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

611.8331/122

Memorandum of Conversation, by Mr. Vernon L. Phelps of the Division of Trade Agreements

[Washington,] July 31, 1939.

Participants:	Egyptian Minister
	Mr. Hawkins
	Mr. Phelps

The Egyptian Minister called by appointment on July 31, 1939 to discuss further the possibility of undertaking trade-agreement negotiations between the United States and Egypt, with particular reference to the observations of the Committee on Foreign Trade in Egypt (outlined in the attached memorandum handed to Mr. Alling by the Minister on July 17²⁴) relative to the Department’s suggestions regarding the possibility of undertaking negotiations which were contained in the informal memorandum handed to the Minister on April 24, 1939.²⁵

The Minister was told that an informal memorandum would be prepared for him containing this Government’s views regarding the observations of the Committee on Foreign Trade in Egypt, but that it seemed desirable to discuss certain points in connection therewith. (This memorandum, intended to be handed to the Minister, is attached hereto).²⁶

Referring to the products which might constitute the basis for possible concessions by Egypt, contained in Lists A and B of the Department’s memorandum of April 24, Mr. Hawkins stated that this Government feels that it could not agree to the withdrawal of all the items in List B (tariff items with respect to which it was proposed that the existing moderate Egyptian customs duties be bound) but it would be disposed to give consideration to possible modification of both Lists A and B in the event decision should be reached to proceed with active negotiations.

The Minister stated that the Egyptian authorities desire to exclude List B from consideration for the reasons that (1) the United States is not the principal supplier of these products and (2) it is against the policy of the Egyptian Government to bind existing statutory customs duties in its commercial agreements.^*

Mr. Hawkins stated that, since it is the general policy of this Government in its trade-agreement negotiations to request concessions on products in respect of which the United States is the principal or an important supplier of the other country’s imports, we would not maintain a request for a concession on a product with respect to which further investigation shows clearly that the United States is a minor supplier of the Egyptian market. In this connection, the Minister promised to supply the Department with 1938 statistics of Egyptian imports of the items in the aforementioned Lists A and B.

With respect to the Egyptian request for a tariff reduction of 50 percent on cottonseed oil, the Minister was informed that it is also the general policy of the United States to grant concessions only on products in respect of which the other country is the principal or an important supplier, and that therefore no concession to Egypt on this product could be considered for the reason that Egypt is a minor supplier of the American market.

As to a concession on long-staple cotton, the problems involved and the difficulties arising in connection with the formulation of a decision at this time were explained to the Minister, and he was informed that pending the outcome of the meeting on cotton to be held in Washington in September²⁷ and a definitive formulation of its domestic cotton program, this Government finds itself unable to decide whether a concession could be granted on long-staple cotton. In this connection, the Minister suggested that no reference be made to long-staple cotton in the informal memorandum (attached hereto) containing the views of this Government regarding the observations of the Egyptian Committee on Foreign Trade, for the reason that the Department’s position regarding this matter had been fully covered in its memorandum of April 24, 1939. Nevertheless, it seems desirable, in view of the fact that the invitations to the meeting on cotton to be held in Washington in September 1939 and the announcement of this Government’s export subsidy on cotton²⁸ were both issued subsequently to April 24, 1939, to state clearly our position on the matter at this time.

24. Supra.
25. Ante, p. 495.
26. Infra.
27. Subsequent investigation has revealed that in the one existing Egyptian commercial agreement containing reciprocal tariff concessions, that between Egypt and Palestine of August 18, 1936, the rates of duty on certain products which had been promulgated by decree in July 1935 were consolidated in the agreement without change. However, it appears that the promulgation of these reduced rates in July 1935 was the direct result of the visit of a Palestine Trade Mission to Egypt in June 1935 so that their consolidation in the agreement of August 18, 1936 seems to have been simply the publication of the terms of an agreement reached a year earlier and made effective at that time by decree. (See despatch, Treaty Series No. 7 (1937), from London, February 3, 1937, enclosure 1, containing the text of this agreement (667N.8331/6), and the Acting Commercial Attaché economic and trade notes no. 15, July 8, 1935, “Egyptian Customs Tariff Changes.”) [Footnote in the original.]
27. See vol. ii, section entitled “Meeting of Representatives of Chief Cotton Exporting Countries …”
28. Announced by the Secretary of Agriculture on July 22, 1939, to be effective July 27, 1939.