832.6363/12–445: Telegram

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

2748. Reurtel 3604, Dec 4. Articles II and IV of Economic Charter of Americas represent undertakings of US Govt and there can be no question of its intention to live up to them.

From standpoint of access to raw material indicated situation would hardly seem to leave anything to be desired by Braz refining industry. As you know at least five American companies are endeavoring to negotiate crude oil supply contracts with applicants for concessions under existing restrictive laws, despite Dept’s hopes to secure a liberalization of the laws before such negotiations have gone too far.

While Braz Govt’s statement is reassuring that granting of concessions under existing laws would not establish vested interests under such laws, it could hardly be expected that successful concessionaires under laws assuring them a market would not oppose changes in the laws that would expose their enterprises to all the hazards of competition. Rather than run the risk of having powerful refinery groups in opposition when revisions in the laws come up for consideration, is it not more desirable that all commitments of Braz Govt on refining concessions be delayed until hoped for revisions can be accomplished? Dept therefore considers that before your departure, and in line with pgh 4 Deptel 2693, Nov 30, it would be wise for you place on record with the Braz FonOff hopes of US that action will not be taken on applications for refinery concessions under laws which it is further [Page 537]hoped will be revised by new Braz Govt to bring them into conformity with article VI of Economic Charter of Americas.

From your 3631, Dec 7,71 Dept assumes Brit Emb will take parallel action.

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