ministration of any form of control of foreign exchange by the principle that, as nearly as may be determined, the share of the total available exchange which is allotted to the other country shall not be less than the share employed in a previous representative period prior to the establishment of any exchange control for the settlement of commercial obligations to the nationals of such other country.

The Government of each country shall give sympathetic consideration to any representations which the other Government may make in respect of the application of the provisions of this Article.

ARTICLE X

In the event that a wide variation occurs in the rate of exchange between the currencies of the United States of America and Sweden, the Government of either country, if it considers the variation so substantial as to prejudice the industries or commerce of the country, shall be free to propose negotiations for the modification of this Agreement; and if an agreement with respect thereto is not reached within thirty days following receipt of such proposal, the Government making such proposal shall be free to terminate this Agreement in its entirety on thirty days' written notice.

ARTICLE XI

The Government of each country will accord sympathetic consideration to, and, when requested, will afford adequate opportunity for consultation regarding such representations as the other Government may make with respect to the operation of customs regulations, quantitative restrictions or the administration thereof, the observance of customs formalities, and the application of sanitary laws and regulations for the protection of human, animal, or plant life, or health.

In the event that the Government of either country adopts any measure which, even though it does not conflict with the terms of this Agreement, is considered by the Government of the other country to have the effect of nullifying or impairing any object of the Agreement, the Government which has adopted any such measure shall consider such representations and proposals as the other Government may make with a view to effecting a mutually satisfactory adjustment of the matter.

ARTICLE XII

The provisions of this Agreement relating to the treatment to be accorded by the United States of America or Sweden to the commerce of the other country do not apply to advantages now accorded or which may hereafter be accorded to neighboring states in order to facilitate frontier traffic, or to advantages resulting from a customs union to which either country may become a party.

Nothing in this Agreement shall be construed to prevent the adoption of measures prohibiting or restricting the exportation or importation of gold or silver, or to prevent the adoption of such measures as either Government may see fit with respect to the control of the export or sale for export of arms, munitions, or implements of war, and, in exceptional circumstances, all other military supplies.

Subject to the requirement that there shall be no arbitrary discrimination by either country against the other country in favor of any third country where similar conditions prevail, the provisions of this Agreement shall not extend to prohibitions or restrictions;

1. relating to public security;

2. imposed on moral or humanitarian grounds;

3. designed to protect human, animal or plant life or health;

4. relating to prisonmade goods;

5. relating to the enforcement of police or revenue laws.

ARTICLE XIII

Except as otherwise provided in the second paragraph of this Article, the provisions of this Agreement relating to the treatment to be accorded by the United States of America and Sweden, respectively, to the commerce of the other country, shall not apply to the Philippine Islands, the Virgin Islands, American Samoa, the Island of Guam or to the Panama Canal Zone.

The provisions of this Agreement regarding most-favored-nation treatment shall apply to articles the growth, produce or manufacture of any territory under the sovereignty or authority of the United States of America or Sweden, imported from or exported to any territory under the sovereignty or authority of the other country. It is understood, however, that the provisions of this paragraph do not apply to the Panama Canal Zone.

The advantages now accorded or which may hereafter be accorded by the United States of America, its territories and possessions and the Panama Canal Zone to one another or to the Republic of Cuba shall be excepted from the operation of this Agreement. The provisions of this paragraph shall continue to apply in respect of any advantages now or hereafter accorded by the United States of America, its territories or possessions or the Panama Canal Zone to the Philippine Islands irrespective of any change that may take place in the political status of the Philippine Islands.

This Agreement shall not apply to the advantages which Sweden has granted or hereafter may grant to Denmark or Norway or both countries insofar as these advantages are not extended to any other country.

ARTICLE XIV

The Government of each country reserves the right to withdraw the concession granted on any article under this Agreement, or to impose quantita

tive restrictions on any such article if at any time there should be evidence that, as a result of the extension of such concession to any third country, such country will obtain the major benefit of such concession and in consequence thereof an unduly large increase in importations of such article will take place: Provided that before the Government of either country shall avail itself of the foregoing reservation, it shall give notice in writing to the other Government of its intention to do so, and shall afford such other Government an opportunity within thirty days after receipt of such notice to consult with it in respect of the proposed action; and if an agreement with respect thereto is not reached within thirty days following receipt of the aforesaid notice, the Government which proposes to take such action shall be free to do so at any time thereafter, and the other Government shall be free. within fifteen days after such action is taken to terminate this Agreement in its entirety on thirty days' written notice.

