632.6231/268: Telegram
The Ambassador in Brazil (Caffery) to the Secretary of State
[Received November 23—1 p.m.]
173. Department’s 66, November 3, 8 p.m. The Foreign Office handed me yesterday the new formula quoted below which it proposes [Page 348] to embody in the arrangement with Germany (item No. 8 of the German counter-proposal transmitted in my dispatch No. 108 of October 23)39 which it hopes will meet our views regarding the question of subsidies and which it believes the Germans will also accept. The Foreign Office points out that the phraseology affords full opportunity for future protests on our part or on the part of Brazil in case we feel that Germany is attempting to use circumventing measures. Furthermore, the Minister of Finance contends that this formula goes much farther than the assurance mentioned in point 3 of Aranha’s letter of July 14. The text of the draft formula follows:
“The two Governments agree that competition in the placing of foreign products on the markets of both countries should be on an equitable basis. The two Governments declare that they are not subsidizing in any manner whatsoever their exports to Germany and Brazil, respectively, nor will they do so during the life of this agreement, except in case one or the other nation is obliged to do so because of changed competitive conditions in the Brazilian and German markets, respectively, of imported products due to measures of a monetary or other nature which may be adopted by other nations.”
The Foreign Office states it will take up the point treated in the Department’s 76, November 13, 10 a.m., after it receives an expression of our views on the formula quoted above.
I would appreciate the Department’s comments as soon as possible as the Foreign Office states it is most anxious to sign an agreement with Germany before the arrival on December 7th of the new German Ambassador who, it is feared, will be very “intransigent”.
- Not printed.↩