The Ambassador in Brazil (Gibson) to the Secretary of State
[Received July 17—4:45 p.m.]
167. For Assistant Secretary Welles. I called upon Macedo Soares19 this morning and inquired as to the progress of negotiations of the treaties which have been denounced particularly that with Italy. I said I had heard a rumor that this might follow the general lines of the arrangement with Germany20 and wanted to assure myself at once [Page 274] in regard to the true situation as I knew the Department would be much concerned at any such development after his previous categorical reassuring statements.
Macedo told me categorically that there was no foundation for such reports. He said that the Italian Government was exercising strong pressure for submitting all products to the quota system; that Italy held the whip hand inasmuch as she had already blocked a million bags of coffee by withholding import permits and was apparently prepared to be ruthless in imposing her views on Brazil. He said that the negotiations would be difficult but that he was determined not to yield to Italian pressure or to conclude any agreement that was not in harmony with the assurances he had given us. He said that it would be impossible to conclude the negotiations before the expiration of the existing treaty21 on July 31st but on that date there would be an exchange of notes for the maintenance of most-favored-nation treatment and probably some temporary agreement to remain in force pending the conclusion of a more permanent treaty. He assured me that he would keep me informed as to developments.