611.9131/122

The Chargé in Iran (Engert) to the Secretary of State

[Extract]
No. 1862

Sir: I have the honor to transmit herewith a copy, in English, of a proposed Trade Agreement between the United States and Iran which the Iranian Government desires me to submit to the Department for examination and comment.

The Persian text, without any translation, was only handed to me by the Under Secretary of Foreign Affairs, Mr. Djevad Amery, on Saturday, June 22, 1940, and the Interpreter of the Legation has ever since then been busy translating it. I have therefore not yet had a chance to study it closely or to compare it with the draft which the Department asked me to submit to the Iranian Government in 1938.

. . . . . . . . . . . . . .

I have since then had a number of conferences with the Under Secretary of Foreign Affairs—who had been especially delegated by the Prime Minister to negotiate this agreement—and with the Minister of Commerce, Mr. Sadeq Vassighi, and the Chief of Economic Studies of the Ministry of Commerce, Mr. Ali Mohamed Oveicy. At first they were inclined to depart very widely from the draft treaty, but when I told them that it would be useless to submit a practically [Page 675] new treaty to the Department, and when I recommended that they study carefully the Trade Agreement between the United States and Turkey78—which the Department had sent me with its instruction No. 428 of April 7, 193979—they produced the draft which is forwarded herewith.

A cursory examination of the text would seem to indicate that the Iranian authorities tried to follow the agreement with Turkey as much as possible. But even so a number of apparently unnecessary changes have been introduced, and article 14 is entirely new.

Respectfully yours,

C. Van H. Engert
[Enclosure—Translation]

Iranian Draft of Proposed Trade Agreement Between Iran and the United States

His Imperial Majesty the Shahinshah of Iran and His Excellency the President of the United States of America, being desirous of maintaining the principle of reciprocity as the basis of commercial relations in order to strengthen the traditional bonds of friendship between the two countries, and of promoting the trade between the two countries by granting reciprocal concessions and facilities, have decided to conclude a Trade Agreement, and for this purpose have appointed their Plenipotentiaries as follows:

His Imperial Majesty the Shahinshah of Iran:

His Excellency the President of the United States of America:

Who, after communicating to each other their respective full powers, have agreed upon the following Articles:

Article 1

Natural or manufactured products of Iran as described in Schedule I annexed to this Agreement, and natural or manufactured products of the United States of America as described in Schedule II annexed to this Agreement shall not, on their importation into either country, pay customs duties in excess of those set forth in the said two Schedules.

Also no other duties, fees, taxes or exactions imposed on or in connection with imports, shall be collected on said articles in excess of those in force on the day of the signature of this Agreement.

The two Schedules I and II are considered as part of this Agreement, and all the contents thereof shall have the same force and effect as those in the text of this Agreement.

[Page 676]

Article 2

The provisions of Article 1 of this Agreement shall not prevent the Government of either party from imposing at any time on the importation of any product of the other party a charge equivalent to an internal tax imposed in respect of a like domestic product, and/or an internal tax on a commodity from which the imported product has been manufactured or produced in whole or in part.

Also either Government is free to increase the duties, charges or other impositions mentioned in Article 1 at any time that it may deem advisable. But in this case such increase shall not be applied to the imports of the other party until two months after the date of approval, and the other party may act in accordance with Article 13.

Article 3

Natural or manufactured products of the Empire of Iran or the United States of America shall not, after importation into the other contracting country, pay any internal taxes, fees or charges other or higher than those payable on like products of national or foreign origin.

Article 4

No prohibitions, import or customs quotas, import licenses, or any other form of quantitative regulation, whether or not operated by means of any agency of centralized control, shall be imposed by Iran on the importation or sale of any natural or manufactured products of the United States as described in Schedule II, and/or by the United States of America on the importation or sale of any natural or manufactured products of Iran as described in Schedule I, other than what is in force and customary in accordance with current laws and regulations on the day of the signature of this Agreement.

