611.3231/1197
The Secretary of State to the Brazilian Ambassador (Aranha)
Excellency: I have the honor to acknowledge the receipt of Your Excellency’s note of July 14, 1937, in which you recite the conclusions reached in the course of recent discussions of questions arising in connection with the execution of the Trade Agreement of February 2, [Page 336] 1935, between our two countries. These questions were examined in several conferences participated in by Your Excellency, 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, various officials of the Department of State and myself.
The agreements reached and the undertakings decided upon in these conferences, which you confirm in your note under acknowledgment, are very gratifying to this Government.
This Government notes with pleasure, in paragraph 2 of your note, 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 spirit.
With reference to the situation presented by the conduct of international trade in compensation currencies which was carefully examined in the course of the recent conferences, this Government welcomes Your Excellency’s statement that the Brazilian Government keenly desires that its import trade shall rest upon the basis of fair competition, and Your Excellency’s assurance that the Brazilian 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.
My Government also notes that the Brazilian Government, in accordance 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, regards trade through compensation currencies as being a contingency which it desires to discourage. My Government is in full agreement with this belief and policy and accordingly notes with gratification the assurance in Your Excellency’s note that the Brazilian Government intends that trade through compensation 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. It shares Your Excellency’s opinion that this action would serve to maintain the effectiveness of commercial agreements based on the principle of equality of opportunity.
In connection with the foregoing undertakings of Your Excellency’s Government, I wish to repeat the statements made during the conferences of which Your Excellency’s note recites the conclusions, that this Government does not seek special protection for American exports to Brazil from any fair competition, nor is it advocating a limitation [Page 337] of such trade as remains open to the competition of all countries, including the United States, on a basis of equal opportunity. The execution of these undertakings of Your Excellency’s Government will serve to bring about these conditions of equality of commercial opportunity and fair competition on the Brazilian market, and will, it is believed, be of advantage not only to the commercial relations of the United States and Brazil but of real and permanent advantage to Brazil and to all countries trading with Brazil.
As Your Excellency states, it was recognized during the conferences that it would 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.
In conclusion, I desire to express the satisfaction of this Government at the opportunity afforded to consult with respect to the economic relations of our two countries with the high officials of the Brazilian Government composing the financial commission. The frankness and sympathetic understanding of this Government’s viewpoint which Your Excellency and the members of the commission brought to the discussions, were greatly appreciated.
Accept [etc.]