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to the United States duty free, but allowed the President, if he considered the duties of any country reciprocally unequal, to suspend the free list upon goods of such country. After the failure of attempts to negotiate a reciprocity treaty with Colombia, the President, March 15, 1892, suspended the free list on certain products of Colombia. At the same time similar goods of Mexico and Argentine were gratitously enjoying these favors. Colombia, relying upon her favored-nation clause, protested. To the insistent and fiery notes of the Colombian Minister, the United States Foreign Office replied in a lengthy correspondence which contains excellent suggestions as to diplomatic “good-form,” but fails apparently to answer the logic of the Colombians or to analyze to any extent the justice of their demands.
At the same time, the practice of other nations presents isolated instances of inconsistencies, though in no case are these sufficient to disestablish the regularity of their interpretations. In Germany in 1885, under the guidance of Bismarck, who asserted that the relations of Germany and the United States were on the basis of the most favored-nation, the Bundesrat, in an ordinance granting to the most-favored-nations the lower duties granted to imports of rye from Spain, expressly included the United States; but in 1883, in a similar ordinance extending to most-favored-nations certain concessions recently granted to Spain and Italy, the United States had not been included. In 1891, Germany negotiated a series of treaties with European countries for reciprocal reductions of import duties. To be consistent with the principle advocated in 1885, they should have extended the reduced duties granted to various European countries to the United States. This they did not do. The Saratoga Convention of August 22, 1891, was based on reciprocity and was, in character, a bargain in return for concessions.45
Certain inconsistencies in English practice will be treated under the subject of countervailing duties.
Among modern European treaties which contain the clause, none is more often quoted than the Frankfort treaty between Germany and France, May 10, 1871. In it we find (article 11):
45 See Stone: Most-favored-nation relations between Germany and the United States, N. Am. Rev., 182 (1906), pp. 433–445.
The French and German governments will base their commercial relations upon the system of reciprocal treatment on the footing of the most-favored-nation. This rule shall apply
to favors which either has granted or shall grant to States other than the following: England, Belgium, Holland, Switzerland, Austria and Russia
It is claimed that the operation of this treaty has always been to give to each contracting party every advantage which was or has been granted by the other to a third nation (with the exception of the States mentioned).
The Treaty of Commerce between Germany and AustriaHungary, December 6, 1891, amended January 25, 1905, provides that no more favorable conditions in respect of “importation, exportation, and transit duties” shall be granted by either party to a third power than shall be accorded to the other party; that any concessions of this kind shall at once apply to the other; and that any disputes arising over this provision shall be submitted to arbitration.
Two treaties of special interest on account of their comprehensiveness are the following:
The treaty between Greece and Japan, May 20-June 1, 1899, stipulates for reciprocal most-favored-nation treatment as regards, (article II) diplomatic and consular officers, (article III) commerce, navigation, residence, hiring residences and warehouses, trading, all that concerns the acquisition, enjoyment and disposition of property of all kinds, (article IV) travel, commerce, navigation, (article V) export and import duties and prohibitions, transit, warehousing, bounties, drawbacks, (article VII) tonnage, light and harbor dues, pilotage, quarantine, salvage in case of damages, (article XIII) billeting, compulsory military service, contributions of war, military exactions, and forced loans. The coasting-trade is excepted (article VIII).
The treaty between China and Mexico, December 14, 1899, while a little less complete than the above, is nearly as comprehensive and includes also (article IX) ships of war; it also provides (article XI) that if either country shall open its coasting trade, wholly or
46 Visser, op. cit., 83–84.
in part, to any nation or nations, the other party shall have the right to claim the same concessions or favors, “provided said contracting party is willing, on its part, to grant reciprocity in all its claims on this point.” There is also a provision that the treaty shall remain in force ten years.
Several modern treaties specify that citizens of each nation in the dominion of the other shall enjoy absolute religious freedom and the same legal privileges as native subjects.
An excellent example of the imperative and unconditional form appears in the treaty between Germany and Russia, January 29, 1894, July 15, 1904, article 6:
The products of the soil and industry of [each, when imported into the other] destined for consumption, warehouse, re-exporting, or transit, will be treated in the same manner as the products of the most favored nation. In no case, and on no account will they be liable to duties, charges, taxes, or dues higher or other, nor be subjected to surtaxes or to exclusion from importation by which the similar products of any other country are not affected. Especially any favor and facility, any immunity, and any reduction of the customs dues contained in the German tariff or in the treaty tariffs which one of the contracting parties may give to a third power permanently or temporarily, gratuitously or for compensation, will immediately and without conditions, reservations, or compensation be extended to the products of the soil and industry of the other.
