611.3231/963: Telegram
The Chargé in Brazil (Gordon) to the Secretary of State
[Received June 7—12:40 a.m.]
151. Department’s 98, May 28, 6 p.m., and my despatch 684 of May 31st.3 Euvaldo Lodi, Second Vice President of the Chamber of Deputies and a class deputy from Minas Geraes, representing industries, asked to see me this morning. He said that he came to speak in a personal capacity as well as in his capacity as President of the Brazilian Federation of Industries. His statements may be summarized as follows:
The trade treaty with the United States was negotiated on the part of the Brazilian Government with undue secrecy and the interested parties especially Brazilian industries were in effect given no hearing at all. In consequence the treaty had lowered Brazilian duties on a number of tariff items in a manner so prejudicial to Brazilian industries that many of them would be seriously crippled if the treaty went into force in its present shape.
Accordingly he and many fellow deputies in the Chamber, although they belonged to the Government majority, would not be able to vote for the ratification of the treaty and as the vote will be by secret ballot he felt that the treaty cannot pass in its present form. However, aside from the tariff items of which they complained, he and his friends approved of the general framework of the treaty and, moreover, wished to do nothing in conflict with the Brazilian traditional policy of cultivating close political and economic ties with the United States. The idea of the dissident deputies representing industry, therefore, was that the treaty might be modified by deleting or changing certain items objectionable to them in schedule I and substituting other reduced duties which they claim would offer greater total advantages to American export trade to Brazil than the items complained of.
I replied to the effect that while I could offer no comment as to the manner in which the treaty had been negotiated on the Brazilian side I wished to point out that our Government had entered upon the negotiation of this treaty after receiving assurances from the Brazilian Government that it was ready and desired to negotiate a treaty of this character and that the negotiations were carried on with the duly accredited representatives of that Government, moreover, that for our part in the negotiations had been attended with all possible public notice to interested parties.
I then developed and extended the arguments set forth in your telegram under reference and emphasized the grave consequence of a [Page 302] psychological as well as of a financial and economic nature that would result if the Brazilian Congress were to reject this treaty which constituted an international act of the highest importance. I expressed my personal opinion that the procedure he proposed was materially impossible: If the Brazilian Congress should attempt extensive modification of schedule I of the treaty not only would the process take an inordinate amount of time which my Government could not but look upon with disfavor but also he would appreciate that it must be entirely problematical whether the Department and the President would then be prepared to give their approbation to such an altered instrument. If he and his friends felt that the interests they represented were vitally affected by the present schedule their best hope of remedy would seem to be to vote first for the ratification of the treaty and then to take their case to their own Government to see if it could be induced to propose to the American Government modifications by way of a protocol or exchange of notes of specific items in schedule I.
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I rejoined that if the treaty were tampered with by the Brazilian Congress and its ratification made impossible the special interests he and his friends were representing would in the not very long run suffer more than they would from the adoption of the treaty as it stood.
I further emphasized that from a purely Brazilian point of view not only was ratification of the treaty most important but also a very prompt ratification: during the days last winter when the negotiations were nearing completion and when the treaty was finally signed while the mission of the Finance Minister was in the United States American interest in expansion of trade with Brazil in the resources of the country and in things Brazilian in general had reached a high pitch and one that could only be highly advantageous to Brazil; as month after month had now gone by without ratification of the treaty or without any solution of the frozen credit situation which as far back as 4 months ago it had been agreed to clear up, this sympathetic interest had necessarily been evaporating little by little and I felt sure he would realize how prejudicial this was to Brazil’s interests.
I trusted that I am not mistaken in my feeling that the sum total of the arguments herein above summarized made some impression on Lodi for he departed saying that he agreed that some way must be found to avoid the grave consequences of a rejection of the treaty, that he believed the way could be found, that he was going to see President Vargas upon his return as well as other high Brazilian officials and if they would give him assurances that the interests of Brazilian industry would be taken in hand after the ratification of the treaty he would vote for the ratification and felt that he could induce his friends to do likewise.
[Page 303]The above is a bare outline of the views exchanged in the interview which lasted upwards of an hour and a half. I have reported them at such length because the views advanced by Lodi and his influential position seemed to me to represent a real danger to the treaty’s ratification. Even should this danger fortunately prove illusory I felt the Department would wish to be fully informed in the premises.
I should like to emphasize that at no stage of the conversation did I say a word which could be interpreted as holding out any definite hope that my Government would be likely to consider favorably any modification that might be proposed along the lines he suggested.
As indicated in my despatch under reference I saw the Acting President of the Republic last Friday and in general terms along the lines set forth in the Department’s telegram under reference presented to his consideration the advantage to Brazil of ratifying the treaty with the least delay possible. The Acting President gave every appearance of responding sympathetically to the views advanced and assured me that he would do everything possible to expedite ratification especially when, after the return of President Vargas, he would resume his functions as President of the Chamber. I had not reported this interview sooner awaiting some concrete result thereof. Yesterday, however, the Diplomatic and Treaty Commission of the Chamber with one dissenting vote approved the treaty; though I regret to say that the approval was given in a rather lukewarm manner emphasizing only the desirability of maintaining close political ties with the United States and intimating that the treaty with its schedules would receive more searching technical examination at the hands of the Commissions of Finance, and of Agriculture, Commerce and Industry, before which it must also go.
I trust that my action as reported above has the approval of the Department and I would greatly appreciate such further instructions as it may wish to send me for my future guidance: e. g. as to whether the arguments summarized above should be reiterated should occasion arise. With the Foreign Minister absent for an indefinite time (see my 150, June 4, 6 p.m.4) I feel I would be on somewhat delicate ground in doing much more than I have already done by way of trying actively to promote ratification, and while it is irksome to remain inactive in the face of evidence that opposition to ratification is being fomented, I naturally wish to avoid even the appearance of becoming involved in what is primarily a quarrel between dissatisfied Brazilian elements and their own Government.