And of the works of the authors themselves

481

Nova Economia_Belo Horizonte_25 (3)_477-500_setembro-dezembro de 2015

 

Luiz Felipe Bruzzi Curi_Danilo Barolo Martins de Lima

in the world market and a notable decrease in trade and 

financial flows. The crisis also revealed changes in the 

framework of the world economy. Countries that were 

dominant before, like England, experienced a relative 

decline, while others, such as Germany, which was 

recovering from a serious crisis after the World War 

I

, 

began to emerge as important players in international 

trade (

ABREU

, 1990, p. 73).

5

Germany in particular began competing for new or 

unexplored markets, seeking to obtain clearance trade 

agreements.

6

 This policy was vehemently opposed by the 

efforts of 

U.S.

 foreign policy, which, in this context, sought 

to establish trade agreements with Brazil and several 

other countries, guided by the “most favored nation 

clause”,

7

 in order to ensure its economic and political 

dominance in those markets that were considered 

strategic to American interests.

This was also a critical moment for the Brazilian 

economy in particular. The global economic crisis 

and the Depression of the 1930s coincided with the 

aggravation of a crisis in the coffee-producing economy, 

which had started in the previous decade. The external 

shock on the Brazilian economy affected the balance of 

payments mainly through a sharp fall in export prices 

(not offset by increased export volume) and through 

the interruption of foreign capital inflows. There was 

a substantial decline in national income, yet relatively 

mitigated by the effects of coffee valorization policies  

and the favorable performance of the emerging  

domestic industry(

ABREU

, 1990, p. 74).

Such an economic imbalance occurred in parallel 

with important political transformations that were not 

restricted to Brazil, but rather global phenomena, as was 

the case of many regime shifts in several countries, such 

as the rise of fascism in Europe and of authoritarian 

regimes in Latin America.

8

 

The Brazilian Revolution 

of 1930 opened up new possibilities for change, as it 

represented a fracture in the hegemonic position of the 

coffee oligarchy, allowing for a new political arrangement, 

in which no dominant sector possessed the requirements 

to immediately establish its prominence. The early 

years of the 1930s were of great instability, with different 

projects disputing the guidance of national economic 

policies (

CORSI

, 2006, pp. 46-47).

It was against this historical background that 

the United States took the initiative, in 1933, to start 

negotiations for a bilateral trade agreement with 

Brazil, based on the most favored nation clause. The 

expected concessions from the Brazilian side included 

the reduction of import duties on an extensive list of 

products, including durable industrial consumer goods. 

The United States, on the other hand, would keep coffee 

on the list of products exempt from taxation, and grant 

tariff reductions for some items, mostly primary goods.

9

The Brazilian government initially did not show 

great interest in signing the Agreement, but eventually 

gave in to 

U.S.

 pressure. In order to obtain the concessions 

demanded, the 

U.S.

 Department of State threatened to 

impose unilateral restrictions of trade to Brazil and 

to establish a tax on Brazilian coffee (

ABREU

, 1990, p. 

74

). The Agreement was negotiated in secrecy by the 

plenipotentiary representative of Brazil in Washington, 

Ambassador Oswaldo Aranha, and the 

U.S.

 Secretary of 

State, Cordell Hull, and it was signed on February 2nd 1935.

According to the Brazilian Constitution of 1934, 

once signed, the Agreement would have to be ratified 

by Congress to take effect. As the Brazilian government 

fell under pressure from the 

U.S.

 State Department for 

the Treaty to be quickly approved, the Agreement had 

to be publicly revealed. The process of its parliamentary 

---

Roberto Simonsen and the Brazil-U.S. Trade Agreement of 1935 

Nova Economia_Belo Horizonte_25 (3)_477-500_setembro-dezembro de 2015

482

ratification then provoked a broad and heated  

public debate in the press, in the Chamber of Deputies,  

in class-based associations as well as within the State  

and its organs.

The debate in question was a conflict between the 

advocates of trade liberalization and the proponents of 

protectionist policies, thus resulting in the articulation 

of interest groups that took their stances based on class 

interests and on interests of other nature, which became 

more clearly defined in the course of the debate itself. It 

also led to the formulation of divergent and antagonistic 

national projects which were then brought to public 

attention. After a long impasse, the direct action of 

President Getúlio Vargas himself pressuring the opposing 

industrial leaders was necessary to obtain the ratification 

of the Agreement, which happened on December 24th, 1935.

The historiography that has dealt with the 1935 Trade 

Agreement has its starting point in an article by D’Araújo 

and Moura (1978). Based on documents related to the 

debate in Congress, the authors focused primarily on 

the actions of the industrial class, which was against the 

ratification of the agreement. The central thesis is that 

the debate about the Treaty would have served as “(...) 

an instrument to denounce the government’s arbitrary 

actions and the excessive control by Vargas of the 

information and decisions that were taken” (

D’ARAÚJO 

& MOURA

, 1978, p.70).This debate is also characterized by 

the authors as an episode that evidenced the political 

articulation of industrial leaders around their specific 

class interests, coupled with nationalist positions.

To Leopoldi (2000), the Agreement was designed to 

essentially meet the coffee sector interests. However, such 

a “short-term defeat” of industrial interests served to 

consolidate the positions of the industrialist leaders in 

Congress, making their discourse more solid, as well as 

enhancing their involvement with  

foreign trade matters and their articulations with 

nationalism (

LEOPOLDI,

 2000, pp. 93-152). The Agreement 

was rejected by the representatives of industry in 

Congress, due to its marked free-trade orientation and 

to the concessions to manufactured products to be 

imported from the United States.

According to Moura (1980), the Agreement appears as 

one of the events that tested the principle of “pragmatic 

equidistance” in the conduct of Brazilian foreign policy. 

The opposition of internal interests (agriculture and agro-

exporting trade on one side versus domestic industry 

on the other) and external (

U.S.

 and Germany) was here 

translated into two fundamental types of trade policies, 

the so-called “protected trade” and free trade, which have 

become poles of a general controversy (

MOURA

, 1980, p. 

69

). Conforming to him, most of the mentors of federal 

economic policy and advocates of the agro-exporting 

economy shared a classical liberal thought.

The Agreement represented to Leme (1976, p. 296) a 

moment in which the State positioned itself in complete 

opposition to what was then advocated by Brazilian 

industrialists and notably by Roberto Simonsen. By 

that time, industry leaders had come to a set of general 

guidelines for foreign trade. They aimed at overcoming 

economic backwardness and financial dependence on 

the “rich countries”, through the pursuit of progress 

and rationalization of agricultural production and the 

protection and development of domestic markets for the 

developing industry.

In disagreement with previous studies, Fonseca 

(2003, p. 141) sees the Agreement of 1935 as an example 

of government support given to the industrial sector 

in order to encourage the import of capital goods. The 

author acknowledges that some industrial leaders 

---