561.333D3/5–1745: Telegram

The Acting Secretary of State to the Ambassador in Brazil ( Berle )

1309. From Clayton. Embs 1557, May 17. After giving full consideration Embassy and Brazilian views and after reviewing reasoning behind our announced position, we believe it inexpedient alter position now to espouse Brazilian for following reasons:

1.
Continued existence Agreement in any form might be jeopardized thereby. Colombia and certain other countries strongly opposed Brazilian position. Colombia threatened withdraw Agreement year ago on same point of quota apportionment.
2.
Our proposal is more or less compromise between Brazilian and Colombian positions.
3.
Domestic trade almost unanimously opposed continuation Agreement present quotas.
4.
Record does not indicate serious Brazilian concern with maintaining share U. S. market otherwise large private sales would have been consummated during last year.

Regarding point 2, contrast Brazilian position with Colombian which definitely opposes putting present basic quota proportions back into effect under any circumstances. Colombia favors realignment quotas now (to be put into effect after October 1) or if this is impossible eliminating present quotas altogether. Our position would suspend quotas for 1 or 2 years but would permit reimposition basis present quota apportionment under emergency conditions. Meanwhile need for new broader agreement would be studied. Thus we occupy middle position. Our delegate at Coffee Board meeting April 16 also stated he would be glad to refer to this Government any proposal on which producing countries would agree. They have reached no agreement. We believe preferable U. S. as principal consuming nation maintain sideline position rather than become involved in crossfire of producing countries not in agreement among themselves.

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Regarding point 4, we appreciate greatly cooperation Brazilian Government in making DNC coffee available but attitude private sellers indicates unconcern over competitive position Brazilian coffees here. They have largely neglected opportunity recapture share U. S. market since 1943. During large part of time since then we have been in supply difficulties and have frequently pointed out to Brazilian Government need of freer selling. Furthermore recent upgrading Brazilian coffee so notorious that reputation suffered. Trend toward milds also accentuated by high money income here and habits of buying higher priced coffees built up during rationing. This trend might have been reversed in last year by selling quality Brazilians at attractive prices.

You may use such of above arguments with Brazilian Government as seem feasible.

Review following papers might permit better understanding of foregoing: circular instructions March 19 and April 17;25 circular telegram April 4; instructions 7024, April 12; 7117, May 5; 7138, May 10; and 7148, May 14.26 These contain background considerations taken account in approval at highest levels of U. S. position renewal Agreement and also occurrences at recent Coffee Board meetings. [Clayton.]

Grew
  1. Neither printed: the first instruction transmitted a memorandum on the attitude of the domestic coffee trade; the second reported on the April 3 meeting of the Coffee Board.
  2. Instructions not printed; they transmitted minutes of the Coffee Board.