The Secretary of State to the Embassy in Brazil
98. You may inform FonMin that coffee is included among commodities in Administration proposal for ERP which estimates 275,000 metric tons of coffee for importation into CEEC countries from western hemisphere during first 15 months. Thus Dept has taken position helpful to Braz and other coffee exporters.
It is however far too early to forecast how closely Congressional [Page 399] action on ERP will follow Administration proposal. In Committee [hearings there have been suggestions that ERP funds be used only in US or that offshore buying (e.g. from Latin America) be held to minimum and confined to absolute necessities but Dept hopes more liberal views which it is strongly supporting will prevail. However final determination of place of coffee in ERP must necessarily await Congressional action, appointment of administrator and formulation of policy by latter. (Urtel 90 Jan 28).
You should make sure that FonMin understands that ERP will be financed only in part from funds to be appropriated by Congress and that use will also have to be made of export proceeds of participating countries, loans and credits from other sources, etc.
Assure FonMin of Dept’s continued sympathetic consideration of Braz problems in connection with ERP.
Following pgh for your info only and not for discussion with Brazs at this stage. With limitations pointed out above Dept obviously cannot support underwriting of all Braz coffee trade with Europe. It does however hope that ERP will emerge in such form that some coffee purchases can be financed by US. It would improve possibilities if Braz were to offer to donate or extend credits to CEEC countries covering some of accumulated coffee not marketable in US.
Dept feels strongly that coffee pledged as security for Sao Paulo loan should not be disposed of until bonds liquidated. Would appreciate your comments on this phase.
Assume FonMin realizes that coffee speculation and increased prices in Braz as result of ERP hopes might endanger inclusion of coffee in ERP because of bad effect here. We trust these can be avoided.