FOREIGN ECONOMIC AND COMMERCIAL POLICY 685

we made last, May, the Spanish government: has now indicated that
it is-interested in unde taking treaty negotiations and. is preparing
@ counter proposal to our basic draft. Denmark is studying a draft
_ treaty which we presented in January, and. the Foreign Office. is

’ “understood to be interested in. beginning negotiations quite soon. A.

draft treaty was presented to the Portuguese government this month.
Recently the Swedish Embassy: expressed interest in a commercial
treaty but suggested that negotiations be preceded by a formal ex-
change of notes stating the intention of the two governments to nego-
tiate such a treaty. It appears, however, that Sweden has been more
interested in the exchange of notes than in the treaty, attaching politi-
cal importance to the proposed notes, particularly as a means of

- counteracting domestic anxiety over Sweden’s growing isolation from

the west. Accordingly, commitments as to the exchange of notes have
been avoided, but a draft treaty has been prepared for purposes of
: technical study by Sweden with a view to eventual negotiation. Greece _
is believed to be favorably disposed toward the US basic draft but
is concerned about extending the substantial establishment rights pro-
vided for in the treaty to other countries, particularly Italy, under
existing most-favored-nation commitments. The Italian government
recently expressed a desire to accelerate the flow of private US capi-
tal to Italy and proposed the negotiation of an agreement designed.
to broaden the guarantees for US investments in Italy, particularly
with regard to the withdrawal of earnings. A draft of an agreement
supplementing the commercial treaty of 1948 and containing the more
significant developments in standard treaty provisions that have been
developed over the past two years is now under consideration as @
basis for possible negotiations with Italy. _

Latin American Interest Since signature of the Uruguayan treaty
in November 1949, drafts have been prepared for negotiation with
Argentina and Ecuador, preliminary meetings have been held with
Brazil and Colombia, and an informal approach regarding possible

~~ negotiations has been made to Paraguay. A standard draft treaty given

the Chileans some months ago is understood to be currently under
study by that government. A number of Chilean officials, however, con-
tinue to hold certain misconceptions regarding the nature and objec-
tives of the draft. In an effort to clear this up, we have submitted a
memorandum designed to remove the basis for these misconceptions.

Negotiations with Other Countries The new Australian Minister
for External Affairs recently expressed interest in resuming the treaty
negotiations which were suspended in September 1948 and welcomed
our suggestion that a revised draft be substituted for the draft pre-
sented in early 1947. It is believed that the Philippine government may
also be interested in resuming treaty negotiations on the basis of an