832.5151/944: Telegram
The Secretary of State to the Ambassador in Brazil (Caffery)
100. Your telegram No. 194, December 24, midnight. It does not appear that the text of the decree law concerning the sale of export bills and other foreign exchange, as transmitted in your telegram under reference, in itself, is inconsistent with the provisions of the trade agreement. However, it is the opinion of the Department that, in the administration of the decree or any regulations issued pursuant thereto, the provisions of the trade agreement require that no tax be imposed on exchange sold for payment for imports from the United States which is not imposed in connection with payment for imports from every other country including countries with which trade is conducted on a compensation basis. It is also the opinion of the Department that the undertaking of the Government of Brazil, voluntarily and unilaterally communicated to this Government by the Ambassador of Brazil in his note of February 2, 19354 at the time of signing the trade agreement, entitles this Government to expect that the advantages contemplated in the agreement will not be impaired through the operation of exchange control and that the necessary exchange will be made available for payments, when due, for all imports from the United States.
[Page 332]Should you anticipate any action under the decree which would not be in accord with the foregoing you should inform the appropriate officials of the Brazilian Government of the above-mentioned opinion of the Department.