Office of the Historian

611.9131/93: Telegram

The Secretary of State to the Chargé in Iran (Engert)

Washington, February 10, 1938—6 p.m.

8. Department’s 50, October 5, 4 p.m. You may inform the Iranian Foreign Office that the United States will be pleased to resume trade-agreement conversations. You should at the same time secure the confirmation of the Iranian Government with respect to the nature of the proposed negotiations as outlined in the second paragraph of our 50 of October 5. In amplification thereof you may state that adequate provision for unconditional most-favored-nation treatment in respect of all commercial matters would require, in this Government’s opinion, that the agreement with Iran embody assurances that: (1) the treatment with respect to customs duties and similar matters specified in numbered paragraph 3 of the exchange of notes of May 14, 1928,49 would be continued, and (2) import permits, quotas and exchange control would not be used by either Government to divert trade to a third country to the detriment of the other and that any advantages granted to any third country with respect to these matters would be accorded unconditionally to the other country. Such guarantees are provided in the standard draft of general provisions for inclusion in trade agreements,50 copies of which are being sent you for transmittal to the Iranian Government.

The procedure followed by the United States in the negotiation of trade agreements customarily includes a preliminary public announcement by this Government that the negotiation of a trade agreement with the other country is contemplated. The purpose of this announcement is to afford American interests opportunity to present views as to the products to be covered. Such announcement includes the statement that at a later date formal public notice of intention to negotiate will be given. Accompanying the formal notice there is published a list of articles under consideration for concessions to the other country. The formal notice constitutes an invitation to our domestic interests to submit briefs with respect to articles included in [Page 760] the published list and sets a date for public hearings here. This Government does not make public announcement of products on which we seek concessions from the other country.

It is possible that preliminary announcement of contemplated negotiations with Iran may be omitted, but no decision has been reached on this point.

You may explain the trade agreements procedure of this Government to the Iranian authorities, pointing out at the time that it will only be possible to proceed to such formal negotiation after agreement has been reached between the two Governments as to the bases of negotiation mentioned in paragraph 1 of this telegram. In addition the Department desires to have an opportunity to study the possible effect of the new exchange control system reported in your 10 of January 25. It will be understood of course that at this point conversations between the two Governments should be regarded as strictly confidential.

While the Department does not wish to encourage the Iranian Government to submit a list of products on which it desires concessions until we are prepared to initiate definitive negotiations, should the Iranian authorities manifest a desire to do so you may say that the United States would be glad to have such a list, referring in this connection to the practice followed by this Government of granting concessions only with respect to those products of which the country in question is the principal or an important supplier of United States imports.

On January 12, formal notice was issued of intention to negotiate a trade agreement with Turkey.51 The list published with that notice of the products on which concessions to Turkey will be considered includes Oriental rugs. However, it is probable that any reduction which may be granted to Turkey on rugs would be restricted to those types which are of particular interest to Turkey and you may so inform the Iranian authorities should you think it advisable.

You are requested to report by telegraph as soon as possible the essential features of the new Iranian exchange control system, which were not clearly indicated in your 10 of January 25. Report should cover following points:

(1)
whether import permit-export certificate system has been abrogated;
(2)
whether new system applies to trade with Germany and Soviet Union which were granted special facilities under the previous system apparently discriminatory to our trade;
(3)
rates paid for exchange sales certificates in the open market;
(4)
basis for classification of export merchandise with particular reference to commodities of importance in trade with the United States.

Report fully by mail.

Hull
  1. Foreign Relations, 1928, vol. iii, pp. 724–728.↩
  2. Ibid., 1935, vol. i, p. 541.↩
  3. See Department of State, Press Releases, January 12, 1938, p. 108.↩