811.20 Defense (M) Brazil/935: Telegram
The Chargé in Brazil (Simmons) to the Secretary of State
[Received August 2—3:27 a.m.]
2832. For Clayton, Finletter, Hays,59 Bicknell60 from Allen, Mc-Ashan, Micou.61 Confirming telephone conversation of today with Cooke,62 Brazil has requested that tires and tubes for shipment from Brazil to American countries other than the United States be not purchased by Rubber Reserve but be sold and shipped by Brazil to [Page 708] such countries under an agreement between Brazil and Rubber Reserve whereby Brazil would agree that shipments of tires and tubes from Brazil to each such country would not exceed the quota established by the United States for the essential needs of each such country.
The reason for this request by Brazil is that Brazil desires to retain its normal trade relations with the countries concerned and does not wish to appear to have such trade under the direct control of the United States. In this connection the Brazilian Foreign Office has sent a strong note to the Embassy expressing this point of view and taking the position that the rubber agreement between Brazil and the United States only contemplated that Brazil would sell the United States its exportable surplus of crude and manufactured rubber to fill the needs of the United States but not for redistribution by the United States to other American countries. Brazilian Government feels so strongly on this matter that they withheld export permits covering shipment of tires to Peru now in process of loading but we were able to have them agree to issue the licenses upon the understanding that this whole question would be explored with a view to considering an adjustment of the present arrangements for the purchase of tires and tubes in Brazil by Rubber Reserve for distribution to other American countries.
The agreement with Brazil limiting consumption of crude rubber within Brazil and the relating agreement to purchase tires and tubes is set forth in Allen’s letter to Bouças originally dated April 27, 1942, later slightly changed and redated May 2.63 This letter must be read in conjunction with memorandum presented to Brazilian Commission April 28, 1942, setting forth the principles agreed upon. Both of these documents are attached to Allen’s report number 3, item number 8.64 The agreements referred to have been recognized by Brazil in practice but have not been officially confirmed. Brazil has not yet taken the position that the agreement is not in effect It must be remembered, however, that the agreement for limitation of consumption of crude rubber within Brazil was a wholly voluntary act of cooperation by Brazil and was agreed to by Brazil despite the specific provisions of the rubber agreement between Brazil and the United States which contemplated the expansion of rubber manufacture in Brazil. In view of this situation it is important that the United States avoid any appearance of dictation or arbitrary control and as long as Brazil specifically agrees to keep its sales and shipments of tires and tubes to other American countries within the quotas established by the United States the main purpose of the [Page 709] United States is accomplished. Furthermore, the request of Brazil is in our opinion, in accord with the understanding set forth in the memorandum of principles agreed upon by Rubber Reserve and Brazil which was the foundation for the agreement set forth in Allen’s letter to Bouças.
If the request of the Brazilian authorities is granted it should be made clear that it is without prejudice to our rights under paragraph 7 of the main Rubber Agreement of March 3.65
In any case we will attempt to negotiate early next week an agreement permitting Brazilian manufacturers and exporters to buy and ship from Rubber Reserve present stocks in Brazil in order to liquidate our stocks first before new production is exported. We will also endeavor to arrange for the continuance of the system whereby we purchase all tires and resell to foreign or Brazilian buyers for exportation since Mr. Cooke has informed us that Brazil’s production is approximately equivalent to total requirements of other Western Hemisphere Republics. To facilitate these discussions please cable third quarter allocations each Western Hemisphere Republic so far arranged and prospects arranging allocations any others.
If we are unable to make these arrangements suggested by Cooke then we recommend granting Brazil’s request outlined in early part of this cable and subject to the conditions set forth, otherwise we fear the breakdown of the entire consumption agreement. [Allen, McAshan, Micou.]
- Paul R. Hays, Chief, Rubber Division, Board of Economic Warfare.↩
- J. W. Bicknell, Vice President, Rubber Reserve Company.↩
- Creswell M. Micou, in charge of the interests of the Board of Economic Warfare in Rio de Janeiro.↩
- R. C. Cooke, official of the Rubber Reserve Company.↩
- Not found in Department files; for terms of the agreement, see telegram No. 1486, May 1, 6 p.m., from the Ambassador in Brazil, p. 700.↩
- Not found in Department files.↩
- See telegram No. 640, March 13, 7 p.m., to the Ambassador in Brazil, p. 692.↩