Agricultural Adjustment Act. However, provision is made for consultation between the two Governments regarding any such restrictions as might be imposed under authority of this reservation; and if either country considers that such restrictions imposed by the other nullify or impair the advantages obtained from the agreement, it may terminate the agreement in its entirety on 30 days' notice, and thus free itself of the obligations which it has assumed under the agreement. In other words, if the reservation referred to should be availed of by either country to such an extent as to impair materially the concessions which it has granted to the other country, the latter can withdraw the concessions which it has granted.

The remainder of the article embodies comprehensive provisions designed to provide for equitable treatment by each country in connection with any quantitative restrictions which may be established, and lays down rules of procedure in connection with the administration of this form of trade control. While neither the United States nor Brazil has adopted the system of quantitative restrictions so extensively employed in other countries and which has contributed so largely to the destruction of international trade, the provisions embodied in the agreement are designed to lay down standards for the administration of such systems which will alleviate, so far as possible, the abuses to which they are subject, and thus to point the way to much-needed reform in international practice with respect to these matters.

Articles III and IV provide for the granting of the reciprocal customs concessions set forth in the appended schedules.

Article V relates to purchases by governmental monopolies, and is designed to insure nondiscriminatory treatment with respect

thereto.

Article VI provides for most-favored-nation treatment with respect to foreign-exchange control. Additional assurances with respect to foreign exchange are provided in an exchange of notes supplementary to this agreement.

Article VII provides for national and most-favored-nation treatment with respect to all internal taxes and charges, except as otherwise required by existing laws of either country, and stipulates that national or Federal taxes on products on which duty concessions are granted will not be increased. This article is designed to “freeze " the existing situation with respect to such taxes and charges, and thus to assure that duty concessions provided for in the agreement will not be nullified or impaired in consequence of subsequent changes in internal taxes.

Article VIII deals with certain matters of customs administration, such as the giving of notice with respect to customs changes. Article IX reserves to both Governments the control of the export of arms and munitions.

Article X contains provisions with respect to customs regulations and formalities and with respect to sanitary laws and regulations. With reference to the latter, it is provided that on the request of either Government, a committee of technical experts will be appointed to study the basis for any quarantine or similar measure and to report its findings to the two Governments. The general purpose of this provision is to reduce to a minimum the injury to commerce resulting from measures of a sanitary character.

Article XI provides that the most-favored-nation provisions of the agreement shall apply in all territories and possessions of the two countries, but confines the application of the other provisions of the agreement to the customs territory of the United States, which includes continental United States, Alaska, Hawaii, and Puerto Rico, but excludes the Philippine Islands, the Virgin Islands, American Samoa, the island of Guam, and the Panama Canal Zone. The article also contains certain reservations which permit, among other things, preferential treatment of Cuban commerce by the United States, and preferences by the United States, its territories and possessions, to each other.

Article XII provides that the agreement will supplant the commercial agreement of 1923, which provides for unconditional mostfavored-nation treatment. The new agreement contains provisions similar to those in the agreement which it supplants.

Article XIII includes a declaration of intention on the part of both Governments to study the possibility of improving relations between the two countries by improved transport and other facilities.

Article XIV contains the provisions regarding the coming into force, the duration, and the termination of the agreement. The agreement will be made effective on the part of the United States by a proclamation of the President under the authority of the Trade Agreements Act approved June 12, 1934. The agreement requires legislative approval in Brazil before it becomes effective. After approval by the President of the United States and by the Congress and the President of Brazil, instruments of approval and ratification will be exchanged, and the agreement will take effect 30 days after the date of such exchange. The agreement will remain in force for at least 2 years, unless terminated before that time under the provisions of article II, but may be terminated on the expiration of the 2-year period or at any time thereafter on giving 6 months' notice.

Brazil's Undertaking with Respect to the Provision of Foreign Exchange

In a note addressed to this Government by the Government of Brazil, it is declared that the Bank of Brazil undertakes to afford sufficient exchange to provide payment, as due, for future imports from the United States and to make available an additional amount of exchange sufficient to liquidate gradually the now existing American deferred commercial indebtedness.

The Brazilian Government, moreover, undertakes, in addition to the assurances given in the trade agreement, to accord most-favorednation treatment in the provision of exchange made available for the transfer of profits and dividends and for expenses incurred by foreign commercial enterprises operating in Brazil.

The amount of exchange made available for these purposes shall in no event be less than the average proportionate share of total Brazilian imports supplied by the United States during the past decade, increased moderately so as to permit that expansion in the trade contemplated in this new agreement.

'See Treaty Series, No. 672.

The Brazilian Government suggests and offers support for cooperation between the Bank of Brazil and the Federal Reserve Bank of New York in inaugurating a system of interchange of records and reports relating to exchange transactions between the two countries. The Brazilian Government declares that in no event will the Bank of Brazil refrain from continuing the obligations assumed in June 1933 with respect to the notes issued to refund the commercial indebtedness existing at that time. Assurance is, moreover, granted that as soon as bank credits can be provided for the funding of existing deferred commercial balances, the Brazilian Government definitely engages to reserve a sufficient amount of exchange to assure the continuance of service on bonds issued in the United States and held by American bondholders in accordance with the plan of payment concluded in February 1934.

RECIPROCAL TRADE AGREEMENT BETWEEN THE UNITED STATES AND THE BELGO-LUXEMBURG ECONOMIC UNION

On February 27, 1935, a reciprocal trade agreement between the United States and the Belgo-Luxemburg Economic Union was signed at Washington. This agreement is the third to be negotiated under the authority granted the President in the Trade Agreements Act of June 12, 1934. The first such agreement, that with Cuba, was signed August 24, 1934, and the second, that with Brazil, was signed February 2, 1935.5

The agreement with the Belgo-Luxemburg Economic Union was effected by an exchange of notes accompanied by two schedules. Schedule I lists the products on which duty concessions are granted by Belgium, and schedule II lists the concessions granted by the United States.