The foregoing provision shall not apply to quantitative restrictions in whatever form imposed by the United States of America or Iran on the importation or sale of any natural or manufactured products of the other country, with a view to supporting governmental measures operating to ensure the following purposes:

1.
Regulating or controlling production.
2.
Adjusting prices of like domestic articles, and/or regulating market supply.
3.
Increasing the labor costs of production of such articles in the interior of the country.

Whenever the Government of either country decides to establish or change any restriction authorized by this paragraph, it shall give notice thereof in writing to the other Government thirty days before such decision is put into effect, and the other Government may within [Page 677] this period state in writing its views in the matter or act in accordance with Article 13.

Article 5

With due regard to the provisions of Article 5 of this Agreement, either of the two Governments may impose prohibitions or quantitative, restrictions upon the importation of natural or manufactured products of the other country, as well as upon the exportation of natural or manufactured products destined for the other country, provided this prohibition or restriction is general and applies also to imports of like products of other foreign countries, or exports of like products of that country to the territory of other countries.

If the Government of either country applies quantitative restrictions to the importation of any product in which the other country has an interest and allocates the share of each importing country of the quantity of imports, there shall be allocated to the other contracting country a share of the total quantity of importations of the said article proportionate with that country’s share of the total imports of such article prior to the establishment of restrictions during a definite period.

Article 6

In the event that either Government shall establish or maintain, either directly or indirectly, any form of control of the means of international payment, it must, with respect to the transfer of all payments in connection with articles imported from the other country and also in the case of the rate of foreign exchange, the charges and dues on exchange transactions, and the rules and regulations relating to said transactions, unconditionally accord a treatment no less favorable than that accorded in the case of the imports of articles from other countries (except the countries with which they have compensation agreements).

Article 7

With respect to customs duties or charges of any kind imposed on or in connection with imports or exports and also with respect to the method of levying such duties or charges, (with respect to) all rules, laws and regulations in connection with importation or exportation, the sale or taxation or method of using imported goods, and also with respect to the application of administrative laws and regulations and administrative or judicial decisions pertaining to the classification of articles for customs purposes or to the determination of rates of duty, and also with respect to advancing the rates of duties or charges collected in the other country, under an established and uniform practise, from imports of either country, or regulations imposing new requirements with respect to such imports, and any other customs formalities, [Page 678] both Governments agree to accord to the imports of each other unconditional most-favored-nation treatment.

Article 8

1. Except as (otherwise) provided in the second paragraph of this Article, the provisions of this Agreement relating to the treatment to be accorded by the Iranian Government and the United States, respectively, to the commerce of the other country, shall not apply to the Virgin Islands, American Samoa, the Island of Guam, or to the Panama Canal Zone.

2. Taking into consideration the reservations specified in the second and third paragraphs of this Article, the provisions of this Agreement regarding most-favored-nation treatment shall apply to products of all territories under the sovereignty or authority of Iran or the United States of America, imported from or exported by either country to any territory under the sovereignty or authority of the other country.

It is understood, however, that the provisions of this paragraph do not apply to the Panama Canal Zone.

3. The advantages accorded or which may hereafter be accorded by Iran or the United States of America to adjacent countries in order to facilitate frontier traffic, and advantages resulting from a customs union to which either Iran or the United States of America may be a party so long as the right to enjoy such advantages is not extended to any other country, shall be excepted from the operation of this Agreement.

4. The advantages now accorded or which may hereafter be accorded by the United States of America, its territories or possessions, or the Panama Canal Zone to one another or to the Republic of Cuba are excepted from the operation of this Agreement. The provisions of this paragraph shall continue in the future to apply in respect of advantages now or hereafter accorded by the United States of America, its territories or possessions or the Panama Canal Zone to one another, irrespective of any change that may take place in the political organization (sic) of any of the territories and possessions of the United States of America.

