Foreign Relations of the United States Diplomatic Papers, 1939, The Far East; The Near East and Africa, Volume IV

611.8331/120

Memorandum of Conversation, by the Assistant Chief of the Division of Trade Agreements (Deimel)

[ Washington ,] April 24, 1939.

Participants:	The Egyptian Minister
	Mr. Murray
	Mr. Alling
	Mr. Childs
	Mr. Durnan
	Mr. Deimel

The Minister called to learn what further conclusions had been reached on the basis of the studies we had been making of the possibilities of trade-agreement negotiations with Egypt. He was told that on the basis of a very thorough review of the facts by the trade-agreements organization it appeared to be clear that in the event an acceptable basis for proceeding with the negotiation of a trade agreement with Egypt is found, and decision is made to undertake such negotiations, the United States would be prepared to give active consideration to the possibility of granting a reduction in the duty on long-staple cotton (783)^*, and of guaranteeing continuance of the present tariff treatment of cigarettes (605)^†, and of the free entry applicable to crude senna (1669), henna (1669) and waste bagging for paper making (1750). The occasion was taken to explain again to the Minister the reason why no binding commitment could be given on such questions prior to public announcement of intention to negotiate and the holding of public hearings, etc. It was also explained that it would not be feasible to make public announcement of intention to negotiate at the present time even if a basis for negotiations were fully agreed upon, but that further exploration with a view to developing a basis appeared to be in order.

It was further explained to the Minister that a quid pro quo in the form of reductions and bindings in Egyptian duties would of course be necessary and that a list of products had been tentatively formulated with regard to which it was believed that reductions or bindings in Egyptian duties would be of particular interest.

It was also explained that we would wish to conduct negotiations, if initiated, on the basis of our standard general provisions.²² Five copies of these general provisions were handed to the Minister together with a memorandum setting forth the information already given to him orally.

The Minister asked whether onions and manganese, the other two products in which his Government had indicated interest, were included in this memorandum. He was told that they were not, for the reason that all possible action authorized under the Trade Agreements Act had been taken with respect to manganese and that on the basis of our information Egypt did not appear to be a sufficient actual or potential supplier of our onion imports to warrant a concession on that product to Egypt; it was explained that should the duty on onions be reduced in negotiations with some other country, Egypt would automatically receive the lower rate on the basis of most-favored-nation treatment. He was also told that the question had been very carefully studied and the possibilities of a seasonal concession had been examined, but that in the case of a commodity as readily stored as onions, the feasibility of a seasonal concession was open to doubt. As he continued to press the subject, he was informed that we would always be glad to receive further information; that we were naturally anxious to find possibilities of granting concessions to Egypt in order that we might ask more from his Government by way of reciprocal concessions, in the event trade-agreement negotiations should be undertaken; and, at his request, a statement of our statistical information on the question of onion imports was promised him.

The Minister also felt that something needed to be done with respect to manganese; it was his impression that in some way the treatment of Egyptian manganese had been made worse in consequence of trade agreements with other countries. The nature of the changes in our manganese duty in 1930 and by the trade agreement with Brazil in 1935 was carefully explained with specific application to manganese ore of a manganese content between 10 and 30%, since it is our information that this was the grade of manganese principally shipped to the United States from Egypt before 1930. It was pointed out that the tariff rate applicable to manganese ore of that grade, which had become dutiable in 1930, had been cut in half in the trade agreement with Brazil and the reduced duly now applied to Egyptian manganese; and it was suggested that perhaps the Egyptian producers had not as yet found the circumstances of sufficient interest to warrant endeavoring to recover their market in the United States. The Minister said, however, that there had been much correspondence from the manganese producers on this subject, that they had shown much interest, and stated that according to his understanding the Egyptian manganese ore had a manganese content of less than 10%. It was pointed out to him that if such were the case, it was believed the ore would continue to enter duty free, but that probably manganese ore of such low grade would not be valuable enough to stand the freight charges. The Minister asked for a memorandum explaining our manganese tariff rates and the changes made therein, and this was promised him.

He said he would await the information on onions and on manganese before communicating with his Government.

[Annex]

The Department of State to the Egyptian Legation

[ Washington ,] April 24, 1939.

Memorandum

1. In the event an acceptable basis for proceeding with the negotiation of a trade agreement with Egypt is found, and decision is made to undertake such negotiations, the United States would be prepared to give active consideration to the possibility of granting a reduction in the duty on long-staple cotton (783)^*, and of guaranteeing continuance of the present tariff treatment of cigarettes (605)^†, and of the free entry applicable to crude senna (1669), henna (1669) and waste bagging for paper making (1750).

