Foreign Relations of the United States Diplomatic Papers, 1938, The British Commonwealth, Europe, Near East, and Africa, Volume II

611.6731/437: Telegram

The Ambassador in Turkey (MacMurray) to the Secretary of State

Istanbul, October 6, 1938—10 a.m.
[Received 6 p.m.]

69. From Trade Agreement Delegation. Department’s telegram No. 90, September 17, 3 p.m.

1. With reference to paragraph 1 delegation does not believe Turkish authorities will insist upon making the proposed trade agreement a supplement to the existing commercial treaty. Present Chief of Turkish delegation however has repeatedly stated, as we have reported to the Department, that Turkey is prepared to conclude at this time, not a comprehensive trade agreement along the lines of our original proposal but a short simple agreement along the lines of Turkish counter proposal of June.³⁷

Department has failed up to the present time to indicate whether the Department will insist that the trade agreement be similar in length and scope to Standard General Provisions, whether it is willing to follow the same procedure in the case of Turkey as was followed in the case of Belgium. (Enclosure 1, despatch No. 691, June 10, 1938).³⁸ Or whether it is willing to negotiate permanent general provisions on the basis of the Turkish draft. We urgently desire to know what provisions the Department will insist upon having included in the agreement because in view of the fact that we have not been able to take any position in the matter the Turkish delegation is assuming that we have accepted the Turkish counter-draft as the basis of the agreement.

If the Department should insist that trade agreement be similar in length and scope to the Standard General Provisions we believe in view of the attitude taken by the Turkish authorities that the chances of concluding an agreement would be slight. Moreover in view particularly of the proposed short duration of the agreement we believe that the needs of American Turkish trade can be adequately covered by adding to the five articles of the Turkish proposal now under discussion, an article covering most favored nation treatment including application to Government purchases and also perhaps quantitative restrictions and articles (which we assume that it will also be necessary to add for technical reasons) covering compensating taxes, general reservations, territorial application and existing treaty. Should the Department be disposed to conclude a trade agreement on such a basis we recommend that we be instructed to endeavor to secure the acceptance of the following text:

Article 1 on concessions by Turkey as indicated Department’s telegram under reference with provision for compensatory modifications.

Article 2 identical with standard reference number 3.³⁹

Article 3 identical with enclosure number 2 to despatch 651, May 16, 1938.⁴⁰

Article 4 “Articles the growth, produce or manufacture of the United States enumerated and described in Schedule I and articles the growth, produce or manufacture of the Turkish Republic enumerated and described in Schedule II, shall be permitted to be imported into the territory of the other country freely without restriction or limitation”. There follow paragraphs identical with the second and third paragraphs of article 5 of French agreement.

Article 5 numbered paragraph 1 identical with standard article reference number 12⁴¹ omitting reference to financial assistance and inserting in its place “and with respect to all foreign purchases by the Government of either country or any agency thereof”.

Numbered paragraph 2. “The Government of either country shall impose no prohibitions, restrictions or limitations upon importation of any article the growth, produce or manufacture of the other country unless importation of the like article the growth, produce or manufacture of all countries is similarly prohibited, restricted or limited. In the event that any such restrictions or limitations are imposed the Government which imposes them shall allot to such other country a fair and equitable share of the total permitted importations of each article subject to such requirements or limitations.”

Article 6 article on exchange control as indicated in Department’s telegram under reference with following change: in paragraph 2 for “merchandise imported into Turkey from the United States of America” substitute “commercial imports into Turkey, the growth, produce or manufacture of the United States of America” and for “merchandise” in the two places where this word occurs substitute “commercial”.

Article 7 identical with enclosure 2(a) to despatch No. 660, May 30, 1938.⁴²

Article 8 identical with enclosure 3(a) to same despatch.⁴³

Article 9 identical with enclosure 7 to despatch No. 651, May 16, 1938.⁴⁴

Article 10 on effective date duration and termination providing that effective date 1 month after signature, duration of 1 year with automatic extension if not denounced at 2 months notice.

2. In recommending the above text we request the Department’s decisions on the following points.

Reference article 5 paragraph 2. No comment has been received from the Department on the Turkish proposal relating to import restrictions on non-schedule articles discussed at the end of numbered paragraph 3 of Embassy’s telegram No. 49 of August 18. We think a statement in the text of the agreement to the effect that such articles imported into Turkey from the United States shall continue to be subject to the Turkish general import [restrictions?] might be interpreted as giving freedom of action to the Turkish authorities. If the Turks should reject the paragraph under reference would the Department be disposed to accept an exchange of notes indicating that Turkey now imposes no restriction on imports of United States products and also indicating the present practices and policies of our Government with respect to import restrictions in so far as they affect Turkey?