A description of the general provisions of the agreement follows: In addition to the provisions with respect to the granting of concessions on products specified in the schedules, the agreement provides for general unconditional most-favored-nation treatment. Assurance is thus provided against greater concessions being given by either country to third countries on articles on which customs concessions are granted under the present agreement and thereby impairing or nullifying the value of such concessions. Moreover, with respect to products on which it has not been possible to grant specific concessions, the most-favored-nation clause affords protection against discriminations which might result in the diversion of the trade in such products to third countries.

Other provisions of the agreement are designed to permit the modification or termination of the agreement in the event of a wide. variation in the rate of exchange between the currencies of the two countries, or in the event that as a result of the extension to third countries of the concessions made under the agreement, such third

See p. 10.

countries should obtain the major benefit of the concessions and an unduly large increase in importations should result.

With reference to the latter provision, the considerations underlying its inclusion in the agreement are as follows: Apprehension has at times been expressed that as a result of generalizing concessions to third countries in accordance with the principle of unconditional most-favored-nation treatment, the concessions made under our trade agreements may result in an undue influx of imports from low cost "countries. These fears, it is believed, are exaggerated since concessions are granted by the United States on products of which Belgium is the chief source or is among the leading sources of imports into the United States.

Nevertheless, as a precautionary measure, to safeguard the interests of American industries, provision has been made whereby the concession granted to Belgium on any product and extended to third countries may be withdrawn if it should develop that the above expectations are not well founded.

The text of the note signed by the Acting Secretary of State of the United States is printed below. The reply of the Chief of the Belgian Delegation, signed in French and Flemish, and the schedules referred to above, are not printed in this Bulletin.

MR. MINISTER:

DEPARTMENT OF STATE, Washington, February 27, 1935.

The undersigned, Acting Secretary of State of the United States of America, being duly empowered thereto by the President of the United States of America, in pursuance of the authority conferred upon him by the Act of Congress of the United States of America, approved June 12, 1934, entitled "An Act to amend the tariff act of 1930 ", has the honor to advise you that the Government of the United States of America, being desirous of strengthening the traditional bonds of friendship with the Belgo-Luxemburg Economic Union, agrees (1) to accord unconditionally to the commerce of the BelgoLuxemburg Economic Union, the treatment now or hereafter accorded to the commerce of the most favored foreign nation, the Republic of Cuba excepted; and (2) to exempt the products of the soil or industry of the Belgo-Luxemburg Economic Union, listed in Schedule II annexed hereto, on their importation into the customs territory of the United States of America, from ordinary customs duties in excess of those specified in the said Schedule.

It is understood that the Belgo-Luxemburg Economic Union, on its part, agrees (1) to accord unconditionally to the commerce of the United States of America the treatment now or hereafter accorded to the commerce of the most favored foreign nation; (2) to exempt the products of the soil or industry of the United States of America listed in Schedule I annexed hereto, on their importation into the customs territory of the Belgo-Luxemburg Economic Union, from ordinary customs duties in excess of those specified in the said Schedule; (3) with respect to products for which import quotas are specified in the said Schedule, to permit the importation of quanti

ties not less than those specified therein; and (4) with respect to products for which luxury or license taxes are specified in the said Schedule, to exempt such products from taxes in excess of those specified therein.

In the event that the Government of either country adopts any measure which, even though it does not conflict with the terms of this Agreement, is considered by the Government of the other country to have the effect of nullifying or impairing any object of the Agreement, the Government which has adopted any such measure shall consider such representations and proposals as the other Government may make with a view to effecting a mutually satisfactory adjustment of the matter.

The present Agreement shall come into force on the thirtieth day following proclamation thereof by the President of the United States of America and the simultaneous publication of the said Agreement in the Moniteur Belge; and, except as hereinafter provided, shall remain in force and effect until six months from the day on which either Government shall give notice of its intention to terminate it. It is understood, however, that:

(1) In the event that a wide variation occurs in the rate of exchange between the currencies of the United States of America and the Belgo-Luxemburg Economic Union, the Government of either country, if it considers the variation so substantial as to prejudice the industries or commerce of the country, shall be free to propose negotiations for the modification of this Agreement or to terminate it on thirty days' written notice.

(2) The Government of each country reserves the right to withdraw the concession granted on any article under this Agreement, or to impose quantitative restrictions on any such article if at any time there should be evidence that, as a result of the extension of such concession to third countries, such countries will obtain the major benefit of such concession and in consequence thereof an unduly large increase in importations of such article will take place: Provided that before the Government of either country shall avail itself of the foregoing reservation, it shall give notice in writing to the other Government of its intention to do so, and shall afford such other Government an opportunity within thirty days after receipt of such notice to consult with it in respect of the proposed action; and if an agreement with respect thereto is not reached within thirty days following receipt of the aforesaid notice, the Government which proposes to take such action shall be free to do so at any time thereafter, and the other Government shall be free within fifteen days after such action is taken to terminate this Agreement in its entirety on thirty days' written notice.

The provisions of this Agreement shall be supplemented as soon as possible by provisions of a general character concerning the treatment to be accorded in each country to the commerce of the other.

As long as the present Agreement shall remain in force, it shall supersede any provisions of the Treaty of Commerce and Navigation between the United States of America and His Majesty the King of the Belgians, concluded March 8, 1875, which may be inconsistent