In effect this means that the United States would be prepared to include these articles in the list of products published together with its public announcement of intention to negotiate a trade agreement. The publication of such announcement and list of products constitute an essential step in the regular procedure followed by the United States in the negotiation of trade agreements with foreign countries, their purpose being to obtain information and views from the trade in regard to the proposed negotiations.

In advance of such announcement and of the public hearings held pursuant thereto, it is not possible to make a firm decision or commitment as to what concessions may be granted in a trade agreement, or in the case of a reduction in duty, what amount of reduction could be offered within the limit of one-half of the existing rate authorized by the Trade Agreements Act. However, the products above-mentioned have been the subject of intensive preliminary study by the interdepartmental trade-agreements organization of this Government, and on the basis of present information there is no apparent reason for doubting that concessions of the nature indicated would be found possible, or that a reduction in the duty on long-staple cotton might be as much as one-half of the existing rate, which is the maximum reduction authorized by the law.

2. In return for the grant of concessions on the products above indicated, it is necessary under the Trade Agreements Act that there be an equitable quid pro quo in the form of reductions in or bindings of the Egyptian tariff rates on certain American products. Subject to some revision in the light of information from the trade which may be received following public announcement of intention to negotiate, and to the possible inclusion of certain kinds of tobacco and lumber on the basis of further studies now being made, the conclusions concerning which will be communicated to the Minister as soon as they have been reached, the United States would consider as an equitable quid pro quo reductions in the Egyptian import duties on the products included in list A, below, and guarantees against increases in the present duties on products included in list B, below.

[Here follow detailed lists of tariff items.]

3. Imports into Egypt from the United States of the products included in the above lists A and B amounted to $6,905,000 in 1937, representing 63.5 percent of Egypt’s total imports from the United States in that year. Imports into the United States from Egypt of long-staple cotton, cigarettes, crude senna, henna, and waste bagging for paper-making—the products mentioned in the first paragraph—amounted to $7,370,839 in 1937, representing 55.4 percent of total imports into the United States from Egypt in that year.

4. In accordance with its established policy, the United States would wish to follow the standard general provisions developed in the negotiation of trade agreements with other countries, as a basis for negotiations with Egypt. There are attached five copies of these standard general provisions. Some revision is now being made of certain articles, particularly the one dealing with import quotas, with a view to simplification, but without change, in substance. The texts of these articles will be provided the Minister at an early date for transmission to his Government.

5. The Government of the United States will welcome a statement of the views of the Government of Egypt as to the acceptability of these standard general provisions, and as to whether the Government of Egypt would be prepared to grant reductions in duties and bindings of existing duties on the products included in Lists A and B, respectively, in the event the Government of the United States should find itself in a position to offer the concessions indicated in the first paragraph. In the event the Minister’s Government should find itself in a position to reply favorably, consideration could then be given to the question of the timing of this Government’s public announcement of intention to negotiate a trade agreement with Egypt. The publication of such announcement, which is required under the law authorizing the negotiation of trade agreements, and the list published therewith of products under consideration for the granting of concessions to the other country^‡, are customarily followed by a period of about five weeks during which interested persons in the United States may submit their views in writing with respect to the proposed negotiations; followed by public hearings at the end of a further week or ten days. After a further brief period for the study of the information thus received, the Government of the United States is in a position to proceed with definitive negotiations.

1. The numbers in parenthesis refer to paragraph numbers in the Tariff Schedules of the United States Tariff Act of 1930. [Footnote in the original.]
2. Rate reduced by 50%—the maximum reduction authorized under the trade agreement concluded between the United States and the United Kingdom effective January 1, 1939. [Footnote in the original. The trade agreement was signed at Washington November 17, 1938, Department of State Executive Agreement Series No. 164, or 54 Stat. 1897.]
22. For text of original standard general provisions, see Foreign Relations, 1935, vol. i, p. 541. Minor changes in these standard provisions were made from time to time.
23. The numbers in parenthesis refer to paragraph numbers in the Tariff Schedules of the United States Tariff Act of 1930. [Footnote in the original.]
24. Rate reduced by 50%—the maximum reduction authorized—under the trade agreement concluded between the United States and the United Kingdom effective January 1, 1939. [Footnote in the original.]
25. The United States does not publish a list of products on which concessions may be requested from the other Government in trade-agreement negotiations. [Footnote in the original.]