The Acting Secretary of State to the Ambassador in Brazil (Pawley)
799. Combined Rubber Committee allocated to Argentina 578 long tons natural rubber for first quarter 1946 and 1250 tons for second quarter. US prepared to ship total quantity immediately either from US ports or from Rubber Development Corporation supplies located in Brazil. Under terms of tripartite rubber agreement US unable to ship this rubber until Brazil permits.
Brazil had verbal agreement with Argentina whereby Argentina would ship 50,000 tons wheat per month for remainder of 1946 to Brazil and in return Brazil would permit US to ship allocated rubber to Argentina. Department understands Argentina failed to sign exchange of notes to this effect. Consequently Brazil requested US to stop shipment of rubber. Small amount was already enroute and ships were loading in New York. US ceased loading and deferred further shipment pending Brazilian concurrence as required tripartite agreement.
Dept has repeatedly proposed to Brazil that working arrangements be reached under tripartite agreement which would regularize shipment [Page 141] rubber and rubber products to Argentina or to terminate tripartite agreement. Brazil has been unwilling to discuss either point until wheat deal consummated with Argentina. Embassy requested to continue to press for solution this problem in accordance with previous Departmental instructions.
Tripartite agreement serves no useful purpose in existing circumstances and is a continuous source of irritation.
Cancellation of tripartite agreement or permission from Brazil for US to ship rubber and rubber products to Argentina will result in immediate shipment of such products.
We have for some time questioned appropriateness of use Brazil has made of tripartite agreement and questioned effectiveness this device for procuring wheat. We have, however, felt obliged to operate under its terms so long as Brazil insists.