systems elsewhere existing as soon as the United States advances to the point of willingness to dispense with its own.1

(4) Certain provisions that might be considered modifications of the absolute obligation of a most-favored-nation clause, for example a provision for quarantine affecting goods of a particular origin, are commonly recognized and should be included.

These requirements would seem to be fully met in the following elaborate article of the general treaty of Friendship, Commerce and Consular Rights, concluded with Germany on December 8, 1924, and promptly submitted to the Senate for its consent to ratification:

Between the territories of the high contracting parties there shall be freedom of commerce and navigation. 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 vessels and cargoes to all places, ports, and waters of every kind within the territorial limits of the other which are or may be open to foreign commerce and navigation. Nothing in this treaty shall be construed to restrict the right

1 Similar exceptions will doubtless be demanded by other countries in the course of actual negotiations.