The Ambassador in Brazil (Berle) to the Secretary of State
[Received April 11—1:22 a.m.]
1112. For Rockefeller and Clayton.71 Bouças tells McLaughlin that he has a directive from President Vargas to discuss the establishment of a token quota of Brazilian tire casings for Argentina. It will be recalled that heretofore Brazil in conjunction with Rubber Development Corporation makes up quotas for the other South American countries and that Argentina heretofore has been excluded. The Brazilian point of view is that since Argentina has now been recognized72 she is entitled to a quota like other countries. The Department’s views on this are urgently sought. Rubber Development here makes certain points, all important, namely:
- Argentina now has 250 tons Bolivian rubber, probably 100 tons Bolivian rubber smuggled, also an undetermined amount smuggled from Brazil. Only other source is the proposed token quota.
- Argentina has not synthetic rubber while United States seems to have ample supplies for export. Simplest way of keeping down Argentine consumption of natural rubber or casings would be the shipment of synthetic from the United States and requirement that synthetic be used. This would have the added effect of breaking the extravagant black market price for rubber prevailing in Argentina which of course attracts smuggling. Result might therefore be to make additional natural crude rubber available here. A question of political policy is raised and I do not know whether Department considers Argentina integrated into the American system now that she should share in the continental supplies, and am not prepared to recommend that we should take this view. The Brazilian Government’s point of view, however, must be taken into consideration. On the [Page 703] assumption that Argentina does have to share in the American rubber McLaughlin’s points seem to me very well taken.
Department no doubt has in mind the necessities and extreme difficulties of a control system in Argentina.