I told Mr. Wheeler that I felt considerably disturbed about the
manner in which these discussions are being handled; that obviously
the Department of State is much concerned in any international
negotiations of this sort which have a bearing on other questions
coming within its responsibilities. I said further that any such
agreement, before it could be made effective, would have to be
approved by this Department; and that in order to obtain such
approval it is essential that this Division participate closely in
the formulation of such agreements. Mr. Wheeler replied that he
understood this fully; that the draft which Dr. Dantas telegraphed
to his Government was merely in the nature of a report on the
present status of the discussions and that the Department of
Agriculture still has questions to raise in regard to that draft. He
said that the plan was to discuss the substance of the proposed
agreement with us at the appropriate stage and see whether we fully
agreed with it.
I also said that obviously the Canadian Government would have to be
consulted in regard to any proposals on this subject and its
acquiescence would have to be obtained. I asked whether Dr. Dantas
also understood this. Mr. Wheeler replied in the affirmative.
Mr. Wheeler said that his present plan was to send Dr. Norris, who is
the officer of the Department of Agriculture principally concerned
with the discussions, over to see us, at which time the substance of
the proposed arrangement can be gone into exhaustively and questions
of procedure, including the form which any agreement might take and
the manner and time for consultation with the Canadians would be
gone into. I told Mr. Wheeler that as soon as we in this Division
reach conclusions regarding a substance and procedure which we think
are tenable, we would then take the matter up with other interested
Divisions and officers of the Department.
[Annex]
Tentative Draft Agreement for Sharing the
Canadian Cotton Market
(1) The Governments of the United States of America and the
United States of Brazil will regulate the annual exports of raw
cotton from their respective countries to the Dominion of Canada
on the basis of an estimated total annual Canadian requirement
of Upland cotton of 258, 120,000 pounds, or 540,000 bales of 478
pounds net weight, of which the United States will export
129,060,000 pounds, or 270,000 bales of 478 pounds net weight
and Brazil will export 129,060,000 pounds, or 270,000 bales of
478 pounds net weight. At least 90 days prior to the expiration
of each marketing year, as provided in this agreement, the Joint
Cotton Committee shall review the estimate of the total Canadian
requirement of Upland cotton and make such revision as it deems
necessary. In the event the revised estimate exceeds 258,
120,000 pounds or 540,000 bales of 478 pounds net, the
additional quantity shall be shared equally between the United
States and Brazil. In the event the estimate is less than 258,
120,000 pounds, or 540,000 bales of 478 pounds net weight, the
reduction shall be shared equally between the two countries,
provided that the share of the United States shall not be
reduced below a quantity of 119,500,000 pounds, or 250,000 bales
of 478 pounds net weight.
If the Joint Committee determines that the importation of cotton
into Canada from countries outside this agreement is in such
volume as to affect materially the agreement, then it shall
notify the Governments of Brazil and the United States and the
two Governments may re-examine the situation with a view to
taking such joint measures as they deem necessary.
(2) During the life of this agreement the Government of the
United States will adjust the export payment on cotton exported
to Canada to such a degree as to maintain a difference of not
more than one cent (1) and not less than one half (½) cent per
pound between the spot price of Brazilian (São Paulo official
Type 5. 28/29 M. M.) cotton at São Paulo, plus the cost of
delivery and handling charges to Montreal and the price of
released Commodity Credit Corpt Middling 15/16 inch cotton at Memphis, Tennessee, plus the cost
of delivery and handling charges to Montreal. If the difference
between the price of Brazilian cotton and United States cotton,
as defined above, becomes less than one half (½) cent per pound,
the United States Government will withdraw the export payment on
cotton exports to Canada.
It is understood that the rate of exchange used in converting the
price of Brazilian cotton to U. S. cents per pound shall be the
export rate of exchange established by the Bank of Brazil for
exporting cotton.
[Page 148]
(3) A joint cotton committee composed of equal representatives
from each country shall be formed for the purpose of supervision
and administration of this agreement. The committee shall elect
its officers and make all necessary provisions for carrying out
its duties. It shall hold an annual meeting and make an annual
report to the signatory governments not later than April 1. It
may hold other meetings and make other reports as it deems
necessary. The date and place of all meetings shall be fixed by
the committee but its annual meeting shall be held not later
than April 1 following the end of the marketing year. The
committee shall make an estimate of the annual Canadian
requirement for Upland cotton and report its findings to the
signatory governments not later than January 10. The signatory
governments shall supply the committee with data and statistical
material, when requested, regarding the sales, arrivals,
movements, and consumption of cotton in their countries. All
such data shall be kept in strict confidence and shall not be
released without the permission of the government supplying the
data. The expenses of the members of the committee shall be
borne by the government they represent, but the expenses of the
committee in connection with its duties shall be paid according
to a plan mutually agreed upon before such expense is
incurred.
(4) This agreement shall take effect on March 1, 1942, and remain
in effect for two years thereafter, unless, one of the countries
signatory thereto notifies the other in writing of its intention
to terminate the agreement at the end of any year. Such notice
must be received by such other country not later than 90 days
prior to the end of the year. This agreement may be extended for
additional periods by mutual agreement of the signatory
countries.
