The Minister in Venezuela ( Nicholson ) to the Secretary of State

No. 271

Sir: I have the honor to inform the Department that on May 6 the Minister for Foreign Affairs called upon me at the Legation to express his readiness to negotiate a reciprocal trade agreement between Venezuela and the United States.

Mr. Gil Borges explained that prior to leaving Washington early this year, he had discussed the subject with Mr. Henry F. Grady, Chief of the Division of Trade Agreements, but that in view of the fact that most of Venezuela’s products now enter the United States without tariff restrictions, it had been decided that there was no urgency in the matter. At the outset of his conversation with me, however, the Minister for Foreign Affairs introduced the topic of certain oil legislation now pending in the United States Congress, and it was clear that recent developments in that connection had led him to set forth the desire of the Venezuelan Government to enter into negotiations for a trade agreement without further delay.

The pending oil legislation to which the Minister referred consisted of Senate Resolution 2106 of February 28, 1935; House Resolution 10483 of January 22, 1936,1 to provide revenue from the importation of crude petroleum and its products; and House Resolution 12161 of April 3, 1936, to impose taxes on fuel oil. While he expressed himself as unprepared technically to interpret the provisions of the bills in question, and doubtful as to whether they would pass at the present session of Congress, it was obvious that he felt some concern as to the possible effect of such legislation on the oil industry of Venezuela and, particularly, on the royalties received by the Venezuelan Government from American oil companies operating in this country.

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Without going into details, Mr. Gil Borges indicated that his object in negotiating a reciprocal trade agreement would be to safeguard the Venezuelan oil industry from possible adverse legislation in the United States, and that his Government would be satisfied if the status quo could be preserved. Asked as to the concessions which the United States might expect from Venezuela, he replied that he had not yet devoted sufficient study to the present Venezuelan tariff laws, but that he was aware of the fact that duties on many products imported from the United States were considered high. It is my opinion that, should negotiations for a trade agreement be undertaken, the Venezuelan Government might be disposed to grant more favorable treatment for such American products.

The Foreign Minister also mentioned that a general revision of Venezuela’s trade policy would probably take place in the near future, and that he intended to negotiate with various foreign countries temporary or provisional agreements based on the principle of “buy from those who buy from us.” While he did not specify the exact nature of the agreements he had in mind, it seems likely that he plans to introduce a system of barter or clearing agreements in some form, which nevertheless would be wholly temporary in character and adjusted from time to time as world conditions changed. The desire to negotiate a reciprocal trade agreement with the United States was, however, uppermost in his mind, and he made it plain that he was prepared to enter into such negotiations immediately.

I should be glad if the Department will instruct me as to what reply I may make to the Foreign Minister on this subject. I should also appreciate it if the Department would forward for the Legation’s information copies of the pending bills referred to above.

Respectfully yours,

Meredith Nicholson
  1. Introduced by Wesley E. Disney, Representative from Oklahoma; Congressional Record, vol. 80, pt. 1, p. 941.