THE MOST-FAVORED-NATION CLAUSE
For purposes of commercial expansion the most-favored- nation clause, formerly the neglected step-child of American diplomacy, has in recent years been arrayed in new garments and brought forth to be introduced to the society of a somewhat reticent world. It has been shown that, with the revolution in the international economic status of the United States, the program of seeking special concessions for exports has given way to one of demanding equality of treatment from other nations. One agency for the obtaining of equal treatment abroad has been the penalty provision of Sec. 317 of the Tariff Act of 1922, which is to be used in retaliation for failure to give equality. The most-favored-nation clause has now been refashioned into an agency for securing the same result by more pacific means. The story of the radical change in the American attitude toward this clause may be somewhat tedious but it is necessary to an understanding of the evolution of the commercial policy of the United States.
The agreement of two nations to give to each other the same treatment that they extend to most-favored-nations has been called the "cornerstone of all modern commercial treaties."1 Such a declaration, because of its important effect on subsequent agreements not contemplated at the time of making the original treaty, has been subjected to the most intense scrutiny. The interpretation of the clause, the determination of its effect upon other commercial treaty provisions, and the decision as to the particular form in which the promise shall be expressed have given rise to many difficulties.
For the purpose of analyzing the effect of the clause and its problems, it may be useful to represent the three countries in____________________