It is a happy circumstance that the first postwar treaty of friendship, commerce, and navigation to be made by the United States with a European nation should have been concluded with the new Italian Republic, and that Republican Italy's first general treaty should be with the United States. Negotiated in an atmosphere of the most cordial friendship and based upon the principle of mutuality, this treaty confirms Italy's adoption of liberal principles of international economic intercourse, and is evidence of the intent of the Italian Government to accord fair and nondiscriminatory treatment to foreign economic enterprise.

Obviously, the provisions of treaties of this type which the United States concludes with all other countries will be basically similar. In the hearings on the treaty with China before this committee on April 26, the Department presented an extensive statement of policy with regard to this type of treaty, a summary of the treaty articles, and explanatory statements on a number of provisions. Much of the information submitted at that time is also applicable in connection with the consideration of the treaty with Italy, and it is thought that it will be unnecessary to burden the record with a repetition of those

statements.

There are, however, some important differences between the two treaties to which I should like to refer. The treaty with Italy contains a number of provisions not found in the treaty with China. Among these are clauses relating to freedom of information, article XI; nondiscrimination in the application of certain compulsory insurance laws, article XII; a provision for the waiving of the immunities of publicly owned or controlled enterprises carrying on business activities, article XXIV, paragraph 6; and a provision that rights enjoyed by the publicly owned or controlled enterprises of one party shall be extended by that party, with certain exceptions, to the private business enterprises of the other party.

FREEDOM OF INFORMATION

I believe that this is the first treaty to come before the Senate which contains specific provisions for giving effect internationally to the ideal of freedom of information. The Congress of the United States formally endorsed the principles of freedom of information in a concurrent resolution adopted in 1944 (58 Stat. (pt. 2) 1119), and the United Nations Conference on Freedom of Information at Geneva has recently completed formulation of recommendations for dealing with this subject on a multilateral basis. The provisions in the present treaty set forth a minimum standard of treatment adapted for inclusion in bilateral treaties of this sort, which should provide worth-while protection for United States nationals engaged in informational activities. The provisions in this treaty relating to the treatment to be accorded foreign corporations and associations are thought to be very advantageous. The standard of national treatment is clearly set forth for the carrying on of commercial, manufacturing, processing, financial, scientific, educational, religious, philanthropic, and professional activities. The rights stipulated for the nationals and corporations of one country to participate in, control, and manage domestic corporations of the other are also extensive, as are the rights for such corporations, participated in by nationals and corporations of the other country, to carry on their corporate activities.

Nationals and corporations of the United States are to be accorded national treatment in Italy with respect to the acqusition and holding of real property. As I have already said, this is a provision of unusual liberality and is a singular evidence of good will on the part of Italy, since national treatment is accorded without prejudicing the right of the States of the United States to freely regulate landholding. The treaty permits Italy, of course, to refuse to accord national treatment to the citizens and corporations of states which deny national treatment to nationals and corporations of Italy.

PROTECTION OF PRIVATE INVESTMENTS

The protection of foreign private investments in the face of the very obvious trend in many parts of the world toward nationalization of industry, extension of public control over certain industries, and the participation of the state in industrial enterprises is a matter that is receiving more and more attention, not only by the Government departments concerned but by businessmen interested in foreign investment. The present treaty with Italy contains provisions designed to increase the protection usually afforded by a treaty of this type. There is, of course, the usual provision for the payment of just and effective compensation for property taken into public ownership or control. Provision is also made, as in the treaty with China, for the transfer of the compensation paid to an expropriated person into the currency of the country of which he is a national. In this treaty there have been included for the first time, as previously mentioned, some rules designed to provide additional protection for private investments. In article V, it is provided more specifically that in all matters relating to the taking of privately owned property into public ownership or control, the nationals and corporations of one country within the territories of the other shall receive treatment no less favorable than that accorded by such country to its own nationals and corporations or those of any third country. This clause is, of course, designed to prevent the alien from being singled out for unfavorable treatment in case of a nationalization program.

Senator LODGE. Does that mean that the alien is put on the same basis as the citizen, or on the same basis as other aliens?

