CO129-588-24 China- British extra-territorial rights- negotiations with China 23-11-1942 - 1-1-1943 — Page 276

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Message received from the Department of State, November 21, 1942.

1. At the time of his call at the Department on November 13th, the Minister Counsellor of the Chinese Embassy discoursed at some length on the aversion of the Chinese to the "most favoured nation clauses" which had worked, he said, in the old extraterritorial truatius with China to China's groat disadvantago almost from the very beginning of extraterritoriality in that country and ho indicated that enlightened Chinese officials of course understood the use of the clause in modern truaties concluded between nations on a basis of equality and reciprocity but pointed out that tho general conception of the clause in the Chinese official and public mind is that it is an integral and much resented part of the extraterritorial system. The Minister Counsellor referred to recent articles in the Ta Kung Pao of Chungking advocating that a strong stand be taken by the Chinese to insure that no such clause bo included in the contemplated new treaties between China and the United States and between China and other countries. He pointed out that the clause in question had grown to bo anathema to the Chinese Government and people for the reason that under it in the extraterritorial treaties various countries large and small as they came on the scene in China had been able to acquire for themselves special rights and privileges and as a result the system of extraterritoriality had been more and more fastened on China.

We believe that the Minister Counsellor correctly described and explained Chinose fooling in this regard, and it has occurred to us that our negotiations with the Chinese might bo facilitated by substituting for any specific reference in the treaty to "most favored nation treatment" other language which will be no luss effective and which might be more acceptable to the Chinc so and might thus obvinte avoidablo opposition and delay. In the texts now under consideration the only references to "most favored nation treatment" occur in the second paragraph of our proposed additional article on coasting trade, inland navigation, etc. In our opinion the language of that paragraph might be altered to read: "the Government of the United States of America and the Government of the Republic of China mutually agree that the merchant vessels of each country shall be permitted freely to come to the ports, places, and waters of the other country which are or may be opened to overseas merchant shipping, and that the treatment accorded such vessels in such ports, places and waters shall be no less favorable than that accorded to national vessels and shall be as favorable as that accorded to the vessels of any third country. The consting trade and inland navigation of cach country are exccpted from the requirement of national treatment and are to be rugulated according to the laws of cach country in relation thereto. It is agreed however that vessels of either country shall enjoy within the territory of the other country with respect to the coasting trade and inland navigation treatment as favorable as that accorded to the vessels of any third country."

2.