Article 9

Taking into consideration the point that under no circumstances shall there be any discrimination under any title, by either country against the country in favor of any third country, the provisions of this Agreement shall not extend to the following prohibitions or restrictions:

1.
Prohibitions or restrictions imposed on moral or humanitarian grounds;
2.
Prohibitions or restrictions relating to prison-made goods;
3.
Prohibitions or restrictions relating to the protection of human, animal or plant life or health;
4.
Prohibitions or restrictions relating to the enforcement of police affairs or fiscal laws;
5.
Prohibitions or restrictions relating to public security.

None of the provisions of this Agreement shall prevent the adoption of measures prohibiting or restricting the exportation of gold and silver, or prevent such measures as either Government may, with a view to protecting its interests, take with respect to the control of the export or sale of arms, ammunition, or implements of war, and in exceptional circumstances, all military supplies, and it is agreed, further, that none of the provisions of this Agreement shall be construed to prevent the adoption of measures to ensure and enforce neutrality.

Article 10

On condition of observing the provisions of Article 13 of this Agreement, the Government of Iran and (the Government of) the United States of America reserve the right to cancel or modify the concession granted on any article under this Agreement, or to limit the quantity of imports of such article if, as a result of the extension of such concession to a third country, they find that such third country obtains the major benefit of such concession and in consequence thereof an unduly large increase in importations of the needed article takes place.

Article 11

Whenever the rate of exchange between the currencies of Iran and the United States of America varies unduly from the rate obtaining on the day of the signature of this Agreement, the Government of either country, if it considers the change in rate so important as to prejudice the industry or commerce of the country, shall be free to propose negotiations for the modification of this Agreement or to terminate this Agreement on thirty days’ written notice.

Article 12

In the event that Iran or the United States adopts any measure which, even though it does not conflict with the terms of this Agreement, is considered by the Government of the other country to nullify or impair the effectiveness of this Agreement, the Government which has adopted such measures shall consider such proposals and protests as the other Government may make in this matter in such a manner as to effect a mutually satisfactory adjustment.

Article 13

Whenever the Government of either country has protests or proposals to make concerning any measures taken by the Government [Page 680] of the other country as a result of Articles 2, 4 (paragraph 4), 5, 7, 9, 10 and 12 of this Agreement, it will state its views in writing to the other party, and the other party shall receive them in a friendly spirit and give most careful consideration and special attention to the matter. If within thirty days after the receipt of such representations, an agreement is not reached between the two Governments, the protesting Government shall be free, within fifteen days after the expiration of the aforesaid period of thirty days, to terminate this Agreement on giving thirty days’ notice.

Article 14

Inasmuch as the main object of concluding this Agreement is the extension of commerce between the two countries with a view to attaining a balance of trade, both Governments fully agree that each shall, within the limits of the laws and regulations in force in their respective countries, afford facilities to the imports of the other contracting country with all the means and powers in its hands, in such a manner that consequently the volume of trade between the two countries may steadily increase.

Article 15

The present Agreement shall come into full force on the thirtieth day following the issuance of a Decree by His Imperial Majesty the Shahinshah of Iran and His Excellency the President of the United States of America for its enforcement, and should these two proclamations be issued on two different days, on the thirtieth day following the date of the later proclamation, and shall remain in force for a term of three years thereafter.

The Government of each country must notify the Government of the other country of the date of its proclamation. Unless at least six months before the expiration of the above-mentioned term of three years either Government shall have given to the other Government notice of its intention to terminate this Agreement upon the expiration of the aforesaid term, this Agreement shall remain in force for six months after any date on which either Government shall have given notice to the other Government.

In witness whereof the Plenipotentiaries of both Governments have signed and sealed this Agreement.

Done at the city of . . . . . . . on . . . . . . . . . . . . in duplicate in the Persian and English languages, both equal and authentic.

For His Imperial Majesty the Shahinshah of Iran:

For His Excellency the President of the United States of America:

  1. Signed at Ankara, April 1, 1939, Department of State Executive Agreement Series No. 163, or 54 Stat. (pt. 2) 1870.
  2. Not printed.