England has been as consistent in maintaining that the clause is absolute as the United States that it is not. In 1884, Mr. Freylinghuysen said of the English position: “ The English contention has hitherto been, under the most-favored-nation clause, that it is absolute, and that even when Japan may bargain with any power to give it a favor for an equivalent the favor must be granted to England without equivalent. The Japanese contention is the reverse of this
*” i. e., in agreement with that of the United States. 48 In 1885, Earl Granville wrote:
From this [the American] interpretation, Her Majesty's government entirely and emphatically dissent. The most-favored-nation clause has now become the most valuable part of the system of commercial treaties, and exists between almost all the nations of the earth. It leads more than any other stipulation to simplicity of tariffs and to ever-increased freedom of trade; while the system now proposed would lead countries to seek exclusive markets and would thus fetter instead of liberating trade. It is moreover obvious that the interpretation now put forward (just that which the l'nited States has always put forward] would nullify the most-favored-nation clause; for any country, say France, though bound by the most-favored-nation clause in her treaty with Belvium, might make treaties with any other country involving reductions of duties on both sides, and, by merely inserting the statement that these were granted reciprocally and for a consideration, might yet refuse to grant them to Belgium unless the latter granted what France might consider an equivalent. Such a system would press most hardly on those
47 Cf. also treaty between United States and Japan, November 22, 1894.
48 Mr. Freylinghuysen to Mr. Bingham, June 11, 1884, MS. Inst. Japan, III, 1253, Moore, op. cit., V, 267.
which have already reformed their tariffs and have not equivalent concessions to offer, and therefore Great Britain, which has reformed her tariff, is most deeply interested in resisting it."
This last sentence contains within the compass of its few words the key to the English position and the explanation of the English interpretation.
The English treaties have been true to these principles, but not without exception. In the treaty with Liberia of November 21, 1848, we find the following stipulation (article 7):
It is hereby agreed between them that any favor, privilege, or immunity whatever, in matters of commerce and navigation which either has actually granted, or may hereafter grant, to the subjects or citizens of any other State, shall be extended to the subjects or citizens of the other
gratuitously, if the concession in favor of that other state shall have been gratuitous, or in return for a compensation as nearly as possible of proportionate value and effect, to be adjusted by mutual agreement, if the concession shall have been conditional.
English treaties have been, however, as a rule, both in wording and in interpretation, unmodified. The purport of their mostfavored-nation provision is in general, that “in all matters and regulations of trade and navigation, each of the high contracting parties will treat the other upon the footing of the most-favorednation.” 50
19 Earl Granville to Mr. West, Feb. 12, 1885, Blue Book, Commercial, No. 4 (1885), 21--22, Moore, op. cit., V, 270-271.
50 Treaty between Great Britain and Sweden and Norway, March 18, 1826, art. 9. In the treaty between England and France, Jan. 26, 1826, art. 4 provides: “It is mutually agreed between the high contracting parties that, in the intercourse of navigation between their two countries, the vessels of any third power shall in no case obtain more favorable conditions than those stipulated in the present convention in favor of British and French vessels." 51 Treaty between Great Britain and Paraguay, Oct. 16, 1834, art. 2.
A favorite form of the clause in English treaties, found constantly recurring, often in identical form, sometimes with slight variations of wording, is the following: “ The contracting parties agree that, in all matters relating to commerce and navigation, any privilege, favor, or immunity whatever, which either
has actually granted or may hereafter grant to the subjects or citizens of
any other state shall be extended immediately and unconditionally to the subjects or citizens of the other contracting party; it being their intention that the trade and navigation of each country shall be placed, in all respects, by the other on the footing of the mostfavored nation."51 Another form found repeatedly in English treaties in common with those of other nations reads: “No higher or other duties,” or “no higher or other import export duties” shall be paid on the goods of one country in the territories of the other than are payable on like goods of other countries.
Earlier British treaties simply stipulated for “ reciprocal liberty of commerce, reciprocal freedom of commerce.” 53
A review of the circumstances which have attended the regular occurrence of the clause in modern English treaties 54 furnishes an object lesson in both the advantages and disadvantages which attend its use.
Its extensive and emphasized employment, with a very
Cf. also treaties of Great Britain with Honduras, Jan. 21, 1887; France, Feb. 28, 1882; Mexico, Nov. 27, 1888; Japan, July 16, 1894.
52 Treaty between United States and Great Britain, July 3, 1815, art. 1.
63 Great Britain and Venezuela, April 18, 1825, art. II; and Great Britain and Russia, Jan. 12, 1859, art. I. In the convention between Great Britain and the United States, March 2, 1899, and Jan. 13, 1902, art. 5, appears the following: “ In all that concerns the right of disposing of every kind of property, real and personal, citizens or subjects of each
shall in the dominions of the other enjoy the rights which are or may be accorded to the subjects or citizens of the most-favored nation."
64 In 1903 no less than forty-two English treaties with foreign powers contained most-favored-nation clauses. Cf. Parl. Pap. Commercial No. 9. (1903).