Memorandum by the Department of External Affairs to Diarmuid O'Hegarty (Dublin) on Irish Free State commercial relations with the USSR

In their despatch No. 99 of the 20th February the Dominions Office transmitted, for the information of the Government of the Irish Free State, a copy of a draft Commercial Modus Vivendi between His Majesty's Government in the United Kingdom and the Government of the U.S.S.R. Article 4 of the Modus Vivendi makes provision for the extension of the agreement to any Member of the British Commonwealth, by means of an exchange of notes between the Government of the U.S.S.R. and the Government of the Member of the Commonwealth concerned.

Article 6 provides that so long as in any territory referred to in Article 4 which is not bound by the agreement (i.e. that has not acceded under Article 4) the goods or manufactures of the U.S.S.R. are accorded most-favoured-nation treatment, the goods or manufacture of such territory shall enjoy in the U.S.S.R. most-favoured-nation treatment. The Soviet reserves the right to denounce this article at any time in respect of any particular Member of the Commonwealth. It has been the practice since the Imperial Conference 1926 to include a general accession clause in commercial treaties made between His Majesty in respect of the United Kingdom and other foreign states. This procedure has been objected to by the Irish Free State, but, owing to the desire of the other Members of the Commonwealth that the clause should be retained, the practice has continued. This is the first occasion however that in an agreement between Governments a general accession clause has been inserted, although cases have arisen in which the United Kingdom has asked governments of other parts of the Commonwealth, either to join in agreements made between the United Kingdom Government and a foreign government, or to authorise the United Kingdom Government to make the agreement on their behalf. In this instance the Government of the United Kingdom have acted as if the procedure regarding Heads of States Commercial Treaties was equally applicable to Agreements made between the United Kingdom Government and a foreign Government.

The inclusion of a general accession clause in an agreement made by the United Kingdom Government implies that there is some inherent authority in that Government to contract for the other Governments of the Commonwealth, and for this reason it is submitted that the inclusion of the clause in its present form should be opposed.

It is more than likely that Australia and New Zealand will want to avail of the provisions of Articles 4 and 6, and for that reason it will hardly be possible to have them deleted. It is suggested that the Government of the United Kingdom should be asked to delete Article 4, and substitute an Article in which the Members of the Commonwealth who are anxious to have the right to accede should be set out Nominatim.

It is understood that South Africa objects to Article 4, and that the South African High Commissioner in London has been instructed to inform the United Kingdom Government that the South African Government wish to be excluded from the terms of the Modus Vivendi.

If the suggestion in regard to Article 4 is accepted by the United Kingdom Government, we shall be excluded from the terms of the Modus Vivendi, which means that our trade relations with the U.S.S.R. will be less favourable than those of the United Kingdom. This immediately raises the question of the Ford Company's exports to Russia. It is regarded as essential that our commercial relations with any country to which tractors are being exported from Cork must be at least as good as those of Great Britain, otherwise the Ford Company threaten to leave Cork. We can avoid any difficulty of this kind by asking the British to inform the Soviet Ambassador that we are prepared to exchange notes establishing a most-favoured-nation treatment Modus Vivendi pending the conclusion of a commercial treaty.

It will be noted that, even if the Anglo-Soviet Modus Vivendi remains in its present form, any other Member of the Commonwealth that wishes to accede must do so by an exchange of notes with the Soviet Government. The benefits of most-favoured-nation treatment with Russia can, of course, be availed of under Article 6 of the Modus Vivendi without any action on the part of the Saorstát save the granting of most-favoured-nation treatment to Soviet goods imported into this country. But it is submitted that this is a very uncertain foundation on which to base our commercial relations with the Soviet.

In considering the alternative procedure, it must be remembered that the establishment of direct commercial relations with the Soviet will, in all probability, mean a request from the Soviet Government for the reception by the Saorstát Government of a Soviet representative of some sort, probably a Trade Commissioner. The advisability of receiving a Soviet representative at Dublin, who might become the centre of Communist activities of an anti-State nature, is a matter for consideration. In view, however, of the establishment of diplomatic relations between the United Kingdom and Russia, and the absence of a passport barrier between this country and the United Kingdom to prevent Russians in England entering this country for anti-State purposes, the increased danger to the State by the establishment of a Soviet representative would not be very great. In fact, it might be more advisable, for the purpose of keeping a watch on Communist activities, to have an official centre whose activities could be kept under close observation.

It is submitted, in all the circumstances, that it would be better from the commercial as well as the international point of view to establish direct relations with the Soviet. It is, accordingly, suggested that the United Kingdom be requested to inform the Soviet Ambassador in London that the Saorstát Government is prepared to establish a most-favoured-nation treatment Modus Vivendi pending the conclusion of a Commercial Treaty between the Saorstát and the Union of Soviet Socialist Republics.