611.9131/61: Telegram

The Secretary of State to the Minister in Iran (Hornibrook)

14. In the light of the information contained in your despatches No. 364 of February 26, No. 375 of March 9, and No. 381 of March [Page 911] 18,3 it would appear that there exists a reasonably satisfactory basis for going forward with the proposed trade agreement negotiations. You should therefore inform the Ministry of Foreign Affairs that the Legation is prepared to initiate formal discussions on the following basis which, if confirmed by the Iranian Government, will permit the issuance of public notice of intention to negotiate a trade agreement with Iran.

The Government of the United States is not unmindful of the present facilities afforded by the Iranian Government to the trade in automobiles, spare parts and accessories, tires and tubes, but it is concerned about certain existing and possible future obstacles to the sale of such American products in Iran. In this connection it is to be understood that the Iranian Government will be willing to give assurances that no unfavorable change will be made in the present customs tariff on automotive vehicles and that the importation or sale of automotive products in general will not be subjected to a monopoly regime as long as the proposed trade agreement remains in force. It is also to be understood that the Iranian Government is prepared to consider reducing or abolishing altogether the amount of so-called exporters’ exchange which importers of automotive products have been required to purchase and that such assessment will not be replaced by any fee or tax approximately equivalent thereto as described in the Consulate’s weekly economic report of March 18. This Government will expect assurances that the Iranian Government would not adopt any new measures unfavorable to the trade in American automotive and other products pending the outcome of the proposed trade agreement negotiations.
This Government on its part is prepared to give consideration to a reduction of the duty on rugs under paragraph 1116 (a) of the Tariff Act of 1930,4 the exact nature and extent of such reduction to be decided upon after the views of interested persons in the United States have, in accordance with existing requirements, been submitted and considered and after the exact nature of the concessions which the Iranian Government is willing to grant has been made clear during the course of the proposed negotiations. It is understood furthermore that other commercial matters of interest to the two governments may be included in these negotiations.
The Department greatly prefers to negotiate a trade agreement embodying general provisions of the sort included in the agreements recently concluded between the United States and certain other countries. If the Iranian Government insists upon the agreement [Page 912] taking the form of an exchange of notes, the Department would consent to this procedure upon the understanding that such exchange of notes would embody the so-called standard general provisions for inclusion in trade agreements,5 a copy of which is being forwarded to you by mail. You should emphasize the fact that this Government attaches great importance to the general provisions in the form in which they now stand and that it believes these provisions form a sound foundation upon which to build up the mutually profitable trade between the United States and Iran.

If the reply of the Iranian Government to the views set forth above is favorable, the Department will advise you as to the date on which it would be prepared to make formal announcement of intention to negotiate, after which the two governments may proceed to work out the specific provisions of the proposed agreement. It is understood of course that these negotiations would take place at Teheran.

You should keep the Department informed of developments by cable.

  1. None printed.
  2. 46 Stat. 590.
  3. See enclosure 2 to circular instruction, dated June 6, p. 541.