ARTICLE XV

The present Agreement shall be approved by the President of the United States of America and ratified by His Majesty the King of Sweden with the consent of the Riksdag.

The Agreement shall come into full force on the thirtieth day after the exchange at Stockholm of the instruments of approval and ratification, and shall remain in force for the term of three years thereafter, unless terminated pursuant to the provisions of Article VII, Article X, or Article XIV.

Unless at least six months before the expiration of the aforesaid term of three years the Government of either country shall have given to the other Government notice of intention to terminate the Agreement upon the expiration of the aforesaid term, the Agreement shall remain in force thereafter, subject to termination under the provisions of Article VII, Article X, or Article XIV, until six months from such time as the Government of either country shall have given notice to the other Government.

In witness whereof the respective Plenipotentiaries have signed this Agreement and have affixed their seals hereto.

Done in duplicate, in the English and Swedish languages, both authentic, at the City of Washington, this 25th day of May, 1935.

For the President of the United States of America:

CORDELL HULL

For His Majesty the King of Sweden:

W. BOSTRÖM

[SEAL]

[SEAL]

[For schedules annexed to agreement, see 49 Stat. 3768 or p. 14 of EAS 79.]

SIR:

DOUBLE TAXATION: SHIPPING PROFITS

Exchange of notes at Washington March 31, 1938; United States memorandum dated March 31, 1938

Entered into force March 31, 1938

52 Stat. 1490; Executive Agreement Series 121

EXCHANGE OF NOTES

The Secretary of State to the Swedish Minister

DEPARTMENT OF STATE WASHINGTON, March 31, 1938

In order to insure that American shipping will continue to enjoy the benefits of tax exemption which have been in effect in Sweden pursuant to the exchange of notes commencing with the Swedish Legation's notes of January 27, 1922, and February 24, 1922,1 I have the honor to inform you that, on condition of reciprocity, corporations, including maritime shipping companies, organized in Sweden, the vessels of which, documented under the laws of Sweden, call at ports in the United States of America either to load or to unload cargo, or to embark or to land passengers, shall be exempted by the Government of the United States of America from the payment of taxes on income or profits derived exclusively from the operation of such vessels.

In consequence thereof, Sweden is held to have satisfied the equivalent exemption provisions of Sections 212(b) and 231(e) of the Revenue Act of 19362 and the provisions for taxation of the income of corporations contained in said Act shall in no case be applied to corporations, including maritime shipping companies, organized in Sweden.

This exemption shall apply even though a Swedish corporation or company has an agency or a branch office in the United States, provided that the activities of the agency or branch office are limited to the direct operation of vessels.

By "maritime shipping companies", shall be understood companies which are managed by an "owner" of vessels, the term "owner" including charterers.

Income or profits derived from the operation of vessels shall also include income or profits derived from the sale in the United States of steamship tickets issued by a Swedish corporation or company.

The same exemption from taxation shall, on condition of reciprocity, likewise be enjoyed by subjects of Sweden, not residents in the United States of America, for income which consists exclusively of earnings derived from the operation of a vessel, or vessels, documented under the laws of Sweden.

This exemption may be terminated at any time by either Government on six months' notice given to the other Government.

Accept, Sir, the renewed assurances of my highest consideration.

CORDELL HULL

The Honorable

W. BOSTRÖM

Minister of Sweden

SIR:

The Swedish Minister to the Secretary of State

LEGATION OF SWEDEN WASHINGTON, D.C., March 31, 1938

In order to insure that Swedish shipping will continue to enjoy the benefits of tax exemption which have been in effect in the United States of America pursuant to the exchange of notes commencing with the Swedish Legation's notes of January 27, 1922, and February 24, 1922, I have the honour to inform you that, on condition of reciprocity, corporations, including maritime shipping companies, organized in the United States of America, the vessels of which, documented under the laws of the United States, call at Swedish ports either to load or to unload cargo, or to embark or to land passengers, shall be exempted by the Government of Sweden from the payment of taxes on income or profits derived exclusively from the operation of such vessels. In consequence thereof, the Royal Ordinance of September 28, 1928, concerning Income and Property Taxation, and The Swedish Communal Taxation Law of the same date shall in no case be applied to American shipping corporations, including maritime shipping companies, organized in the United States of America.

This exemption shall apply even though an American corporation or company has an agency or a branch office in Sweden, provided that the activities of the agency or branch office be limited to the direct operation of vessels.