611.9131/77
Memorandum by the Second Secretary of Legation in Iran ( Merriam ) to the Minister ( Hornibrook )7
From a reading of the file on the proposed reciprocal trade agreement with Iran, it appears that most if not entire attention will be devoted, in the negotiations, to concessions affecting automobiles, parts, tires and tubes on one side, and wool rugs on the other. There can be no doubt of the overwhelming importance of these commodities in the trade relations of the two countries at the present time, but largely for my own satisfaction I have gone through the trade statistics of the United States and Iran with considerable care in order to discover whether or not some thought might be given to the trade in other goods in the coming negotiations. While the result of this little investigation was negative, it may be well, for the purpose of record, to give a brief summary of the matter.
The only articles in which there is trade of any importance are listed in the following tables, together with the pertinent figures from the Iranian statistics.
[Page 914]Iranian Exports to the United States
June 22, 1933–June 21, 1934
| Rugs, all kinds | $3,609,571 |
| Sausage casings | 586,495 |
| Gum tragacanth | 211,311 |
| Skin, raw | 114,967 |
| Objects in mosaic | 46,259 |
| Fruit, fresh or dry | 41,198 |
| Fabrics, pure cotton (Ghalamkar) | 22,122 |
| Sheepskins, raw | 20,280 |
| Minerals, raw | 18,812 |
| Metals | 5,457 |
| Miscellaneous | 9,784 |
| $4,686,256 |
United States Exports to Iran
June 22, 1933–June 21, 1934
| Automobiles and Trucks (free–10%) | $2,074,685 |
| Spare parts, tires & tubes (free) | 838,392 |
| Typographic and lithographic products (12%–25%) | 186,910 |
| Railway materials (5%–10%) | 152,905 |
| Haberdashery, toys and hardware* | 47,971 |
| Machines and parts* | 45,016 |
| Machine oils (Rls .52 per 6.5 lbs) | 35,180 |
| Iron, cast iron and steel in ingots, etc.* | 24,728 |
| Prepared skins* | 20,826 |
| Tools, mechanical (6%–10%) | 15,962 |
| Pharmaceutical specialties (200%–40%) | 11,869 |
| Tools, hand (6%–10%) | 10,047 |
| Furniture and furnishings* | 8,376 |
| Other drugs (5%–10%) | 4,267 |
| Chemical products of all kinds (10%–30%) | 4,232 |
| Nails, screws, rivets, etc. (5%–12%) | 3,663 |
| Cotton cloth of all kinds* | 3,629 |
| Miscellaneous* | 20,492 |
| $3,509,150 |
Requirements for exporters’ exchange (Rials 28.28 per $1, as against current rates of approximately Rials 19.5 equal $1):
| Motor trucks | 20% |
| Passenger cars | 20% |
| Spare parts | 10% |
| Tires and Tubes | 10% |
Export certificates to 117.7% of the value of the goods for which import licenses are desired must be purchased in each case. These [Page 915] certificates are sold by the Government (which buys them for 10%) for 15% of the face value.
Balance of Trade
| Exports from Iran to the United States | $4,686,256 |
| Imports into Iran from the United States | 3,509,150 |
| Favorable balance to Iran | $1,177,106 |
Iranian Imports in Franchise
| Iranian imports from the United States in franchise (not included in the above figures) | $24,172 |
It is evident from the foregoing that practically all of the products of lesser importance which are imported by the United States from Iran are now admitted free of duty. On the other hand, the products of lesser importance exported by the United States to Iran are for the most part subject to low rates. The only question arising, with respect to duty, is whether or not it would be wise to bind the rates, by agreement, where they stand. There would seem to be no reason to do so because such duty-free goods as sausage casings, gum tragacanth, hides and skins are required from abroad by American industry, and such low-duty goods as machinery, tools and engine oil are required from abroad for the current needs and economic upbuilding of Iran, and in the ordinary course there is no good reason for the non-producer to levy heavy duties on needed commodities. Moreover, as Iran would be the chief beneficiary from binding the exemptions, the initiative would logically come from her.
Generally speaking, in view of the trade balance in favor of Iran, there is no reason why the Iranian Government should become anxious over granting facilities for the importation of American automobiles; on the other hand, this trade balance is such a small matter to us when our total foreign trade is considered (we had a favorable balance ourselves of some 200 million dollars in 1933) that we could scarcely begrudge the Iranians an extension of their trade in rugs if they are willing to compensate to a satisfactory extent in regard to automobiles. Under all the circumstances, they appear to have more reason to reach an agreement than ourselves, though, of course, both countries would benefit.
- Copy transmitted to the Department by the Minister in his despatch No. 667, December 27, 1935; received January 24, 1936.↩
- These items lump together several customs classifications, consequently the rates of duty on the articles included vary considerably. [Footnote in the original.]↩
- These items lump together several customs classifications, consequently the rates of duty on the articles included vary considerably. [Footnote in the original.]↩
- These items lump together several customs classifications, consequently the rates of duty on the articles included vary considerably. [Footnote in the original.]↩
- These items lump together several customs classifications, consequently the rates of duty on the articles included vary considerably. [Footnote in the original.]↩
- These items lump together several customs classifications, consequently the rates of duty on the articles included vary considerably. [Footnote in the original.]↩
- These items lump together several customs classifications, consequently the rates of duty on the articles included vary considerably. [Footnote in the original.]↩
- These items lump together several customs classifications, consequently the rates of duty on the articles included vary considerably. [Footnote in the original.]↩