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

641.6731/53: Telegram

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

Washington, August 26, 1939—1 p.m.

41. Department’s 39, August 19, 3 p.m. Your 45, August 21, 5 p.m.

1. On the basis of informal discussions with the Treasury Department, the following statements were transmitted in an informal letter⁴¹ to the Turkish Ambassador today: (a) It appears that the payment by Turkey of a premium on foreign exchange derived from the sale of particular Turkish products to the United States would be considered by the Treasury Department to constitute a bounty or grant within the meaning of Section 303 of the Tariff Act of 1930, and would therefore require the imposition of countervailing duties on dutiable imports from Turkey benefiting from such premiums; (b) apparently the only way in which the application of countervailing duties to dutiable goods could be avoided, if the proposed exchange premiums are applied to Turkish exports to the United States, would be to apply such premiums uniformly to all transactions in Turkey, whether connected with the sale of goods or otherwise, involving the purchase with Turkish currency of American dollars or other free foreign exchange.

2. In a preliminary discussion of this matter with the Ambassador on August 21 it was (a) pointed out that Section 303 does not apply to duty-free imports and that in recent years dutiable imports into the United States from Turkey other than tobacco have equaled only a little over 5 per cent of the value of total imports from Turkey; (b) suggested that the Turkish Government might wish to consider having restored in the Turkish-German clearing agreement provisions similar to those contained in the agreement of August 1937 whereby German imports from Turkey of certain important raw materials were restricted to specified amounts, with possibly an additional proviso that any German imports in excess of the specified limits would be paid for by Germany in free exchange, as a possible means of reducing Germany’s share of Turkey’s export trade and of increasing Turkey’s trade with free-exchange countries. Since the Department is not certain that the Turkish Ambassador understood these statements clearly, they are transmitted for your use in any conversations you may have with the appropriate Turkish officials regarding the matter.

Hull

41. Not printed.