283. Memorandum of a Conversation Between the Assistant Secretary of State for Inter-American Affairs (Rubottom) and the Chief, Economic and Commercial Department, Brazilian Foreign Office (Barbosa da Silva), Rio de Janeiro, February 24, 19601
SUBJECT
- P.L. 480 Agreement and Brazil–USSR Trade Negotiations
After an exchange of pleasantries at today’s luncheon given me by Barbosa da Silva, I asked him whether he had been pleased with the results of his trip to Moscow. He answered affirmatively.
The Ambassador talked quite a while on this subject placing more emphasis on the atmospherics than on the substance of the Brazil–USSR agreement, [remainder of paragraph (16 lines of source text) not declassified]
I asked the Ambassador about Brazilian economic conditions. He said that he would not have believed it possible that 1959 could have ended as satisfactorily as it did. The economic goals set by the government had seemed impossible of achievement but they had come close. The prospects for the future were satisfactory in view of the likelihood of a reduced coffee crop. The only unfavorable factor was the poor prospect for wheat.
At this point Barbosa said that Brazil would be interested in talking to us about another PL–480 agreement. I asked about the approximately 300,000 tons remaining to be purchased under the old agreement. He said that they would be buying this soon and that they would need a great deal more wheat. The outside figure they had in mind would possibly reach 200,000,000 dollars. There were two problems in this connection which he wanted to mention. First, the maintenance of value clause which was complicating things enormously under the old agreement,2 leaving millions of cruzeiros tied up in the bank as a result, and, second, the loans to U.S. investors under the Cooley amendment.3 I asked the Ambassador whether he realized the extent to which these and other requirements were the result of laws passed by the U.S. Congress. He acknowledged the role of the Congress [Page 760] but said that he knew we had changed our policy regarding the maintenance of value of the proceeds of purchase of PL–480 goods; he knew also that we had waived the Cooley amendment requirement in a PL–480 agreement with Poland.4 When I mentioned that that waiver had been due to the obvious fact that there was no U.S. investment in Poland, he countered by pointing to the harm that would be done the United States in Brazil by the strong reaction from the ultra-nationalist group if we insisted that a certain percentage of the proceeds be loaned to U.S. companies. He said that our companies should have the same treatment as Brazilian companies and that all of them are now feeling the pinch of credit restrictions.
We had not finished our discussion regarding PL–480 when the time came for me to leave the luncheon in order to attend the special meeting of the Brazilian Congress to hear President Eisenhower.5 I did, however, say to Barbosa that we should explore very carefully the outer limits under which his government and mine might negotiate another PL–480 sale; there were emotional overtones on both sides that needed to be taken into account, matters which might be beyond the control of the executive branches of the government; it was not quite as simple as our having surplus wheat and other products to sell to Brazil and their needing these products, although these were the basic facts; it would be better not to start a serious negotiation if there were requirements from the U.S. side which would make an agreement unacceptable to Brazilian public opinion.
The Ambassador had little opportunity to react to the above line but he indicated that they were still interested in PL–480 and hoped that something could be worked out.6
- Source: Department of State, ARA/EST Files: Lot 62 D 308, ARA: EST/B 1960 Files Folder #8. Confidential.↩
- For text of the Surplus Agricultural Commodities Agreement signed by representatives of Brazil and the United States at Washington, December 31, 1956, see 7 UST (pt. 3) 3475.↩
- The Cooley amendment in the 1957 renewal of the Agricultural Trade Development and Assistance Act of 1954 (RL. 480) provides that up to 25% of the local currency proceeds from Title I sales shall be made available for loans to U.S. and foreign private investors through the Export-Import Bank (section 1040). For text, see Public Law 85–128, approved August 13, 1957; 71 Stat. 345.↩
- For text of the Surplus Agricultural Commodities Agreement signed by representatives of Poland and the United States at Washington, June 10, 1959, see 10 UST 1058.↩
- For text of an address by President Eisenhower before a joint session of the Congress of Brazil, February 24, see Public Papers of the Presidents of the United States: Dwight D. Eisenhower, 1960–61, p. 216.↩
- Regarding extension of the Surplus Agricultural Commodities Agreement, see footnote 9, Document 280.↩