Mr. THORP. Both. He gets whichever is better.

Mr. BROWN. Sometimes, Senator, the citizen gets treated worse than the foreigner.

Senator LODGE. You are not in favor of that, are you?

Mr. BROWN. No.

Mr. THORP. If they do that for some other country, there is no reason why we should not get it.

Senator LODGE. That is not most-favored-nation treatment, is it? Mr. THORP. It is both. It is which ever is better.

Senator LODGE. Give me an illustration of how that would work. Mr. THORP. Suppose, let us say, that in a given situation Italy nationalized an industry and they agreed to settle for 50 cents on the dollar so far as Italians were concerned.

Senator LODGE. With the stockholders?

Mr. THORP. With the stockholders-50 cents on the dollar with Italian stockholders, but felt that because, we will say, there were some very important citizens of a third country involved in this, and they did not want to get into trouble, they would pay them off at 100

cents on the dollar. In that case we would insist that we be given the full 100 cents on the dollar, because that had been done with a third country.

Oftentimes it works the other way around-that the nationals of a given country will be treated more favorably than the aliens because, shall we say, their political strength may be a little greater with the country, and in this case, if it were more favorable treatment for the nationals, we would get the more favorable treatment.

This is irrelevant in the United States, because in the United States there is no differential treatment at all. If we nationalize property, the owner is entitled to court protection and a determination, if necessary, by going to the courts, of what he will be paid in connection with the expropriation, quite regardless of his nationality.

Senator LODGE. So this is a one-way proposition, is it? It works insofar as Italy is concerned.

Mr. THORP. It happens that we already have a procedure here which would identify national treatment with the treatment of the alien, and what this does is to bring Italy, shall we say, up to that same standard.

Senator LODGE. In this country, if the Government takes something it condemns it, as I understand it, and pays damages to the private person from whom the thing has been taken. Does that not hold true in Italy?

Mr. THORP. Yes; this does not change what happens today in Italy. Italy has the same basic principle with respect to nationalization and condemnation that we have. But we have discovered that there is some tendency throughout the world for differential treatment to develop, and it seemed just as well to establish the principle in the treaty, although, as I say, it is not a new principle that is established here. This is confirming by an international agreement an established practice in both countries.

Senator LODGE. Thank you.

Mr. THORP. In addition to the danger of being expropriated, a serious danger faced by American private enterprise abroad is that of being subjected to unfair competition from state owned or controlled enterprises. In this treaty, an effort is made to deal with this problem by providing that, with certain exceptions, special favors granted by one country to its publicly controlled business enterprises shall be extended also to the private enterprises of the other in situations in which the public enterprises operate in fact in competition with private enterprises. Somewhat related to this provision is another which provides that no publicly owned or controlled enterprises of one country, if it engages in business activities within the territories. of the other, shall claim for itself or its property immunity from taxation, from suit, from execution of judgment, or from any other liability to which a privately owned or controlled enterprise is subject therein.

COMPARISON WITH CHINA TREATY

There are a few subjects dealt with in the treaty with China that are not covered in the treaty with Italy. There are no provisions here dealing with the reception of diplomatic representatives, the recognition of agreements and awards in commercial arbitration, the protection of literary and artistic property, and adherence to a pro

gram designed to expand international trade. These matters are dealt with in articles I, VI, IX, and XV, respectively, of the treaty with China. The first and last of these subjects are not considered as of consequence in a treaty with Italy. As to commercial arbitration, as I have already said, the Italian negotiators felt that the provision which we had included in the China treaty was not well adapted for application under Italian law. As to copyright matters, the two Governments concluded that their relations, based upon proclamations issued under their respective laws in 1910, were satisfactory and that no treaty provision would be necessary.

A number of provisions in the treaty with Italy have been restated in language somewhat different from that in the treaty with China. The objective has been to clarify the language or to make the provision more explicit. Examples are the article relating to internal taxation article X in the China treaty, IX in the treaty with Italyand the article relating to exchange controls-articles XIX and XVII, respectively, in the Chinese and Italian treaties. There are, of course, a number of minor differences in phraseology and even in substance between the two texts that have not been referred to above.

