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

No. 5621

The Secretary of State informs the Embassy that the Department has noted with great interest the Embassy’s despatch no. 14206 of January 15, 1944 proposing the complete elimination of the Decentralization Plan as well as other controls burdensome to commerce.

Officials of the Department had the opportunity to discuss with Mr. Stephen Danforth his views and the views of the American Chamber of Commerce for Brazil, as presented by him, during his recent visit to Washington. Mr. Danforth was informed that the Department was aware of the inherent danger to future trade of the existing elaborate documentary controls and that the Department and the Foreign Economic Administration were developing plans to modify these controls as rapidly as conditions permit. Mr. Danforth concurred with the viewpoint that a sudden elimination of all existing controls might precipitate a confusion which would be most undesirable. In this connection Mr. Danforth agreed in general with the recent resolution of the National Foreign Trade Council that relaxation and elimination of superfluous documentary controls should be undertaken as rapidly as possible but in a progressive and orderly manner.

The Department and the Foreign Economic Administration are now preparing communications to the field proposing a further substantial rollback of the Decentralization procedure with the elimination of the necessity for Import Preference Requests on five large groups of commodities. It is possible that between now and July 1, 1944 further proposals will be made, with the objective of eventually arriving at a small positive list of critical items, which for reasons of extremely short supply, will be continued under the Preference Request Recommendation system.

While there are evidences of substantial improvement with respect to the supply and production facilities affecting certain commodities, and while the shipping problem is less acute, nevertheless, the war situation has not yet developed to the point where sweeping relaxation of controls would be advisable. In the rollback of January 1, and the contemplated proposals for further rollback, it will be necessary in the majority of cases to continue subjecting export clearance to individual [Page 653] export licenses issued by the Foreign Economic Administration. Thus, the primary accomplishment in these modifications of the Decentralization Plan will, unfortunately, be merely the elimination of the Preference Request Recommendations issued abroad.

The Embassy’s views in the despatch under reference as to the immediate necessity for eliminating wartime controls so that trade can return to normal channels, while a highly desirable objective, perhaps does not take into account the fact that the War Production Board still controls the allotment of materials under the CMP56 Plan and the Preference Rating system, and that the only way supply assistance can be rendered an export case is through the documentary process of an individual export license. The Statement of Cargo Availability is perhaps an adequate control document with reference to those limited items which can be returned to general license, but is considered to be wholly inadequate as a document to obtain supply assistance through the War Production Board. Furthermore, exporters do not file a Statement of Cargo Availability until they have the goods in hand for export which means that they have gone through the process of applying for and receiving supply assistance. Thus, the Embassy’s desire that the Statement of Cargo Availability be used as the sole documentary control anticipates a readjustment of administrative processes so sweeping that it cannot be considered at this time, although the agencies are anxious and willing to simplify procedures as much as possible and as quickly as practicable.

In view of this situation the Department does not feel that this is the opportune time for the Embassy to submit to the Brazilian Foreign Office the proposed note transmitted with the despatch under reference.

  1. Controlled Materials Plan.