560.AL/8–647: Telegram
The Secretary of State to the Consulate at Geneva
urgent
962. To ITO 173. From Commerce, Agriculture and State. Com, Agric and State are in general agreement with your proposal Fr ITO 165, Aug 3.93 In view sharp price rise and general low level existing Brazilian duties, moderate increases in duty on basis indicated urtel could be agreed to, provided firm provision made, as urtel indicates it will be, for downward revision of rates in event price decline. Depts agree, for reasons (especially possibility similar requests from other countries) indicated Fr ITO 150, July 24,94 it is regrettable to conclude agreement which would permit later increased duties on scheduled products but feel such agreement is better than none at all, in which latter case Brazil might raise duties in any event and without limitation resulting from negotiation.
Depts offer following specific comments your proposal Fr ITO 165:
- (1)
- Depts agree your para 1. Think “less than prewar” particularly important.
- (2)
- Depts agree your para 2, and interpret reference to “higher” to mean higher than ad valorem equivalent specified in para 1, namely 20 per cent. As for products falling in your para 2 classification, Depts assume you will endeavor to prevent any increase in duty concessions which Brazilians have already tentatively offered. (In addition, we also assume Brazilian proposal to mean that no item now free of duty will be made dutiable and are concerned particularly on Brazil’s retaining all offers for binding duty-free status.)
- (3)
- Depts agree your para 3 and leave possible concession withdrawals to your discretion.
- (4)
- Re your para 4, Depts agree that agreement should provide for principle of downward revision of rates in event price decline but feel your proposed formula presents great administrative difficulties and may prove unworkable. If time allows, alternative formulas might be developed here for use in connection Brazilian and similar situations that might develop. However, if Brazilians accept your formula, suggest you proceed on that basis, and difficulties which may develop subsequently can be worked out then. As final alternative, suggest you might proceed on basis commitment in principle to reduce specific rates in event postwar price decline without attempting to work out at this time specific formula for implementing this commitment.