NEED FOR THE PROTOCOLS

In negotiating the treaty with Italy, it was necessary to give special consideration to the grave economic situation facing Italy as a result of the war and the present inability of Italy to supply, unassisted, the minimum needs of its people or the minimum requirements of economic recovery. Accordingly, there has been attached to the treaty a protocol, the purpose of which is to relax under certain conditions some of the rules of the treaty, such as those relating to quantitative restrictions on imports and exports, in order to enable Italy to protect its international-payments position and obtain the essential needs of economic recovery.

The Department of State regards this treaty as a very favorable one from the standpoint of American interests. Prompt ratification would not only have the effect of affording immediate treaty protection for American interests in Italy but would also further strengthen our cordial relations with the government and people of Italy. The announcement of the signature of the treaty on February 2 was particularly well received by the Italian press and public. Approval of the provisions of this treaty by the Senate will provide the Department with an accepted standard which will afford necessary guidance in proceeding with the negotiation of treaties with other countries. Senator THOMAS of Utah. Thank you, Mr. Thorp.

Is Mr. Egan here? Will you please state your name and your address, and whom you represent?

STATEMENT OF RICHARD M. EGAN, GREAT LAKES CARBON CORP., NEW YORK CITY

Mr. EGAN. Richard M. Egan, Great Lakes Carbon Corp. I am foreign sales manager of Great Lakes Carbon Corp., New York City, 18 East Forty-eighth Street. I have had some experience in Italy, having been there for the greater part of 2 years and having had my family there for about a year and a half.

I thought I would take this opportunity to answer a few questions, mainly, if they were to be put to me, to give you a businessman's version of the peace treaty, just from observation. I am not an expert, and I represent a company that has done a fair amount of business with the Italian Government and the Italian people, and we are still doing business with them, and we have a great interest in the future of Italy.

So far as the peace treaty is concerned, we are of the opinion that it is a good treaty. There are a few things that we feel maybe could be improved, so far as the people's future is concerned; but so far as business opportunities for American business, I am convinced. that it is a good treaty.

Senator THOMAS of Utah. That is the treaty that brought about peace. Now tell us what you think about this commercial treaty.

Mr. EGAN. The commercial treaty is very satisfactory for the American businessman. I see no obstacles. So far as the Italians are concerned, I think their opportunities under that treaty are very satisfactory. We have made a study of it, and we have seen no obstacles.

Senator THOMAS of Utah. In other words, you feel that this is a constructive move on the part of our country to enter into this treaty with Italy?

Mr. EGAN. Very much so, Senator.

Senator THOMAS of Utah. And that American business will benefit from it?

Mr. EGAN. Very much so, Senator.

Senator THOMAS of Utah. Have you had any trouble trading in the last 2 years?

Mr. EGAN. No, Senator.

We have done about between five and six million dollars' worth of business with Italy, and all of it has been satisfactory.

Senator THOMAS of Utah. Of course, conditions in Italy are such that it is not hard to sell things if they have any money.

Mr. EGAN. That is true.

Senator THOMAS of Utah. So that probably under any circumstances anybody can get along if they can get the money. Mr. EGAN. Very true.

Senator THOMAS of Utah. You think, though, that the Government is moving forward in a really constructive way with this treaty so far as Italy is concerned, and it will contribute to better relations? Mr. EGAN. I think the Government is to be complimented on its move to get a treaty as satisfactory as the one presented.

Senator THOMAS of Utah. Have you any critisiem at all to make of the treaty?

Mr. EGAN. None, Senator.

There is just one small statement that I would like to make-that, in my personal opinion, I feel something should be done about the movement of the population of Italy. They should have opportunities to go to the colonies that they had before the war. I don't say all of them, because that is impossible, but I feel the Italian people must create trade among their own colonials that benefits their own economic situation. I think it is a very serious problem. I do not know whether I should go much further on it. But looking at it from my observations, I think it is something that should be considered. Senator THOMAS of Utah. It is serious from Italy's standpoint?