The Secretary of State to the Minister in Persia (Hart)
1. Consulate’s report No. 12 of November 285 and your recent despatches on the subject of the Perso-Soviet Convention of October 27, 1931.
The Department is substantially in accord with the views expressed by the British Legation in its aide-mémoire to the Minister for Foreign [Page 797] Affairs of October 29 and considers that the most-favored-nation clause of the provisional agreement of May 14, 1928 between the United States and Persia6 entitles American trade to privileges equivalent to those accruing to the Soviets under the above-mentioned convention. In connection with the British suggestions respecting the granting of import permits, the Department: considers that a closer and more practical equivalent of the concession to Soviet trade in respect of export certificates might properly involve the granting of import permits subject to the production of requisite export certificates within 6 months after the date of actual importation. If this more liberal concession cannot be obtained, the terms set forth in the British memorandum would be acceptable.
It is important to stipulate in this connection that applications for import permits enjoying the proposed privileges should not be less favorably treated than applications not similarly favored.
With respect to the import quota percentages reserved to Russia, as well as the entire monopolization of certain quotas and the possible extension of such monopolization to the direct injury of American exports to Persia, the Department is not now prepared to assert a definite policy. It desires to associate itself with the British reservation on this point, letting it be clearly understood that failure to protest the monopolization or percentage allotment of quotas does not imply acceptance of such practices as compatible with the most-favored-nation principle.
From the Consulate’s analysis, it appears that the quota percentages reserved to Russia will result in an adverse effect on American shipments of automobile tires and possibly machinery. Subject to official verification of the Consul’s statement that tires are included in the quota for rubber goods and not, as the Department had understood, in the quota for vehicles and spare parts, it would appear that the allotment to Russia of 23 per cent of the rubber goods quota entails a restriction of the normal American share of Persian tire imports and therefore a discrimination against American trade with Persia.
Unless there are objections which have not yet come to the Department’s attention, you should take an early opportunity to bring the views above outlined to the attention of the Persian Government. It is desired that you telegraph briefly the results of your representations.