The Department of State to the Iranian Legation
The Government of the United States has given careful consideration to the proposal made by the Government of Iran for the conclusion of a trade agreement between the United States and Iran. The Government of the United States believes that the conclusion of a trade agreement between the two countries would be mutually beneficial and, on the basis of the recent informal discussions with the Iranian Trade and Economic Commission, is prepared to issue public notice, as required by law, of intention to negotiate such an agreement with Iran.
It is understood that the negotiations will be conducted on the basis of the attached draft general provisions, Enclosure 1,86 and that the concessions to be granted by each country will be worked out in the course of the actual negotiations.
In accordance with usual procedure, there would be published, in connection with the public notice, a list of products which would come under consideration for the possible granting of concessions, either reductions or bindings of duties, by the United States in the prospective trade agreement. The purpose of such a list is to give interested persons in this country an opportunity to present their views or suggestions to the trade-agreements organization as to any of such products under consideration. The items which the Government of the United States would be willing to include in the list to accompany public notice of intention to negotiate with Iran are given in Enclosure 2.86
In 1939, these items accounted for about 98 percent of the total dutiable imports into the United States from Iran and for 91 percent of the total duty-free imports. However, it is not possible for the Government of the United States to make a firm decision or commitment as to what concessions may be granted in a trade agreement in advance of announcement of intention to negotiate and of the public hearings held pursuant thereto. It should be understood therefore that the inclusion of an article in the published list referred to above does not necessarily mean that it will be the subject of a concession in the agreement as finally concluded.
The maximum reduction in United States import charges permitted by the Trade Agreements Act, under authority of which trade agreements are negotiated, is 50 percent. It may also be noted that the United States customarily grants tariff concessions only in respect [Page 284] of articles of which the other country concerned is the chief or an important source of imports into the United States.
In a trade agreement with Iran the Government of the United States would expect the Government of Iran to accord more favorable treatment for those products in which this country is primarily interested. This would include concessions, either in the form of reductions or bindings, of the Iranian import duties or other charges on those products of which the United States is the principal or an important supplier. This Government is not prepared at this time to present a definitive list of products with respect to which it would expect concessions in a trade agreement with Iran. However, a list of products has been tentatively formulated with respect to which it would appear that reductions or bindings in Iranian import charges would be of particular interest to the United States. It should be understood that further study, and information received at public hearings, might reveal additional items with respect to which this Government would wish to request concessions. The list, which on the basis of Iranian import statistics for 1939–40 covers about 82 percent of the total Iranian imports from the United States, is contained in Enclosure 3.88
It is understood, of course, that the conclusion of a trade agreement could not affect decisions with respect to the kinds and quantities of materials which can be exported from the United States to Iran.
Finally, it may be noted that during the course of the discussions it was pointed out that in its trade agreements the United States usually includes the following provision:
“The provisions of this Agreement relating to the sale, taxation or use of imported articles within the United States of America are understood to be subject to the constitutional limitations on the authority of the Federal Government.”
The foregoing provision was designed primarily to cover explicitly the provisions of the twenty-first amendment to the Constitution of the United States under which broad powers have been granted to the several States for the regulation of trade in alcoholic beverages. However, since it would appear unlikely that any substantial trade could be developed in importing alcoholic beverages into the United States from Iran, it was mutually agreed to dispense with the provision cited as unnecessary.