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We do not feel that we can ask the Chinese to agree to continue the employment of foreign pilots but perceive no objection to the British Government, for its part, following its suggestions in this matter. As regards the question of the financial obligations of the licensed pilots association, it is our view th t this question might fall within the purview of the second paragraph of article 7 of our draft.
Foreign warships. We are adopting the British suggestions and now propose to insert in the draft notc from the Chinese Government language as follo s: "it is mutually understood that the Government, of the Unitca States of America relinquishes the special rights which naval vessels of the United States of America have been accorded in the waters of the Republic of China and that the Government of the Republic of China. and the Government of the United States of America shall extend to each other the mutual courtesy of visits by their warships in accordance with international usage and comity."
2.
(a) We accept the British suggestion.
(b) We accept the British suggestion.
3. It seems to us that the divergence of vi ows which has obtained between this Government and the British Government in regard to the questions of coasting trade and inland navigation arise from necessary differences in the practices of the two Governments. For example, as previously indicated, we cannot grant the Chinese reciprocal rights in these matters. In the light of our concept of policy toward China, we cannot consistly seck to reserve or retain special rights. However, in consideration of the importance which the British Government attaches to the questions of coasting trade and inland navigation, we are prepared to abandon our proposal that these questions be covered by an additional definitive article and now propose, as a suitable alternative within the necessary framework of our general policy, the insertion in the proposed note from the Chinese Government of language as follows: "While the question of rights in connection with the coasting trade and inland navigation in the waters of the Republic of China is not related to extraterritorial jurisdiction and is a matter which it is appropriate to reserve for the comprehensive treaty of commerce, navigation, et cetera, which will be negotiated subsequently by the two Governments, it is mutually understood that the Government of the United States of America relinquishes the special rights which vessels of the United States have been accorded in connection with the coasting trade and inland navigation in waters of the Republic of China and that, while the Government of the Republic of China reserves the right to limit the coasting trade and inland navigation to the Chinese flag, the Government of the Republic of China does not contemplate applying restrictions which would have the effect of making material alterations in the existing practice pending the making of further arrangements between the two Governments. It is further understood that it is the concept and intention of the Government of the Republic of China und the Government of the U.S. of America that questions in regard to coasting trade and inland navigation will be resolved on the basis of what is normal and usual in modern international treaties between friendly countries."
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