The Egyptian Minister (Hassan) to the Secretary of State

Sir: I have the honour to inform you that the Royal Egyptian Government has carefully studied the text of the reciprocal trade agreement between the United States and Peru signed May 7th, 194247 and has come to the conclusion that the terms of the agreement relating to the importation of long-staple cotton (cotton having a staple of one and one-eight inches or more in length) will be detrimental to the Egyptian cotton trade with the United States. The enclosed memorandum explains the findings of the competent Egyptian Government Agencies.

Viewing the situation with grave concern, my Government has instructed me, in bringing this matter to the attention of the United States Government, to point out that, while fully recognizing the exigencies of the moment, it hopes that a more equitable solution could be found by the United States competent authorities which might alleviate the harmful effects inflicted on a friendly country whose national wealth depends primarily on cotton.

Thanking you in anticipation for the attention you may give this matter, I seize this opportunity [etc.]


Memorandum by the Egyptian Legation

Egypt has always been and still is a purely agricultural country. Agriculture constitutes over 90% of its economic activities. Cotton, although using only a little over 30% of its arable land, is by far the most important crop from an income point of view as it yields the nation about 50% of all agricultural income. Egypt consumes less than 5% of its cotton for domestic industry and the country depends completely on the export of its cotton.

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While Peruvian cotton constitutes a substantial item in Peru’s wealth, Egyptian cotton is the life of Egypt’s economic existence. The following comparisons corroborate this statement:

Peru’s cotton accounts for 58 percent of the value of Peru’s total agricultural exports, while Egypt’s cotton accounts for 75½ percent of the value of Egypt’s total agricultural exports. The value of the Egyptian cotton exports in 1939 (the last normal year) was over 24 million Egyptian pounds while the total value of Egypt’s agricultural exports was 32 millions.

Still more striking is the comparison of cotton to the total value of exports of the two countries. Egypt’s cotton constitutes 71½ percent of the total value of its exports. In 1939, the value of Egypt’s cotton exports was over 24 million Egyptian pounds while all exports amounted to 34 million Egyptian pounds. In the same year, the value of Peru’s cotton exports was only 19½ percent of the total value of its exports. The value of Peru’s cotton exports was 75 million Sols while the value of her total exports was 380 million Sols.

Before the reciprocal trade agreement between the United States and Peru, signed on May 7th, 1942, the quota for Egyptian long staple cotton was 43½ million pounds while it was only about 2 millions for Peru. The global quota introduced into the new agreement will greatly increase Peru’s share of the quota at the expense of Egypt. In the first place, Peru’s 35,000 bales (17,500,000) of Pima, of which only 10% is consumed domestically, could all be exported to the United States. Peru’s exports of Pima which is the direct competitor of Egyptian cotton is about 15,000,000 pounds or 33 percent of the global quota. In the second place, demand for Tanguis cotton is increasing in the United States, while the pre-war markets for this Peruvian cotton are no longer available. The increase in the sale of Tanguis to the United States will, therefore, cut still deeper into the global quota. It is even feasible that the exports of both Pima and Tanguis to the United States could fill the whole of the global quota, leaving very little for Egypt which enjoyed about 95 percent of the total of individual quotas which were in force before the signing of the reciprocal trade agreement between the United States and Peru. It is, therefore, apparent that this agreement is most harmful to the vital interests of Egypt.

It seems, therefore, that the correctional measure for an equitable solution would be either a substantial increase in the global quota or its entire abolishment.

  1. For text, see Department of State Executive Agreement Series No. 256, or 56 Stat. (pt. 2) 1509; for correspondence regarding the negotiation of this agreement, see vol. vi, pp. 674 ff.