Memorandum of Conversation, by Mr. George V. Allen of the Division of Near Eastern Affairs

Participants: Turkish Ambassador
Mr. Murray32
Mr. Allen

The Turkish Ambassador called to inquire whether any progress was being made in the consideration by the Department of the Turkish Government’s suggestion that in order to increase the export of Turkish commodities to the United States Turkey might grant a more favorable exchange rate for dollars transferred to Turkey in payment for Turkish goods. He said that the matter was of some urgency to his Government, and hoped we might give him a reply shortly.

Mr. Murray said that the suggestion had been under serious consideration by the two Divisions of the Department directly concerned with such questions, and that he hoped the Department’s reply would be ready within a few days.

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During the ensuing discussion, Mr. Murray told the Ambassador that officials in the Department were inclined to believe that any favorable exchange rate which the Turkish Government might establish in connection with American purchases of Turkish commodities other than tobacco would probably cause the Treasury Department to consider that an export bounty or grant was in effect for those other commodities which would require the levying of a countervailing duty in the United States. Mr. Murray said that any favorable exchange rate allowed would probably have to apply to all Turkish exports to the United States, and possibly would have to apply to all Turkish exports to all free exchange countries.

It was difficult for the Turkish Ambassador to understand at first why we should insist upon the inclusion of tobacco, but he later appeared to understand thoroughly the necessity therefor.

The Ambassador stressed the fact that his Government’s intention was not to indulge in anything in the nature of dumping, since the desire was merely to equalize for the United States the opportunities of purchasing Turkish goods. He said that the Germans were able to increase their bids on Turkish commodities above the market price because they were paying in blocked currency. A more favorable exchange rate for dollars would not be facilitating Turkish exports to the United States to the extent of granting any special favors for this trade, but would merely equalize the opportunities of Americans to bid against Germans for Turkish goods.

It was suggested to the Turkish Ambassador that in as much as former Turkish-German clearing agreements have included quotas on the exportation of Turkish commodities to Germany, the Turkish Government might desire to consider the re-institution of these quotas, with a proviso that any Turkish commodities purchased by Germany in excess of the quota limitations would have to be paid for in free exchange. (It is not certain that the Turkish Ambassador was familiar enough with Turkish-German trade relations to follow the discussions on this point.)

  1. Wallace Murray, Chief of the Division of Near Eastern Affairs.