The Minister in Persia (Hart) to the Secretary of State

No. 1323

Sir: I have the honor to acknowledge the receipt of the Department’s special written instruction No. 198 of November 14, 1932, file [Page 810] No. 661.9131, and telegram No. 27 of December 30, 4 p.m.,16 directing me to dispatch to the Persian Minister for Foreign Affairs a first person note protesting formally in the matter of the discrimination against American trade with Persia resulting from the Perso-Soviet Convention of October 27, 1931.

As a matter of record, I enclose a copy of the note, No. 411, which in accordance with those instructions, I addressed to the Persian Foreign Minister under date of January 5, 1933.

Permit me, at the same time, to refer to the following passages of the written instruction under acknowledgment:

[Here follow paragraph 3 and the first sentence of paragraph 4 of instruction No. 198, printed on page 808.]

I shall comment briefly on the points raised in the second and third of the above quoted paragraphs, to the end that the Department may be informed of my reasons for not incorporating reference thereto in my above-mentioned note.

Under the first point I found, after consultation with local representatives of American automotive interests, that no discrimination in fact, prejudicial to their interests or to those of their principals, results from the privilege in question. Practically all of their importations are, in the ordinary course of the trade, made either through Mohammerah or via Baghdad through Kermanshah. And I have not been able to learn of any specific case where the Persian port quotas have prevented their making such importations by way of such port as, in any particular instance, they may have preferred. Further, these port quotas are flexible figures, used rather as a guide than as a fixed “control” factor. Frequently one sees reported in the local press notice of the increase of one port’s quota together with a corresponding decrease in that of another. This, I am reliably informed, is to facilitate the normal movement of imported goods.

On the second point I was unable to ascertain any facts whatsoever tending to substantiate the report of the National Automobile Chamber of Commerce. I believe that report may have had its origin in the fact that at Pahlevi the Soviet Trade Delegation (Torgpred) has constructed at its own expense and is permitted to use its own bonded warehouses. Obviously, on merchandise in such warehouses the Persian Customs Administration makes no demurrage charges, whereas on goods in its Government-built-and-owned warehouses such “service” charges are levied.

Respectfully yours,

Charles C. Hart
[Page 811]

The American Minister (Hart) to the Persian Minister for Foreign Affairs (Foroughi)

No. 411

Highness: I am instructed by my Government to refer once again to the subject of the Perso-Soviet Convention of October 27, 1931, and its effect on American trade with Persia, and in particular to the views of the American Government on this matter as set forth in a memorandum presented to the Under Secretary of State for Foreign Affairs on April 14th last. To date no reply has been received from the Persian Government either to the memorandum in question or to the Legation’s oral representations on the subject.

The Government of the United States has taken cognizance of the fact that with the exchange of ratifications on June 22, 1932, the Perso-Soviet Convention has now fully come into force. As the Persian Government has previously been informed, my Government considers that the most-favored-nation clause of the Provisional Agreement of May 14, 1928, between the United States and Persia entitles American trade with Persia to privileges equivalent to those accruing to Soviet trade under the Perso-Soviet Convention, and in my Government’s judgment it does not appear that such privileges are accorded to American trade under any of the provisions of the present trade monopoly regulations of Persia. In particular, after a careful examination of the recently amended foreign trade monopoly law, my Government is of the opinion that the so-called bank guarantee plan incorporated in Article 8f2 of that law fails to afford American trade with Persia, if such was its intent, facilities equivalent to those granted to Russian trade under the terms of the Perso-Soviet Convention.

From the standpoint of the American exporter, my Government finds especially burdensome the two essential requirements conditioning the issue of import permits under the Persian trade monopoly law which Soviet importers in Persia are not required to fulfill and which therefore appear to be of a nature discriminatory against American trade with Persia: namely, the requirement to export Persian goods before importing an equivalent amount of foreign goods; and the requirement to sell to the Persian Government foreign exchange to the value of such exports. Furthermore, it appears that under the newly amended trade monopoly law an importer not wishing to avail himself of the bank guarantee plan may import goods only up to 95 per cent of the value of his export certificate, a stipulation not applied in the case of Soviet trade and therefore also discriminatory [Page 812] in fact against American trade with Persia. In addition, mention may be made of the flexibility enjoyed by Soviet commerce in the matter of balancing exports against imports, in contrast to the provisions of Article 8f2 above referred to, under which importers of American goods must effect such a balance within six months not from the date of actual importation but from the date of receiving an import permit.

My Government desires me to reiterate at this time its view that the monopolization and percentage allotment of import quotas in favor of Soviet trade is incompatible with the most-favored-nation principle and that to the extent that this practice results in an adverse effect on American trade it regards such monopolization and percentage allotment of quotas as constituting additional discrimination against American trade with Persia. I am instructed to add that an early expression of the Persian Government’s views in the above matters would be appreciated.

Accept [etc.]

Charles C. Hart
  1. Latter not printed.