'Persian Coasting Trade (Communicated by the Board of Trade)' [‎75r] (1/2)

CONFIDENTIAL.
Book C'op'i
Persian Coasting Trade.
(Communicated by the Boai'd of Trade.)
(Reference: P.G., 2nd Minutes, Conclusion (1).)
PRIOR to the recent negotiations with Persia, which resulted in the signature
of the other. This arrangement went further than any existing Treaty between
this country and any other foreign Power, in that it applied in full to the coasting
trade as well as to the foreign trade. It had, incidentally, the effect of conferring
upon Persian vessels an absolute right to engage in the coasting trade in this country,
and vice versa, and was the or 1 surviving case in which such an absolute Treaty
right and obligation existed. I e general practice which has been tollowed in our
other Commercial Treaties has been to exclude the coasting trade from the scope of
the clauses providing for national treatment of ships, but to grant, and to require,
most-favoured-nation treatment in respect of the coasting trade. Accordingly, the
result of the Anglo-Persian Agreement, when taken in conjunction with all the other
most-favoured-nation Treaties and arrangements, is that not only Persian ships, but
ships of other Powers with which we have treaties in force, have an absolute right to
partake in the coasting trade of the United Kingdom, even though, as is often the
case, they themselves reserve their own coasting trade to national ships.
Although we may not have any intention of closing the coasting trade in this
country to any foreign vessels at the present time, it is obviously desirable that the
obligation to allow all foreign vessels to participate therein should be got rid of. as
it is clearly unreasonable that we should remain thus bound by treaty in a world in
which so large a number of the principal maritime Powers exclude British ships
from this trade. On the other hand, in Persia itself our ships have enjoyed this
facility, and whatever it may be worth it seems desirable to hold on to it if possible.
Taking, therefore, both of these considerations into account, an effort w r as made
during the recent negotiations with Persia which led to the conclusion of the Tariff
Autonomy Treaty to induce the Persian Government to accept a Protocol to the
Treaty to the effect that existing Treaties should not be held to confer on the
vessels of either party the right to participate in the coasting trade of the other,
but that British ships w r ere to continue to be allowed to engage in the Persian
coasting trade so long as Persian vessels w 7 ere allowed in the coasting trade of the
United Kingdom. The Persians appear not to have understood this proposal, or, at
any rate, to have disliked it, and time being short it was dropped in favour of the
maintenance of the status quo which w T as effected in an exchange of Notes. The
present position, therefore, pending the conclusion of a new Commercial Treaty,
remains the same as it has been for many years past. Although the solution
suggested by His Majesty's Government is no doubt the best from the point of
view of British interests, for it gets rid of a Treaty anomaly whilst maintaining
our rights in Persia until such time at least as we decide to close our own coasting
trade, it is perhaps not altogether surprising that it did not appeal to the Persian
mind, as it is not based on any real reciprocity, even in form, and the open coasting
trade of the United Kingdom is of no practical value whatever to Persia. As will
be seen from the annexed Note on the extent of our shipping interests in Persia, the
coasting trade of Persia is of no very great importance to us, and although w 7 e might
in the forthcoming negotiations for a new Treaty of Commerce and Navigation put
forward a proposal similar to that made in connection with the Tariff Autonomy
negotiations, namely, that British vessels should be permitted to engage in the
Persian coasting trade so long as Persian vessels are permitted to engage in the
coasting trade in this country, it would not involve any great sacrifice if this clause
had to be dropped and w 7 e were left in the same position as we are in the case of
most countries wdth which we have Commercial Treaties. We shall, therefore, no
doubt, in these negotiations do well to be satisfied w ith the navigation clauses which
are contained in our usual Treaties, including one which will have the effect of
excepting the coasting trade from the operation of the clauses providing for national
treatment of ships whilst securing most-favoured-nation rights. There is in any
of the Tariff Autonomy Treaty of the 10th May last, the Treaty rights of British
ships in Persia were those conferred by Article 4 of the Anglo-Persian Agreement
of 1920, which provided, in effect, for most-favoured-nation and national treatment
in all matters relating to Navigation for the ships of either party in the territories