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The Commonwealth and Favored-Nation Usage

Published online by Cambridge University Press:  28 March 2017

Robert B. Clute  and
Robert R. Wilson
Robert B. Clute
Affiliation:
Duke University
Robert R. Wilson
Affiliation:
Of the Board of Editors
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Extract

Guidance of development in the British Commonwealth has involved the use of various legal means. In the field of international commercial relations perhaps none has been more striking than the adaptation of the familiar idea of most-favored-nation treatment.

Type
Research Article
Information
American Journal of International Law , Volume 52 , Issue 3 , July 1958 , pp. 455 - 468
Copyright
Copyright © American Society of International Law 1958

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References

1 M.T.Z. Tyau, The Legal Obligations Arising Out of Treaty Relations between China and Other States (Shanghai, 1917), p.6 (cited after Herman Walker, Jr., “The Most-Favored-Nation Treatment of Consular Officers,” an unpublished doctoral dissertation accepted at Duke University in 1937, at p. 2).

2 On the meaning of unconditionality as American courts have interpreted it, see Honoré Catudal, M., “The Most-Favored-Nation Clause and the Courts,” 35 A.J.I.L. 41-54 (1941).Google Scholar

3 For an account of the long struggle on the part of the colonies to induce the mother country to replace its free trade policy by a system of imperial preferences, see United States Tariff Commission, Colonial Tariff Policies 630 ff. (1922).

4 See 9-10 Vict. c. 94; Baron Boris Nolde, ‘ ‘ La Clause de la Nation la Plus Favorisée et les Tarifs préférentiels,” 39 Hague Academy Recueil des Cours 101-102 (1932).

5 Great Britain, House of Commons, Accounts and Papers, 1863 [3071].

6 Ibid., 1865 [3570].

7 Robert B.Stewart, Treaty Relations of the British Commonwealth of Nations 76- 77, 96 (1939). It is to be noted that from 1870 onwards there was also an increased desire on the part of the colonies to develop a strong system of imperial preferences between themselves and the mother country. This was finally realized at the Ottawa Conference of 1932. See Nolde, loc. cit. 102-106.

8 Canada, Sessional Papers (1883), “Vol. XVI, No. 89, pp. 7-8.

9 Accounts and Papers, cited above, 1880 (C. 2615).

10 Ibid., 1882 (C. 3231).

11 See the Treaty of Commerce of April 19, 1905, between Great Britain and Nicaragua. Ibid., 1906 (Cd. 3156).

12 See, for example, the Treaty of Commerce and Navigation of Nov. 27, 1937, between Siam and the United Kingdom. 188 League of Nations Treaty Series 334.

13 Accounts and Papers, cited above, 1906 (Cd. 2998).

14 See Art. 25 of the 1937 treaty with Siam, cited in note 12 above.

15 Arnold D. McNair, The Law of Treaties: British Practice and Opinions 298 (1938). Cf. Georg Schwarzenberger, “The Most-Favoured-Nation Standard in British State Practice,” 22 Brit. Year Book of Int. Law 96, 109 (1945).

16 Accounts and Papers, cited above, 1900 (Cd. 254).

17 Ibid., 1883 (C. 3666). Italics inserted,

18 Ibid., 1910 (C. 5126).

19 See Treaty of Versailles, June 28, 1919, ibid., 1919 (Cmd. 153); Treaty of Saint- Germain-en-Laye, Sept. 10, 1919, ibid., 1919 (Cmd. 400); Covenant of the League of Nations with a Commentary thereon, ibid., 1919 (Cmd. 151).

20 See Stewart, op. cit. 43-75, 159-204.

21 See P.J.Noel Baker, The Present Judicial Status of the British Dominions in International Law 164 ff., 250 ff. (1929).

22 Accounts and Papers, cited above, 1926 (Cmd. 2768).

23 Great Britain began to include special articles in her commercial treaties to cover the accession to such treaties of newly acquired Mandates. See the Treaty of Commerce of July 14, 1923, with Czechoslovakia, 29 League of Nations Treaty Series 378. However, in 1932 the United Kingdom planned to grant a preference to Palestinian products and the United States objected on the basis of her Commercial Treaty of 1815 with Great Britain and the fact that Palestine was a “foreign country.” Italy and Spain likewise objected on the basis of most-favored-nation clauses in their treaties with Great Britain. See 2 Papers Relating to the Foreign Relations of the United States (1932) 32, 33, 36-37.

24 See Sehwarzenberger, loc. cit. 109.

25 For example, see treaties of Great Britain with Spain, Oct. 31, 1922, 28 League of Nations Treaty Series 340; Latvia, June 22, 1923, 20 ibid. 396; Poland, Nov. 26, 1923, 28 ibid. 429; Finland, Dec. 14, 1923, 29 ibid. 130; Hungary, July 23, 1926, 67 ibid. 184.

26 See, for example, the Canadian treaties with the Economic Union of Belgium and Luxembourg, July 3, 1924, 32 ibid. 36; The Netherlands, July 11, 1924, 39 ibid. 46.

27 95 ibid. 290. The latter exception was necessary as the British Merchant Shipping Act (an Imperial Act) provides that British ships can only he owned by British subjects.

28 131 ibid. 147.

