108. Telegram 279836 From the Department of State to the Embassy in Brazil1

279836. Subject: Brazilian Import Restrictions. Ref: (A) Brasília 4685, (B) Brasília 8859, (C) Rio A–151, (D) Rio 4532, (E) Brasília 9036, (F) Geneva 7528.

1. We are increasingly concerned over series of restrictive import measures imposed by Brazil in recent months (Refs A through D) and anticipate raising issue with GOB and in GATT once we have clearer picture of nature and extent of these measures. In general, Brazilian actions appear inconsistent with the spirit of international commitments undertaken in the GATT and IMF to avoid unilateral resort to trade restrictions for balance of payments purposes; some of them may violate specific GATT provisions and bound tariff rates.

2. For example, recently adopted measures regulating public sector imports (Refs B and C) appear to contravene Brazilian obligations under GATT Article XVII (1), subparagraphs B and C, which state inter alia that government enterprises should “act solely in accordance with commercial considerations” in its purchases involving imports. Further, according to reports from Embassy in June (reftel A) new import [Page 306] restrictions/duty increases may affect fresh foods including apples and pears. If so (and this is still unclear to us at this stage) this would constitute impairment of bound concessions. As Embassy is aware, apples and pears presently bound at 37 percent rate, which is scheduled to be reduced to 32 percent once Brazil concludes all GATT Article XXVIII renegotiations.

3. Action: To assist us in developing appropriate course of action re Brazilian measures, Embassy should transmit to Washington and Geneva on priority basis list of products subject to new restrictions and/or duty increases. To extent possible Embassy should also (A) report if any GATT-bound items are affected, (B) ascertain whether exemption of LAFTA items applies to imports from non-LAFTA countries, and (C) determine what time limit, if any, GOB has placed on duration of these measures. Finally, we would appreciate indication from Embassy of relationship between measures reported Brasília 4685 dated June 26 and those mentioned in Rio 4532 of December 9; are measures reported in December same as or in addition to those reported in June?

4. Refs (A) through (E) being repeated to Geneva. Future cables re this subject should also include Geneva as info addressee.

  1. Summary: The Department informed the Embassy of its concern over a series of restrictive measures that Brazil placed on imports. The Department instructed the Embassy to transmit a list of products subject to the new restrictions.

    Source: National Archives, RG 59, Central Foreign Policy File, D740372–0367. Unclassified; Priority. Drafted by Williams; cleared by Slattery and in STR, USDA/FAS, Commerce, and Treasury; approved by Dunford. Repeated to the UN Mission in Geneva, the EC Mission in Brussels, and to Rio de Janeiro and São Paulo. Telegram 4685 from Brasília, June 26, and telegram 4532 from Rio de Janeiro, December 9, are ibid, D740168–0930 and D740357–0334. In telegram 142, January 7, 1975, the Embassy informed the Department that the import restrictions reported in Rio de Janeiro 4532 were in addition to those reported in Brasília 4685. (Ibid., D750006–0795) In telegram 585 from Brasília, January 22, the Embassy informed the Department that it thought efforts to scale back import restrictions should be directed toward specific commodities or trade provisions that constituted a clear violation of the GATT. The Embassy concluded that across-the-board criticisms risked damaging bilateral relations. (Ibid., D750024–0300)