611.3231/7–2348: Telegram
The Ambassador in Brazil ( Johnson ) to the Secretary of State
817. Congress is not ratifying GATT but approving signature protocol for provisional application and authorizing the 40 percent tariff readjustment (urtel 550, July 21). Finance committee Chamber Deputies July 21 approved above which should now be sent to floor for plenary approval. Such approval expected rapidly although some possibility industry and commerce committee might first be called upon for opinion. Subsequent Senate approval also required. Confidentially informed Congressional leaders promised government to obtain approval by end month. Brazilians feel that as exchange notes does not terminate 1935 agreement but makes it inoperative while both countries contracting parties to GATT, existing rates under 1935 agreement not affected until GATT provisionally placed into force here.
If legislation passed in closing days of month possibility exists insufficient time to publish new rates by August 1 but government could find ways and means of making them applicable to goods in customs on August 1.
Conversation with Lopez Rodriguez revealed Brazilians do not feel obligated to remove immediately existing inconsistent discriminatory taxation (consumption tax) under text (B) of protocol but only when GATT or Habana charter1 are ratified and come into full effect. Brazil nevertheless intends to remove such discriminatory taxation as [Page 403] soon as action can be obtained from Congress but this does not appear likely until next year.