611.9131/107: Telegram
The Secretary of State to the Chargé in Iran (Engert)
17. Your 14, January 19, 8 p.m. and 25, February 3, 8 p.m. You may inform the Iranian officials that this Government fully reciprocates the desire of the Iranian Government to widen and increase the scope of the economic relations between the two countries. The Iranian officials, therefore, may be assured that the officials of this Government take a thorough-going interest in the present proposals and will lend [Page 666] their full cooperation in every way in which it is possible for this Government to act.
You should state that the Iranian plans and intentions apparently contemplate several arrangements, one of them being a commercial agreement. This Government would not, of course, be disposed to consider any arrangement for placing Iranian-American trade on a private barter or compensation basis since such arrangement would be contrary to the well-defined policy of this Government of conducting its foreign trade relations on a multilateral basis in accordance with the principle of unconditional most-favored-nation treatment. You should add, however, that this Government would be willing to give sympathetic consideration to a proposal for the resumption of conversations with a view to undertaking the negotiation of a trade agreement along the lines indicated in the Department’s No. 50, October 5, 1937, 4 p.m.,64 and No. 8, February 10, 1939 [1938], 6 p.m.65
It would not be possible to undertake active negotiations for a trade agreement with Iran, including public announcement thereof, until the Trade Agreements Act is renewed. However, this would not preclude the resumption of preliminary conversations.
With reference to your understanding that a barter or compensation arrangement had been attempted by Turkey,66 the Department presumes that you have reference to recent unilateral action by the Turkish Government involving a system of exchange premiums covering exports to and imports from the United States. The system does not require export and import transactions to offset each other and is intended to lower the relatively high prices of Turkish products which have developed under the clearing and compensation system applied in Turkish foreign trade since 1933 and which, in the view of the Turkish Government, have seriously handicapped Turkish exports to the United States. Turkish-American trade does not rest, of course, on a barter or compensation basis, but upon a reciprocal trade agreement concluded on the same principles as the 18 other similar agreements negotiated by this Government and now in effect.
Before definite comment can be made on the other suggestions of the Iranian authorities, which do not appear to involve direct action by this Government, it will be necessary to explore the ground. The Department anticipates so doing in close association with the new Iranian Minister who has just arrived.