561.321D1 Advisory Committee/70: Telegram

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

928. Your 1416, October 2. With reference to the Brazilian request that the export subsidy be withheld, you may reply to the Foreign Ministry’s note along the following lines:

1.
At the time that the cotton export program was decided upon, the Canadians had already purchased enough cotton from Brazil to supply a large part of their cotton needs during the current marketing year for American cotton and, since it appeared that such purchases would continue and that the deferring of action pending the proposed discussions would result in still fewer market opportunities in Canada this year for American cotton, the Brazilian authorities were informed at the time discussions were proposed (Paragraph 4 of Department’s 804, September 15) that it would be necessary to proceed at once with the program.
2.
The subsidy part of the program, which the Brazilian authorities were informed (Department’s 856, September 25) would be announced not later than October 1, was announced September 27, prior to your receipt of the request under reference. Although a member of the Brazilian Embassy informed an officer of the Department on the [Page 142] day of this announcement by the Department of Agriculture that it would be convenient if this Government avoided putting into effect the export subsidy which, his Government was informed, would go into effect on October 1, postponement was not considered feasible for the reasons indicated above.
3.
An additional reason for not now suspending the program would be that such suspension, resulting in uncertainty and confusion, would cause serious disturbance to our cotton export trade.

For your information. The Brazilian Ambassador has recently urged that, pending the arrival of Dantas, discussions regarding the supplying of the Canadian market be entered into with the Embassy and has called on officials of the Department of Agriculture requesting that they present to him our proposal in that regard. It was explained to him that no proposal could be formulated until all the facts were ascertained, including the quantity of Brazilian cotton sold to Canada since August 1. He indicated that he would attempt to obtain information regarding such sales, but it appears that there will be little opportunity for further discussion with the Brazilian Embassy in view of limited time before Dantas is scheduled to arrive.

Hull