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Memorandum of Conversation, by Mr. Cecil T. White of the Division of Commercial Policy and Agreements

Participants: The Iranian Minister;26
Mr. Amerie, the Iranian Trade Representative;
Mr. Deimel, TA;27
Mr. Merriam, NE;28
Mr. Lary, Finance Division, Bureau of Foreign and Domestic Commerce;
Mr. Goldberg, Division of Regional Information, Bureau of Foreign and Domestic Commerce;
Mr. Shaw, Division of Foreign Tariffs, Bureau of Foreign and Domestic Commerce;
Mr. White, TA.

The Iranian Minister recalled that in reaching agreement with respect to a basis for trade-agreement negotiations two problems appear to present particular difficulty, namely, the Iranian exchange control and government monopolies. The Minister said that in view of Mr. Amerie’s long experience with Iranian domestic and foreign trade, he had brought him to the Department to clarify the Iranian position in those respects.

[Page 367]

The Minister read Article 6 of the Iranian draft agreement handed the Department on September 3, 1940,29 which provides with respect to means of international payment that each country shall extend to the other treatment no less favorable than that accorded the products of third countries, “excepting those with which it has barter agreement”. Mr. Amerie stated that Iranian trade with Germany and the Soviet Union is practically impossible except on a commodity basis. He indicated that while those two countries each have some foreign exchange, necessity requires that it only be used for the purchase of commodities essential to their respective economies. In this connection, the Minister and Mr. Amerie stated it as their opinion that Iran would be very unlikely to enter into clearing or barter agreements with countries other than Germany or the Soviet Union.

In reply, Mr. Deimel pointed out that the Iranian draft left the door open to any further special arrangements Iran might wish to make. He went on to explain that the standard general provisions previously given the Iranian Government are not necessarily the provisions this Government must have in a trade agreement with Iran, and that this Government has been trying to find a formula which would meet the exigencies of the Iranian Government and at the same time give us the assurances we consider necessary. Mr. Deimel suggested that an exploratory discussion of the Iranian trade control system would be of assistance in the search for such a formula.

In the ensuing discussion the Iranian representatives made the following assertions:

German and United States exports to Iran are not competitive and, therefore, the clearing arrangement with Germany does not adversely affect United States trade with Iran.
Germany pays twice as much as other countries for Iranian merchandise and the application of the exchange certificate system to non-German countries merely offsets the artificial value of the mark. (Mr. Lary pointed out in this connection that, as in the case of Turkey and certain other countries, by buying large amounts of Iranian goods at artificially high prices, Germany could force Iran to buy abnormal amounts of German goods at correspondingly high prices).
With respect to export monopolies, it was stated that they are used primarily for the purpose of standardizing products for export and that they have not, nor would be, used to discriminate against the United States.
With respect to import monopolies, it was stated that they are applied to all countries, including Germany and Russia, and have not been, nor would be, used to discriminate against the United States.

Mr. Deimel thanked the Minister and Mr. Amerie for their kindness in answering questions, and said that he felt that we had a much [Page 368]clearer picture of the Iranian position than before. It was agreed that in a few days Mr. Amerie would come in to discuss possible items for inclusion in the list of products for publication in the event public notice of intention to negotiate with Iran should be issued.

  1. Mohammed Schayesteh.
  2. Henry L. Deimel, Jr., Assistant Chief of the Division of Commercial Policy and Agreements.
  3. Gordon P. Merriam, Division of Near Eastern Affairs.
  4. Not found in Department files, but for draft submitted by the Iranian Ministry for Foreign Affairs, see Foreign Relations, 1940, vol. iii, p. 675.