632.003/196: Telegram

The Secretary of State to the Ambassador in Brazil ( Gibson )

70. For Gibson from Welles. Your 123, May 10, 5 p.m. I have had the matter of the 2 per cent tax very carefully studied by the Department’s competent advisers, all of whom, after a careful reexamination, are convinced of the soundness of their original conclusions. I appreciate that the Embassy may be caused some embarrassment and that the Department may be subjected to criticism by business interests based upon their misapprehension of the terms of the agreement, but hope that perhaps by pointing out that the tax is contrary to the general policy of expanding trade through reduction of tariff barriers espoused by both Governments in the Trade Agreement, the Brazilian Government may decide to abolish it. [Welles.]