611.3231/976: Telegram

The Acting Secretary of State to the Chargé in Brazil (Gordon)

124. For the Ambassador. While Gordon’s 176 July 17, 4 p.m., gives ground for optimism as to the ratification of the trade agreement, time is of increasing importance. I therefore wish you would promptly review the file on the subject and use every suitable opportunity, with due regard to the local situation, to promote early ratification and particularly to encourage the Foreign Minister to activity in behalf of this. While the delays which have been encountered may be readily understandable to persons on the ground, they have caused increasing apprehension among the large body of American businessmen who are interested in our current trade with Brazil and who in many cases are also interested in the funding agreement for deferred commercial indebtedness which, while not intergovernmental, is regarded by them as closely related to the trade agreement. Apart from those directly interested in this situation, the delay in ratification of this early and important trade agreement, the first to be signed after the special case of our agreement with Cuba,8 has repercussions on general sentiment toward the whole program. This program is regarded as particularly favorable to Brazilian interests when compared with the general trend of the commercial policy of other important trading countries, and the failure of Brazil so far to make the agreement effective naturally affords material for all those who wish to attack and weaken the general program.

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With regard to deferred commercial indebtedness, the National Foreign Trade Council has arrived at agreement with the Brazilian Ambassador on this subject. As indicated in Embassy’s 178, July 23,9 it is apparently contemplated that signature to the agreement will be withheld until the trade agreement shall have been ratified. The Council is still endeavoring to obtain discount privileges from the Export-Import Bank for the frozen credit notes which will be issued under the agreement but the bank has not yet decided whether, or in what form, such privileges will be granted. When the agreement with respect to deferred commercial indebtedness is signed, it will be appropriate for the Embassy to use its good offices to insure that there will be no unnecessary delay on the Brazilian side.

Phillips