611.9131/39a: Telegram
The Acting Secretary of State to the Minister in Persia (Hornibrook)
35. Your despatches Nos. 186 August 22 and 228 October l.1 Department is prepared to enter into early negotiations with Persia envisaging the exchange of reciprocal concessions on rugs and automotive products if reasonably assured of prospects of a rapid and satisfactory conclusion. The prospect of establishment of an automobile monopoly in Persia unfortunately complicates the situation.
This Government would be prepared to offer a reduction in the United States import duty on oriental rugs under paragraph 1116 (b) of the Tariff Act of 19302 in exchange for abatement of the various restrictions imposed on the importation into Persia of automobiles, parts, accessories, tires and tubes since 1930: this would involve suitable undertakings with respect to export certificates and import licenses, the sale of dollar exchange, customs appraisal, the limit of valuation for duty-free importation, import quotas and invoicing as well as adequate assurances with respect to the possible establishment of an automobile trade monopoly in Persia.
While the Department is reluctant to insist upon assurances against any monopolization of the Persian automobile trade as a part of such an agreement, it has strong doubts of the practicability of negotiating an agreement without such assurances because of the practical impossibility of reconciling any form of monopolization of the automobile trade with the necessary assurance that the entire American automotive industry will enjoy a full and free opportunity to share in the benefits of the trade agreement, which is a sine qua non of its negotiation.
The Department desires you to discuss the foregoing in strict confidence with the appropriate Persian authorities making clear to them that a reduction in the United States import duty on rugs can be made under the authority of the Trade Agreements Act3 only in [Page 885] return for reciprocal concessions calculated to benefit American exports, and to inquire as to the specific nature of the concessions, along the lines indicated in the foregoing, which the Persians would be prepared to offer in exchange, so that in the event the latter are found satisfactory this Government may proceed to make public announcement of its intention to negotiate with Persia, as required under the Trade Agreements Act, whereupon it will be prepared to proceed to the detailed negotiations, which in the Department’s opinion should take place at Teheran.
For your confidential information Department considers an appropriate reduction in the United States import duty on oriental rugs within the limitations of the Trade Agreements Act would be a decrease in the specific component of the rate to such figure, but not below 25 cents, as would make the ad valorem rate effective on the bulk of the imports of Persian rugs into the United States at current prices, with possibly some moderate reduction in the ad valorem rate itself.
Report by telegram.