611.3231/1197

The Brazilian Ambassador ( Aranha ) to the Secretary of State

[Translation]
No. 68/890.(42) (22)

Mr. Secretary of State: I have the honor to bring to Your Excellency’s knowledge the conclusions reached in the course of recent discussions of questions arising in connection with the execution of the Trade Agreement of February 2, 1935, between our two countries. These questions have been the subject of several conferences participated in by myself, the Minister of Finance of Brazil, Mr. Arthur de Souza Costa and the Chief of the Commercial Service of the Ministry of Foreign Affairs, Mr. J. A. Barboza Carneiro, not only with Your Excellency but also with various other officials of the Department of State.

2.
In the course of these conferences it was made perfectly clear that the Brazilian Government, like the Government of the United States, keenly desires that the aforesaid Agreement of February 2, 1935, shall continue to be fully executed both in letter and in spirit.
3.
The situation presented by the conduct of international trade in compensation currencies was carefully examined, and it was made clear that the Brazilian Government keenly desires that its import trade shall rest upon the basis of fair competition. Having regard to this, my Government will use every effort to assure that those goods imported into Brazil which may compete with the American products covered by our Trade Agreement shall not be favored by any direct subsidy from the Government of exporting countries.
4.
In correspondence with its belief that international trade will develop most substantially and with the greatest economic and other benefits on the basis of equality and through the medium of free currencies, the Brazilian Government made it clear that it regards trade through compensation currencies as being a contingency which it desires to discourage as soon as may be possible. In view of this, the Brazilian Government intends that trade through compensating procedures, being susceptible of creating a situation which introduces difficulty into the trade with countries having a regime of currency of free international circulation, should be so regulated as to prevent the dislocation of trade with the countries carried out in free currencies and on a basis of equality. This would serve to maintain the effectiveness of commercial agreements based on the principle of equality of opportunity.
5.
Furthermore, it was recognized to be highly desirable to create two Brazilian-American mixed commissions composed of representatives of the commercial interests of the two countries, one in Rio de Janeiro, the other in New York, the purpose of which would be the continuous study of the means to increase mercantile transactions between Brazil and the United States, achieving within the mutual obligations assumed by the Government of the United States and by the Government of Brazil in the Trade Agreement of February 2, 1935, the most appropriate solutions to overcome the obstacles which might obstruct the natural development of trade between the two countries. These advisory commissions would from time to time inform the Brazilian and American authorities of their work.

I take the occasion [etc.]

Oswaldo Aranha