29 For example, see the Commercial Treaty of Aug. 3, 1936, between Australia and Czechoslovakia, 177 ibid. 246; the Commercial Agreement of July 3, 1935, between Canada and Poland, 172 ibid. 69; the Exchange of Notes Constituting a Trade Agreement between New Zealand and The Netherlands on Dec. 22, 1937, 185 ibid. 330; the Exchange of Notes in regard to Commercial Relations between the Union of South Africa and Brazil, April 11, 1932, 135 ibid. 220. The Treaty of Commerce of April 4, 1950, between India and Afghanistan does not specifically mention the Commonwealth in qualifying the most-favored-nation treatment provided for in the treaty; however, Art. 16 provides that: “ … ‘most-favored-nation treatment’ shall not be deemed to be contravened by the grant or continuance of … preferences or advantages accorded by either contracting party to any country, existing on the date of this or in replacement of such preferences or advantages… . “ See 167 U.N. Treaty Series 120.

30 149 U.N. Treaty Series 260, 262.

31 T.I.A.S., No. 2155.

32 See, for example, W. S. Culbertson, Commercial Policy in War Time and After 302-305 (1919); B. C. Snyder, The Most-Favored-Nation Clause 171 (1948).

33 See Frederic Benham, Great Britain Under Protection 71 ff. (1941); K.V.Meyer. Britain's Colonies in World Trade, passim (1948).

34 Accounts and Papers, cited above, 1931-1932 (Cmd. 4174).

35 135 British and Foreign State Papers 251-264.

36 139 ibid. 231-234.

37 135 ibid. 250-251.

38 Accounts and Papers, cited above, 1950-1951 (Cmd. 8187).

39 See E.S. Russell, Imperial Preference 15 ff. (1949) ; H.P.Whidden, Jr., Preferences and Discriminations in International Trade 20 (1945).

40 Accounts and Papers, cited above, 1894 (C. 7553).

41 Ibid., 1902 (Cd. 1299).

42 Ibid., 1907 (Cd. 3523).

43 Ibid., 1917-1918 (Cd. 8566).

44 See p. 456 above.

45 Stewart, op. cit. 76 ff.

46 See Colonial Tariff Policies, cited above, 630 ff.

47 22-23 Geo. 5. c.8.

48 Cmd. 4174, cited above. An example of such a waiver of rights is to be found in the exchange of notes between Canada and South Africa on Nov. 16, 1938, whereby South Africa waived certain preferences in order that Canada might conclude a trade agreement with the United States. See 142 British and Foreign State Papers 312-314.

49 Cmd. 4174, cited above.

50 For an account of Great Britain's reactions to the Ouchy and Hague Conventions see W.A.Brown, The United States and the Restoration of World Trade 41-42 (1950); Jacob Viner, The Customs Union Issue 30-32 (1950).

51 2 Foreign Relations of the United States (1937) 4.

52 2 ibid. (1938) 67.

53 Executive Agreement Series, No. 164.

54 Ibid., No. 149.

55 Ibid., No. 241.

56 T.I.A.S., No. 1545.

57 For text see Anglo-American Financial and Commercial Agreements, December, 1945 (Dept. of State Pub. 2439, Commercial Policy Series 80).

58 For text see Proposals for Expansion of World Trade and Development, November, 1945 (Dept. of State Pub. 2411, Commercial Policy Series 79).

59 Whidden, op. cit. 24-26.

60 H. C. Debates, 1946-1947, Vol. 430, col. 34.

61 See Brown, op. cit. 69-72; Clair Wilcox, A Charter for World Trade 69-70 (1949); U.S. Dept. of State, Havana Charter for an International Trade Organization, March 24, 1948 (Pub. 3206, Commercial Policy Series 114) 45 ff.

62 The Contracting Parties to the General Agreement on Tariffs and Trade, Basic Instruments and Selected Documents, May, 1953, Vol. I , pp. 14-15, 63-64, 66. It is to be noted that Pakistan in signing this Agreement noted that under the provisions of Art. XXXV it would not extend the most-favored-nation treatment outlined therein to the Union of South Africa. India in signing this Agreement withheld its consent under Art. XXXV to the application of the Agreement between India and South Africa. 55 U.N. Treaty Series 313, 316. Apparently Pakistan later withdrew its condition.

63 Basic Instruments and Selected Documents, cited above, January, 1954, 2nd Supp., pp. 20-22, and June, 1955, 3rd Supp., pp. 25-26.

64 Ibid., January, 1954, 2nd Supp., p. 18; and January, 1957, 5th Supp., p. 34.

65 The desirability of this arrangement has not gone unquestioned. At Westminster members favoring a further increase of imperial preference have asked that the restrictions imposed by the General Agreement on Tariffs and Trade be removed. See H.C.Debates, 1951-1952, Vol. 495, cols. 333-335, and Vol. 499, cols. 1654-1656. At the Commonwealth Economic Conference of 1952 Great Britain proposed that the Commonwealth countries join to seek release from the “ no new preference” rule in the General Agreement; however, the Commonwealth countries were divided on the question. Accounts and Papers, cited above, 1952-1953 (Cmd. 8717).

66 Illustrated in Art. XXVI (3c) of the treaty signed with Nationalist China in 1946 (T.I.A.S., No. 1871) : By the provision referred to, the provisions of the treaty according treatment no less favorable than that accorded to any third country were not to apply to “advantages accorded to third countries pursuant to a multilateral convention of general applicability, including a trade area of substantial size, having as its objective the liberalization and promotion of international trade or other international economic intercourse, and open to adoption by all the United Nations.” By an exchange of notes in 1948 this language was related to the General Agreement on Tariffs and Trade and to Chapter IV of the Havana Charter for an International Trade Organization (the latter of which did not come into effect).

67 See, for example, Art. XXI (2) of the Commercial Treaty with Haiti in 1955, Sen. Ex. H, 84th Cong., 1st Sess., whereby “ the most-favored-nation provisions of the present Treaty relating to the treatment of goods shall not apply to advantages accorded by either Party to any country or area with respect to which special treatment has been permitted under the General Agreement on Tariffs and Trade.“