Foreign Relations of the United States: Diplomatic Papers, 1942, The Near East and Africa, Volume IV

611.9131/217a

The Department of State to the Iranian Legation

Memorandum

Reference is made to the preliminary conversations which have taken place between the representatives of the Government of the United States and the Government of Iran regarding a proposed trade agreement.

The Government of the United States now desires to submit to the Government of Iran the proposed text of such an agreement (Enclosure 1⁹⁰).

It may be noted that the general provisions contained in the proposed text are identical, with one minor exception, with the general provisions proposed as a basis for agreement by the Government of the United States in its note of July 11, 1942 and accepted in principle by the Government of Iran in its reply of July 16, 1942. For purposes of accuracy, sub-paragraph (d) of Article (12) has been changed from “relating to police or revenue laws;” to “relating to the enforcement of police or revenue laws;”. For your convenience and information there is attached an analysis of the proposed general provisions (Enclosure 2⁹⁰).

The products with respect to which the United States is offering concessions (Schedule II) accounted for about 95 percent of total United States imports from Iran in 1939. New reductions up to the maximum amount permitted by the Trade Agreements Act are offered on oriental rugs and other items which accounted for 87 percent of the total dutiable imports from Iran in that year. In addition, the 50-percent reduction on pistache nuts made in the Trade Agreement with Turkey⁹¹ is offered to Iran in its own right. Bindings of present duty status are offered with respect to 11 percent of the dutiable items and 91 percent of the duty-free items. The extent of the concessions offered by the United States are set forth in detail in Enclosure 4.⁹⁰

During the course of the discussions the Iranian representatives stated that because of the comparatively low morphine content of Iranian opium, the present United States import duty of $3 per pound on opium containing more than 8.5 percent of anhydrous morphine (paragraph 59) is more burdensome on Iranian opium than on opium coming from certain other countries. (Opium containing less than 8.5 percent of anhydrous morphine is dutiable under tariff paragraph 59 at $6 per pound.) In order to alleviate any such burden, this Government is offering a concession on opium containing not less than 8.5 percent of anhydrous morphine based on the morphine content contained therein; the proposed rate is $18 per pound of anhydrous morphine content, but not less than $1.80 nor more than $3 per pound of opium. On the basis of 11 percent morphine content, this rate would amount to $1.98 per pound of opium, a reduction in duty of 34 percent. It may be noted that Iranian opium has a relatively high codeine content, which is not dutiable.

The representatives of the United States pointed out that it is the general policy of this Government to issue permits for the importation of opium only in cases in which the producing country has established a system of import permits and export authorizations at least equivalent to that described in the International Opium Convention signed at Geneva on February 19, 1925,⁹² and that the issuance of permits for the importation of Iranian opium into the United States in the future would depend largely upon the measures which may have been taken by the Government of Iran for controlling effectively the traffic in opium.

It is the understanding of this Government that to date the Iranian Government has not fully established and enforced such a system. Although this Government has authorized the purchase of Iranian opium during the past year, it has been made clear to the Iranian representatives that this Government has not abandoned its policy as regards the importation of opium, and they have been informed that this Government would be pleased if the Iranian Government would establish regulations equivalent to those provided for by the Geneva drug convention of 1925. To this end, there is attached a proposed exchange of notes⁹³ in which the Iranian Government would undertake to establish such a system. The establishment of such a system would remove any question as to the eligibility of Iranian opium for consideration in connection with purchases made in conformity with the provisions of the Narcotic Drugs Import and Export Act,⁹⁴ as amended.

The Government of the United States is offering a concession of 50 percent on hair of the Cashmere goat on the skin. In order to preserve the relationship established by the Tariff Act of 1930⁹⁵ between the rates of duty on the different categories, the reductions offered on hair of the Cashmere goat in the grease or washed; scoured; and sorted, or matchings, if not scoured; respectively, vary from 43 percent to 47 percent. The rates of duty offered on hair of the Cashmere goat are identical with the rates of duty on hair of the alpaca, llama and vicuña included in the Trade Agreement with Peru.⁹⁶

With respect to the proposed Schedule I, this Government is requesting concessions on products accounting for 91 percent of total Iranian imports from the United States in 1939; reductions in import duty or the abolition of the monopoly tax are requested on items accounting for about 78 percent of Iranian imports from the United States in that year; and bindings are requested on items accounting for 13 percent. An analysis of the concessions requested in Schedule I is attached as Enclosure 3.⁹⁷

This Government is requesting the removal of the monopoly tax now imposed on articles imported from the United States included in Schedule I under Section VIII, Chapter 39; Section XV, Chapter 63; Section XVI, Chapter 73; and Section XVII, Chapter 75; respectively, of the Iranian Customs Tariff and Road Tax Law of 1941; removal of the import duty of 4 rials on canned asparagus (tariff no. 292) and the import duty of 3 rials on preserved fruits in cans or other sealed containers (tariff no. 293); reduction of the duty on mechanical household refrigerating and air-conditioning machinery and apparatus (tariff no. 1814); and reductions of 50 percent in the rates of duty on radio tubes (tariff no. 1910) and radio receiving sets, including radio phonographs (tariff no. 1911).

Headnote 2 to Schedule I has been included at the request of the Iranian representatives. Its purpose is to permit the Government of Iran to consolidate the various charges on importation now in effect, if it should so desire. The note would permit the Government of Iran to increase the import duty on any article included in Schedule I, provided the sum of the consolidated charges (road tax, import certificate tax, import duty and any other duties, charges, fees or exactions) would not exceed the sum of such charges which would be applicable, under the terms of the Agreement, in the absence of such consolidation.

The purpose of headnote 3 to Schedule I is to indicate that the provisions in the Schedule shall be considered as amendments to the pertinent sections, chapters and numbers given at the left of the descriptions of articles, and that, consequently, the pertinent section and chapter headings and other collateral provisions in the law will continue to be applicable to articles enumerated and described in the Schedule.

For reasons which have been explained to the Iranian representatives, this Government would appreciate an early reply to these proposals.

Washington, December 31, 1942.

[A few minor changes in the wording and phraseology in the draft agreement proposed by the United States were made and accepted by both Governments. Article 15 of the draft which read as follows: “Pending the definitive entry into force of this Agreement as provided in Article (14), the provisions thereof shall be applied provisionally on and after . . . . . . . subject to a right to terminate the provisional application of the Agreement pursuant to the provisions of Article (9), or upon six months’ written notice” was omitted because of Iranian objection that tariff concessions could be made only after Majlis approval.

The trade agreement was signed at Washington, April 8, 1943. For text of agreement and supplementary exchange of notes, see Executive Agreement Series No. 410, or 58 Stat. (pt. 2) 1322.]

90. Not printed.
90. Not printed.
91. Signed at Ankara, April 1, 1939; for text, see Department of State Executive Agreement Series No. 163, or 54 Stat. (pt. 2) 1870.
90. Not printed.
92. League of Nations Treaty Series, vol. lxxxi, p. 317.
93. Not printed.
94. Approved February 9, 1909; 35 Stat. 614.
95. 46 Stat. 590.
96. Signed May 7, 1942; for text, see 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.
97. Not printed.