Reference article 6 paragraphs and article 5 paragraph 2. The use of the phrase “commercial imports” will reserve allocated exchange for ordinary imports since armament purchases and other military purchases are not classified by Turkish Government as commercial imports and are not included in the Turkish import statistics upon which our exchange formula is based. The use of the phrase “growth, produce or manufacture of the United States of America” is designed to prevent the use of the allocated exchange for the payment of goods purchased in other countries and shipped through the United States. The insertion in paragraph 1 of article 5 of reference to Government purchases is intended to protect our trade against the practice of the Turkish Government of ordering its agencies to buy only from clearing countries.

3. Article on internal taxation has been omitted from our suggested draft mainly because nearly all of the important American exports to Turkey particularly items to be included in Schedule I are non-competitive with Turkish production.

4. Wadleigh desires to draw to the attention of the Department the fact that the use of the word “nationals” in the first paragraph of the exchange control article (numbered paragraph 2 of the Department’s telegram) would make the provisions of this paragraph apply to the non-commercial as well as commercial transactions. [Trade Agreement Delegation.]

MacMurray

37. For general summary of Turkish counterproposal of June 7, see telegram No. 46, June 8, 7 p.m., from the Ambassador in Turkey, p. 1057.
38. Not printed.
39. Regarding duty concessions by the United States. See article II of standard general provisions, Foreign Relations, 1935, vol. i, p. 541.
40. Not printed. The proposed text was as follows: “The provisions of this Agreement shall not prevent the Government of either country from imposing at any time on the importation of any article a charge equivalent to an internal tax imposed in respect of a like domestic article or in respect of an article from which the imported article has been manufactured or produced in whole or in part.”
41. Regarding most-favored-nation clause. Except for a few minor changes, this is the same as article X of the standard general provisions, Foreign Relations, 1935, vol. i, p. 541.

42. Not printed. Proposed text of Article on General Reservations was as follows:

    • “1. The provisions of this Agreement concerning the treatment accorded by the United States of America or the Turkish Republic to the trade of the other country shall not apply to:

      (a) advantages now accorded or which may hereafter be accorded by each of the two countries to adjacent countries in order to facilitate frontier traffic within a zone not exceeding fifteen kilometers on either side of the frontier;

      (b) advantages resulting from a customs union to which either the United States of America or the Turkish Republic may become a party, so long as such advantages are not accorded to any third country;

      (c) advantages which the Turkish Republic has accorded or may hereafter accord in the matter of the customs tariff affecting products originating within the territories detached in 1923 from the Ottoman Empire;

      (d) advantages now accorded or which may hereafter be accorded by the United States of America, its territories or possessions, or the Panama Canal Zone to one another or to the Republic of Cuba.

    • The provisions of sub-paragraph (d) of the present paragraph shall continue to apply in respect of any advantages now or hereafter accorded by the United States of America, its territories or possessions or the Panama Canal Zone to one another irrespective of any change in the political status of any of the territories or possessions of the United States of America.
    • “2. Nothing in the present Agreement shall be construed to prevent the adoption of measures prohibiting or restricting the exportation of gold or silver, or to prevent the adoption of such measures as either Government may see fit with respect to the control of the export or sale for export of arms, ammunition, or implements of war, and, in exceptional circumstances, all other military supplies, and it is agreed, further, that nothing in the present Agreement shall be construed to prevent the adoption or enforcement of measures relating to neutrality.
    • “3. Subject to the requirement that, under like circumstances and conditions, there shall be no arbitrary discrimination by either country against the other country in favor of any third country, the provisions of this Agreement shall not extend to prohibitions and restrictions:

      (a) relative to public security;

      (b) imposed on moral or humanitarian grounds;

      (c) designed to protect public health or the life of animals or plants;

      (d) relative to prison-made goods; or

      (e) relative to measures taken for the enforcement of police or revenue laws.”

43. Proposed text of Article on Territorial Application was as follows:

    • “1. The provisions of this Agreement regarding most-favored-nation treatment shall apply to articles the growth, produce, or manufacture of any territory under the sovereignty or authority of the United States of America or the Turkish Republic, imported from or exported to any territory under the sovereignty or authority of the other country. It is understood, however, that the provisions of this paragraph do not apply to the Panama Canal Zone.
    • “2. Except as otherwise provided in the second paragraph of this Article, the provisions of this Agreement relating to the treatment to be accorded by the United States of America and the Turkish Republic, respectively, to the commerce of the other country, shall not apply to the Philippine Islands, the Virgin Islands, American Samoa, the Island of Guam, or the Panama Canal Zone.”

44. Not printed. Proposed text of Article on Existing Treaty was as follows:

    “Nothing in this Agreement shall be deemed to affect the rights and obligations arising out of the Treaty of Commerce and Navigation between the United States of America and the Turkish Republic, signed at Ankara on October 1, 1929.”