811.20 Defense (M) Brazil/5302: Telegram

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

3863. Embassy’s 4779, October 8.

1. British and all interested American agencies here believe undertaking to purchase should be joint, details to be worked out by actual purchaser, which for time being shall be British Ministry of Food.

2. Following suggested for substance of note to Brazilian Foreign Office has been approved by British and interested American agencies:

“I have the honor to refer to the recent conversations between representatives of the Governments of Brazil, the United Kingdom and the United States of America, concerning the exportable surplus of rice produced in Brazil. As a result of these conversations I am happy to confirm the understanding of my Government in this connection to be as follows:

The Governments of the United States of America and of the United Kingdom undertake to purchase the exportable surplus of rice produced in Brazil from the 1943–1944 and the 1944–1945 crops of the types and qualities specified in the attached schedules. The prices stated in the attached schedule shall be applicable for rice of the 1943–1944 crop; prices for the 1944–1945 crop shall be established later by agreement between the three Governments. The Government of Brazil undertakes to take such action as shall be necessary to limit exports of rice to those destined to the United States of America, the United Kingdom, or their respective nominees. In order, however, that Brazil may maintain its normal channels of trade so far as consistent with the present emergency and to assure equitable supplies to the other American Republics, it is understood that there are excepted from the foregoing undertakings rice in an amount sufficient to satisfy the essential needs of other American countries normally supplied by Brazil, which have been agreed upon by the three Governments to be represented by the following maximum amounts for each of the two crops:

Country Amount

The price for rice exported to these other countries shall not exceed that fixed for sales to the United States of America and the United Kingdom. It is understood that rice will be made available for export only after provision is made for meeting Brazilian needs.

Purchase by the Governments of the United States of America and by the United Kingdom shall be made on their behalf by such agency or agencies as shall be designated by them from time to time, it being contemplated that such purchases may be implemented by commercial contracts (containing terms consistent with the understanding set forth herein, including delivery terms) entered into with the interested trade associations or regular exporters or otherwise. The British Ministry of Food has been designated to act as such agency until further notice from the two Governments. It is understood [Page 719] that the rice purchased pursuant to this agreement will be subject to allocation by the Combined Food Board to areas other than those for which quotas are established as referred to above.

In view of the undertaking of the Governments of the United States of America and of the United Kingdom, your Government has agreed that export taxes and other taxes and charges on rice imposed by the Brazilian Federal or State Governments will not be increased during the term of the agreement.[”]

British Ambassador would deliver similar note. When notes have been exchanged with Brazilian Government, Bland would make commercial arrangements with Rice Institute exporters, etc., consistent with terms of the notes. Please observe that obligation covers surplus from all areas of Brazil. Schedule of types, qualities and prices is to be prepared by Bland and American negotiators.

3. It is realized Brazil may not like provision that rice is subject to allocation by Combined Food Board. It is felt here, however, that we must retain this flexibility and that in view of our undertakings it is fair to insist on this with the Brazilians, provided its normal trade within the Hemisphere is not interfered with.

4. British Ambassador is being telegraphed instructions similar to foregoing.