611.6731/396: Telegram
The Ambassador in Turkey (MacMurray) to the Secretary of State
[Received June 17—5 p.m.]
47. From Trade Agreement Delegation. Your 12, June 15, 6 p.m.
1. Reference paragraph 2. Turkey has requested a 50 percent reduction on all dutiable items and bindings on all free items on published Schedule II list, with the following reclassification “Izmir and Samsoun type tobacco”, “Levant type shelled filberts” and “Anatolian type rugs”; while we have presented our requests on Schedule I we have not been able to obtain Turkish counter-proposals. Turks have indicated that they intend offering generous tariff reductions on American specialties. Negotiations regarding tariff concessions on both schedules have been necessarily pushed into background by discussions regarding nature of tariff reductions and question of quotas and exchange payments.
Delegation is of the opinion that no useful purpose would be served by proceeding with negotiations regarding individual schedule items until agreement is reached on general provisions. Nature and extent of Turkish tariff concessions are dependent on provisions regarding quotas on schedule articles and exchange control. If we should embark on discussion of tariff concessions on individual schedule items Turks would almost immediately desire to know for instance whether we accept their 80 percent exchange clause.
2. Reference paragraph 4. Delegation is of opinion that it would be helpful if the Department would discuss situation with Turkish Ambassador, but suggests that nothing be said indicating that we feel that Turkey is retracting its assurances on the basis of which negotiations have been undertaken. As the Department is aware Turkey has undertaken to give us unconditional most-favored-nation treatment in respect to all forms of trade control. Turkey still declares that it is prepared to accord us this treatment and, in declining to accept our proposals with regard to tariff reductions and bindings and the full text of our standard provisions, Turkey does not feel that it is retracting its commitment.
In view of the fact that the trade agreement negotiations were discussed in conversations which the Ambassador had recently with Prime Minister and Foreign Minister, Ambassador feels that a special [Page 1064] interview with the Minister for Foreign Affairs with regard to this matter would be of more use at a later date.
3. Reference paragraph 3. Study of published Turkish import statistics for first 3 months 1938 (which do not include Government purchases or military supplies) shows that the large increase which took place in imports from the United States in that period compared with corresponding months 1937 was distributed over practically entire range of commodities normally imported and includes many new items. As long as Turkey continues to maintain trade with other countries on clearing basis there is every reason to believe that, in the absence of restrictions on imports from the United States, the changed trade balance would continue and that the demand for American goods will tend to exceed the exchange availabilities. [Trade Agreement Delegation.]