224. Memorandum of Conversation1

SUBJECT

  • US-Brazilian Relations

PARTICIPANTS

  • For Brazil:
    • President Goulart
    • Minister of Foreign Relations Francisco Clementino San Tiago Dantas
    • General Amaury Kruel, Head of the Military Household
    • Mario Gibson Barbosa, Head of the Cabinet of the Ministry of Foreign Affairs
    • Ambassador Campos, Brazilian Ambassador to the U.S.
  • For the United States:
    • The President
    • Mr. Arthur Schlesinger, White House
    • Ambassador Gordon, U.S. Ambassador to Brazil
    • Assistant Secretary of State Edwin Martin
    • Deputy Assistant Secretary of State Richard Goodwin
    • Mr. Teodoro Moscoso, AID

[Here follows discussion of public utilities questions.]

He then asked Ambassador Campos to go through a series of points, largely in the economic field. Campos covered the following:

1.
President Goulart is anxious to have emergency economic assist-ance while his reform proposals are before the Brazilian Congress, in order to insure confidence in the future. He needs things like the Northeast project to get the support and help of the people generally.
2.
They were anxious to proceed with a three-year wheat agreement and thought there would be no Argentine objection.
3.
They welcomed United States support for a worldwide coffee agreement of a long term character. They also were glad to have the United States help with respect to discrimination against coffee by the Common Market and against the excise taxes in Germany and elsewhere. They would need United States assistance in financing the eradication of excess coffee trees. They welcomed the encouragement they had had in this matter so far. They had a plan ready which should bring the surplus under control and will give it to the Department of State. They hoped they could have the President’s personal support.
4.
The Brazilian Government was disappointed in the recent allocation of sugar under the barter arrangement. They could have sold 300 thousand tons but were only permitted to sell 50 thousand tons. They hoped for a permanent quota under the new law, though they are not sure what form the law will take.
5.
They were disturbed that, while the United States heretofore supported the idea of a regional compensation scheme for fluctuations in export earnings while an international one was being worked out, we had now abandoned this position in favor of working only on a global scheme. They felt it would take too long to work out a global arrangement.

The Brazilian Finance Minister expressed their satisfaction with the understanding reached with Secretary Dillon and his confidence that the program for financial recovery would proceed successfully. They had not sought the approval of the Fund for this program but believed they could, nevertheless, control inflation and then come back for further discussions with the Fund.

Ambassador Campos continued that the previous difficulties with the Eximbank with respect to releases under the May 1961 agreement had been solved. However, some Brazilian applicants for export financing were coming back with reports that the Eximbank said they were closed for business with Brazil and this was bad for Brazil’s credit generally. They had also been frozen out of the IBRD with no loans since 1958, while $400 million had gone to other Latin American countries and another $400 million to South Asia. They felt that these were not constructive attitudes and hoped the United States Government would try to change them.

With respect to the European Common Market, Brazil welcomed the lowering of trade barriers which might result from our trade legislation and negotiations, and expressed appreciation for our efforts to secure a lowering of barriers against Latin American exports. They also supported Nigeria in the proposal to eliminate tariff barriers entirely on tropical products, especially coffee. The UK negotiations may present a new problem in terms of securing discriminatory treatment for coffee from Tanganyika and Kenya. Brazil is looking forward to the forthcoming meeting in Geneva on tropical products and hoped they would have our strong support on matters of interest to Brazil and Latin America.

President Kennedy replied that we had a great interest in the Northeast program and hoped it would have immediate and visible effects. Our aid last year was in large part really appreciated only by bankers and the program it was supporting did not have readily visible results even though it did limit the balance of payments troubles. Last year’s effort was a major one and it was essential that what we do from here on out [Page 466]really have an impact, not only in the Northeast but elsewhere in the country as well.

He reviewed the general history of our financial transactions with Brazil and expressed satisfaction with the result of the Dillon-Moreira Salles discussion. The President emphasized the necessity of getting Congress to go along with our actions and, therefore, we must show results from the use of our money. We realized that Brazilians need funds to get a stabilization program going but after the discouraging results of last year, we have to reach a balance and keep a proper relation between the use of our funds and Brazilian action in order to keep Congress in a mood to support us and if possible to secure IMF support as well. He understood the Brazilians were in agreement with Dillon that this really should be carefully worked out by stages. The Brazilian Finance Minister said there was agreement. President Kennedy continued that if they implemented the program it would become easier for the IMF to enter the picture and we would continue to press them, but the Brazilians must act first.

With respect to wheat he emphasized the need to consider the export position of other countries but agreed to look right away into the prospects for a multi-year agreement.

He endorsed the general lines of the coffee program, emphasizing the importance of production controls by all countries, not only Brazil.

With respect to sugar the President emphasized the desire of United States producers to take over more of the United States market. He thought 50,000 tons, which was about one-third of what was available, was not bad for Brazil in view of the competition.

The President thought it was wrong to think the Eximbank closed to Brazilians, although they do have heavy commitments in Brazil. He said he would seek to clarify this. He asked if they were seeing Mr. Linder and Mr. Black to discuss the Eximbank and IBRD problems and they said they were.

The President went on to say that we were trying our best to protect Latin America with respect to the Common Market. The possibilities for preferences for French and UK African territories was of great concern to us. He personally had talked to Erhard, DeGaulle, Mende, and others about this and would continue to do so. Our real interest in all this, of course, is its effect on Latin America.

Deputy Herbert Levy was asked to comment on the coffee situation by President Goulart. He called attention to the fact that Brazil had carried the burden of world over-production as she was the only country which had kept surpluses off the market. Brazil could not carry this umbrella over the market indefinitely and the burden must be shared on a global basis. He also pointed out the contribution that this policy had made to inflation in Brazil. The President agreed fully with this analysis. [Page 467]Ambassador Gordon mentioned that the Embassy had received the eradication plan two weeks ago and had made preliminary recommendations. It looked promising on first review.

The President commented that he assumed the IBRD problem had to do with the balance of payments situation. The Brazilian Finance Minister agreed.

Foreign Minister Dantas mentioned that they had been discussing the need for measures to implement the Alliance for Progress in Brazil and had been thinking of reviving the joint commission which had once existed. In discussions the day before with Ambassador Gordon, the latter had suggested a more simplified arrangement which they thought now might be preferable. The President suggested they continue to talk to Ambassador Gordon and see what could be worked out. The old joint commission was successful but the conditions and problems are somewhat different now and there are hemispheric organizational arrangements to take into account. We certainly do need better priorities and better-prepared applications from Brazil for specific development projects. The President then asked Mr. Moscoso to comment.

Mr. Moscoso said that we will be happy to study the question of better means for cooperation on our side, but that the first problem is one of effective Brazilian machinery for program coordination, establishment of priorities, and preparation of projects. President Goulart agreed.

Foreign Minister Dantas emphasized that their thought now is not so much one of a joint commission, but rather the permanent availability in Brazil of representatives of the main outside financing agencies, U.S. and international, to work closely together with the new Brazilian machinery which they would establish.

  1. Source: Department of State, Presidential Memoranda of Conversation: Lot 66 D 149. Official Use Only. The meeting took place at the White House. The time of the meeting was taken from the President’s Appointment Book. (Kennedy Library) Approved in S on April 12 and in the White House on April 16.