FOREIGN ECONOMIC AND COMMERCIAL POLICY


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to resume tax conversations with India which were begun during his
visit to Washington and which have been held up pending our
instructions.
  At the present time nine tax conventions with six different coun-
tries are in effect. We have treaties dealing with income taxes with
Sweden, France, Canada, the Netherlands, the UK, and Denmark;
and those covering death taxes with Canada, France land the UK.
Treaties have been negotiated and signed during the past year with
Belgium, Norway and Ireland and are awaiting approval by the US
Senate. Income and estate tax conventions have just been signed with
Greece and will also be submitted to the Senate in the near future. The
Senate Foreign Relations Committee also has before it treaties with
South Africa and New Zealand.2

  2 Later in 1950 supplementary income tax and estate tax treaties were signed
  with Canada (June 12) and supplementary protocols were signed to the income
tax and estate tax treaties with the Union of South Africa which were then
'before the U.S. Senate (July 14). For Department of State announcements
,concerning these signatures, see Department of State Bulletin, June 26,
1950, p.
1056, and August 7, 1950, p. 218, respectively. On July 20 notes were signed
and
,exchanged, constituting an agreement, between the United States and Argentina
for the avoidance, on a reciprocal basis, of double taxation on earnings
derived
from the operation of ships and aircraft, and entered into force immediately.
For texts of the notes, see ibid., August 7, 1950, pp. 216-217.

611.00921/7-2150
Memorandum by the Deputy Director of the Oflice of Financial and
   Development Policy (Spiegel)-to the Assistant Secretary of State
   for Economic Affairs (Thorp)

                                        [WASHINGTON,] July 21,.1950.
    [Here follows an exposition of the status of the tax treaty program.]
    Tax treaty negotiations with American republics are close to definite
 collapse. The Treasury is firmly refusing to accept any treaty innova-
 tion- designed to stimulate American private investment abroad by
 reductions in United States income tax rates on income.derived by
 Americans and American corporations from investments abroad. So
 far there has beeni no public avowal that negotiations are proving or
 are likely to prove ,futile. .The matter has not been thoroughly talked
 out, between the State and Treasury Departments pending further
 trial of 'the possibility of drafting, mutually acceptable-treaties.1
   Failure owith the American republics would probably mean failure
 with-underdeveloped countries elsewhere, such as India and Pakistan.
 If we get a treaty wvith Australia, it will result- from Australia adopt-

   This situation is further discussed in the editorial note, infra.