Memorandum by the Chief of the Trade Agreements Section (Grady)

As agreed at the meeting on December 6 [5], Mr. Muniz and Mr. Penteado of the Brazilian Embassy34 called on me Thursday, December 6, to discuss further the extent to which the joint statement to be issued at the time of the proclamation of the Brazilian-American trade agreement is to be interpreted as precluding any types of arrangements which the Brazilian Government may make with European Governments to protect their trade with Europe.

Mr. Muniz repeated what he had said in the conversations on December 5, that the Brazilian Government felt that it would be impelled to make some forms of clearing arrangements with Germany and Great Britain, and he wished to ascertain informally whether these would be in violation of the joint declaration or of the agreement. We requested, in our conversations on December 5, that he indicate to me what was contemplated in these agreements. He did not seem to have any information of a concrete nature to supplement his conversations of the day before. He expressed his belief that clearing arrangements could be made with both Germany and Great Britain without prejudice to American interests, and suggested the possibility of Brazil’s action in regard to such agreements being checked at the quarterly meetings between representatives of the two Governments, provided for in the proposed draft of our agreement with Brazil.

He questioned me further as to the discussed cotton arrangement between Germany and American interests, but I could give him no definite answer as to whether that plan would or would not be carried out.

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I again suggested it would help us in considering this matter if he could indicate concretely what was contemplated in the way of commodity exchange in connection with the clearing arrangements his Government has in mind with Great Britain and Germany. He left with the understanding that we should meet in a few days, and I expressed the hope that he could furnish us at that time with more concrete information as to what was contemplated by his Government than he has so far given us.

H[enry] G[rady]
  1. Eurico Penteado, Administrator General of the Brazilian Coffee Department, designated to assist the Brazilian Embassy in reciprocal trade agreement negotiations.