Memorandum of Conversation, by the Assistant Chief of the Division of Near Eastern Affairs (Alling)

The Egyptian Minister called today by appointment to discuss further the possibility of a trade agreement between the United States and Egypt. He said that upon receiving the Department’s suggestions a few weeks ago he had communicated them to his Government, which in turn had referred them to the Egyptian Committee on Foreign Trade. The Minister said that he had now had a reply from that committee which made certain informal observations, which are outlined in the attached memorandum. The Minister stressed the fact that these observations did not constitute an official communication since they had not been passed upon by his Government and that they [Page 498] were merely preliminary proposals for our consideration. The attached memorandum is self-explanatory. I asked the Minister, however, if he had any information whether the Committee on Foreign Trade in Egypt appeared to be agreeable to accepting our general provisions as a basis of discussion in the event it should later prove possible to initiate negotiations for a trade agreement. The Minister replied that it was his definite understanding that the general provisions were acceptable in principle.

The Minister went on to inquire whether it would be possible, in the event the present suggestions proved acceptable to us as a possible basis of negotiations, to conduct those negotiations in Cairo in the event it was decided in principle that a trade agreement was feasible. In this connection the Minister stated that he was leaving Washington for Egypt about the first of September, that there would be no one here with whom to carry on negotiations, that the negotiations would in any case be very simple, and that he therefore hoped that we would be agreeable to having our Commercial Attaché in Cairo carry on the necessary work. I told him that so far as I knew we had negotiated trade agreements in foreign countries only in the case of Turkey23 and that our experience in that case had not proved very satisfactory. I stated, therefore, that I felt certain that our people would much prefer to have any negotiations take place here, but that I would nevertheless pass along his suggestion.

I asked the Minister what he anticipated to be the next move. He said that if we found the present suggestions agreeable as a basis of possible negotiations he would like to be informed and that we could then decide, after he had consulted his Government, what the next step might be. He said that he would telephone to me from his hotel in Hot Springs next Monday, July 24, and he hoped that by that time I could let him know the reactions of the Trade Agreements Committee to the present suggestions.


The Egyptian Legation to the Department of State


The proposals of the Trade Agreement Commission have been discussed in a preliminary manner by the Committee on Foreign Trade in Egypt, and the following preliminary observations are made by the Committee:—

It has been noticed that the Trade Agreement Commission has taken as the basis of discussion the 1937 statistics, while the Egyptian [Page 499] Committee considers that it would be more suitable to take the 1938 statistics as the basis of discussion as the year 1938 just precedes the year during which the Trade Agreement is proposed to be settled.
The Egyptian authorities feel they are only interested in the reduction of 50% of the taxation imposed on long staple cotton, and on cotton-seed oil. The other articles mentioned in the proposals of the Trade Agreement Commission do not really interest the Egyptian authorities.

In the circumstances, and as the list proposed by the American authorities was notably abbreviated, the Egyptian authorities, in order to maintain the good economic relations between the two countries, are willing to discuss as a whole the articles contained in list “A” of the Trade Agreement Commission.

It should be mentioned once more that the taxation imposed on cotton has not been met by a counter measure on the part of the Egyptian authorities, who do not even think that after such a lapse of time (practically ten years) Egyptian cotton can in any way regain its former position on the American market. However, in order to demonstrate their goodwill they are nevertheless disposed to make certain concessions on list “A” in compensation for the proposed reduction of 50% on cotton and cotton-seed oil.

  1. For trade agreement negotiations with Turkey, see Foreign Relations, 1938, vol. ii, pp. 1052 ff.