832.852/78a: Telegram
The Acting Secretary of State to the Ambassador in Brazil (Caffery)
4156. On September 11 Azevedo, acting under instructions of the Brazilian Maritime Commission, wrote the War Shipping Administration asking for the return of the Brazilian vessels chartered by the United States. Agreement in principle had been reached on terms when your 4867, October 15, 3 p.m., reporting that Aranha was opposed to such return, was received. However, Donnelly informs us that subsequently Aranha authorized Celestino to negotiate a return.
[Page 741]Most expeditious manner of handling matter would appear to be by exchange of notes between you and Aranha preliminary to the signature of an actual agreement replacing that of September 30, 1942. Please ascertain from Aranha whether he is agreeable to such an exchange covering following points already agreed upon with Azevedo:
- 1.
- Cancellation of September 30 agreement on date of new exchange of notes;
- 2.
- Immediate return for use in coastwise services of chartered vessels as they become available, WSA’s obligations for replacement in case of loss to terminate with delivery;
- 3.
- Negotiation of new agreement on following bases, effect to be
retroactive to date of cancellation of old agreement:
- A.
- American military cargoes and those of Rubber Development Corporation and other United States Government agencies to receive same preferential treatment in coastwise services as Brazilian Government cargoes of similar nature;
- B.
- Every effort to be made by Brazil to transport from secondary ports to the main ports of Santos, Rio, Victoria, Bahia, Pernambuco, and Pará cargoes destined for export to the United States;
- C.
- Brazil to continue to maintain in the United States-Brazil services 21 of her ships assuming responsibility for the movement of not less than 25,000 tons monthly northbound and the same amount southbound;
- D.
- The United States to replace, after the war with a vessel of similar size, tonnage, and characteristics, any of the 21 ships which Brazil maintains in the United States trade which may be lost as a result of war risk;
- E.
- Any obligations which may have been incurred on behalf of either country under the September 30 agreement to be settled in accordance with the terms of that agreement and the supplementary exchange of letters between Aranha and you.
Please discuss the matter with Aranha and telegraph whether such a solution would be satisfactory to him. Details of delivery of chartered vessels would be worked out with Azevedo and new agreement could be signed either in Rio by you and Aranha or here by WSA and Azevedo as Aranha might prefer.
In view of the fact that the Commodity Credit Corporation coffee agreement was entered into concurrently with the shipping agreement and was linked with it, the Department feels that the alteration of the shipping arrangements furnishes an appropriate opportunity for discussing with Aranha the possibility of terminating the coffee agreement. The restoration of trading in coffee to the usual and normal basis with the elimination of governmental intervention, which seems no longer to be required by the circumstances, would appear to be advantageous to Brazil as well as the United States. From our [Page 742] point of view, coffee purchases may be protracted indefinitely unless the coffee agreement is now cancelled, whereas continuance of CCC purchases will inevitably on occasion disturb the coffee market contrary to Brazilian interests. You may use your discretion as to the extent you wish to go with Aranha in dealing with the coffee feature. The Department does not wish in any way to delay or endanger conclusion of the new shipping agreement by making termination of the coffee agreement a condition thereto.72