(2)

For the purposes of Title I of the Convention of October 18, 1946(a) The determination whether a citizen of the United States acquired a domicile in France will, for the purposes of the French tax on inheritances, be made in conformity with Article 103 of the French Civil Code as in effect on the date of signature of this Protocol.

(b) The determination whether a citizen of France acquired a domicile in the United States will, for the purposes of Federal estate taxes, be made in conformity with Section 81.5 of the United States Estate Tax Regulations as in effect on the date of signature of this Protocol.

(3) Article 9 of the Convention between the two Governments relating to income taxation signed at Paris on July 25, 1939, is amended to read as follows:

ARTICLE 95

An individual who is a resident of one of the Contracting States shall be exempt from tax by the other Contracting State upon compensation for personal services (other than income from the exercise of a liberal profession) performed during the taxable year within such other Contracting State if (a) he is present in such other Contracting State for a period or periods aggregating less than the taxable year and (b) such services are performed for or on behalf of a resident, corporation or other entity of the former Contracting State.

This provision does not apply to the income referred to in Article 8. (4) The provisions of Article 10 of the Convention signed July 25, 1939 between the United States and France shall be applied on a reciprocal basis. (5) Title I of the Convention between the two Governments signed at Paris on July 25, 1939 is supplemented by the following Article:

ARTICLE 19A

In the case of taxes on property or on increment of property, the following provisions shall be applicable:

(1) If the property consists of:

(a) immovable property and accessories appertaining thereto;

(b) commercial or industrial enterprises, including maritime shipping and air transport undertakings;

the tax may be levied only in that Contracting State which is entitled under the preceding Articles to tax the income from such property.

5 For a further modification of art. 9, see convention of June 22, 1956 (8 UST 843; TIAS 3844).

(2) In the case of all other forms of property, the tax may be levied only in the State of domicile. However, the value of furniture is taxable in the State of the residence to which the furniture appertains.

(3) In applying paragraph (2) above, the domicile of physical persons corresponds to the normal residence understood in the sense of permanent habitation; domicile of corporations or other juridical persons to the place of the site of their actual management.

(4) This Article shall become effective only as to taxes enacted on or after the date of exchange of the instruments of ratification of this Protocol.

ARTICLE II

(1) This Protocol shall be ratified and the instruments of ratification thereof shall be exchanged at Washington.

(2) This Protocol shall become effective and continue effective in accordance with Articles 18 and 19 of the Convention of October 18, 1946 as though this Protocol were an integral part of that Convention.

IN WITNESS WHEREOF the undersigned Plenipotentiaries, being duly authorized thereto by their respective Governments, have signed this Protocol. and have affixed thereto their seals.

DONE in duplicate, in the English and French languages, at Washington this 17th day of May, 1948.

For the Government of the United States of America:

Secretary of State of the United States of America

For the Government of the French Republic:

MOST-FAVORED-NATION TREATMENT FOR AREAS UNDER OCCUPATION OR CONTROL

I have the honor to refer to the conversations which have recently taken place between representatives of our two Governments relating to the territorial application of commercial arrangements between the United States of America and the French Republic and to confirm the understanding reached as a result of these conversations as follows:

1. For such time as either the Government of the United States of America or the Government of the French Republic participates in the occupation of any areas in Western Germany or the Free Territory of Trieste, the other Government will apply to the merchandise trade of such area the provisions of the General Agreement on Tariffs and Trade, dated October 30, 1947,1 as now or hereafter amended, relating to most-favored-nation

treatment.

2. The undertaking in point 1, above, will apply on the part of the Government of the United States of America or the Government of the French Republic to the merchandise trade of any area referred to therein only for such time and to such extent as such area accords reciprocal mostfavored-nation treatment to the merchandise trade of the United States of America or the French Republic, respectively.

3. The undertakings in points 1 and 2, above, are entered into in the light of the absence at the present time of effective or significant tariff barriers to imports into the areas herein concerned. In the event that such tariff barriers are imposed, it is understood that such undertakings shall be without

1TIAS 1700, ante, vol. 4, p. 641.

prejudice to the application of the principles set forth in the Havana Charter for an International Trade Organization 2 relating to the reduction of tariffs on a mutually advantageous basis.

4. It is recognized that the absence of a uniform rate of exchange for the currency of the areas in Western Germany, referred to in point 1 above, may have the effect of indirectly subsidizing the exports of such areas to an extent which it would be difficult to calculate exactly. So long as such a condition exists, and if consultation with the Government of the United States of America fails to reach an agreed solution to the problem, it is understood that it would not be inconsistent with the undertaking in point 1 for the Government of France to levy a countervailing duty on imports of such goods equivalent to the estimated amount of such subsidization, where the Government of France determines that the subsidization is such as to cause or threaten material injury to an established domestic industry or is such as to prevent or materially retard the establishment of a domestic industry.

5. The undertakings in this note shall remain in force until January 1, 1951, and unless at least six months before January 1, 1951, either Government shall have given notice in writing to the other of intention to terminate these undertakings on that date, they shall remain in force thereafter until the expiration of six months from the date on which such notice shall have been given.

Please accept, Excellency, the renewed assurances of my highest consideration.

Referring to the conversations which have recently taken place between our two Governments relating to the territorial application of commercial arrangements between France and the United States of America, I have the

2

* Unperfected; for excerpts, see A Decade of American Foreign Policy: Basic Documents, 1941-49 (S. Doc. 123, 81st Cong., 1st sess.), p. 391.

honor to confirm the agreement reached as a result of these conversations as follows:

[For text of understanding, see numbered paragraphs of U.S. note, above.] Please accept, Mr. Ambassador, the assurances of my highest consideration. G. BIDAULT

His Excellency

The Honorable JEFFERSON CAFFERY

Ambassador of the United States of America

Paris