CO129-588-24 China- British extra-territorial rights- negotiations with China 23-11-1942 - 1-1-1943 — Page 133

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and are to be regulated according to the laws of each High Contracting Party in relation thereto. It is agreed, however, that vessels of either High Contracting Party shall enjoy within the territories of the other High Contracting Party .with respect to coasting trade and inland navigation treatment as favourable as that accorded to vessels of any third country subject to the above- mentioned proviso."

The Foreign Office note that the Department of State intend to accept the wording now proposed by the Chinese Government and that there is no reference to the taking over of any American properties that may have been engaged for the purposes of coastal trade and inland navigation and

The Foreign the payment of adequate compensation therefor. office are also inclined not to raise this latter point but to assume that the reservation of coastal trade and inland navigation to ships flying the Chinese flag does not necessarily preclude the use of foreign-owned wharves, etc., for the purposes of these trades.

DOW

In connexion with the understanding on coastal trade and inland navigation, His Majesty's Ambassador will. inform the Chinese Government of the long-established practice under which traŭe between India on the one hand and Barmm or Ceylon on the other is regarded as coastal trade.

FURKION OFFICE,

17th December, 1942.