The Minister in Venezuela ( Nicholson ) to the Secretary of State
[Received August 25.]
Sir: I have the honor to enclose a copy of a memorandum regarding a conversation which the Secretary of the Legation, Mr. Villard, recently had with the Minister for Foreign Affairs in respect to the increases which it is proposed to make in the Venezuelan customs tariff insofar as such increases affect American products, particularly passenger automobiles.
These increases are part of a general upward revision of the import duties, amounting to two per cent for most products but to very considerably more in certain instances, which accompany the new tariff bill submitted to the current extraordinary session of the national Congress. Pending a detailed study of the bill which is being made by the Commercial Attaché, it is not possible to affirm that the new rates of duty would be directly discriminatory against American trade, but it is obvious that they would fall heavily on many products [Page 967] which are the manufacture of the United States. While in some cases a reduction in duties is contemplated, such reductions for the most part neither compensate for the increases insofar as American products are concerned, nor do they affect importations of greatest importance to American trade with Venezuela.
A preliminary study of the proposed law reveals, for example, an increase of 530 per cent in the duty on passenger automobiles in the lowest price class, with proportionate increases in the rates on higher priced cars; an increase of 1,777 per cent in the rates on radio and telegraph transmitters and instruments for electrical measurement; an increase of 1,309 per cent on electrical transformers; an increase of 964 per cent on typewriters and accessories and calculating machines; and an increase of 666 per cent on cash registers. Other increases proposed are: machines, apparatus and accessories not otherwise specified, from 27 to 609 per cent; electric refrigerators from 410 to 538 per cent; storage batteries, and cinematographs, accessories and exposed films, 155 per cent; metal furniture, 126 per cent; and radio receiving sets of the 25–50 kilo category, 104 per cent.
Reductions amounting to 50 per cent are provided for silk hosiery and silk clothing; 57 per cent for rayon clothing; 43 per cent for certain classes of fresh fruits; and 29 per cent in the case of apples.
While the memorandum enclosed herewith shows that the Foreign Minister has disclaimed any intention of his Government to use these increased rates for bargaining purposes in connection with the suggested negotiations for a reciprocal trade agreement between the United States and Venezuela, it is apparent that an upward revision in many items imported from the United States has been proposed on the very eve of such possible negotiations. From a confidential but reliable source, moreover, I have learned that this “bargaining plan” was probably in the mind of the late Minister of Hacienda, Dr. Alberto Adriani, who died a short time ago while still occupied with drafting the tariff bill in question.
It is clear that in any trade agreement that might be negotiated between the two countries, Venezuela would have more to offer to the United States in respect of tariff reductions—even without the proposed increases—than the United States would be able to offer to Venezuela. For this reason it might be argued that the Venezuelan position in the matter of the new tariff rates is a relatively strong one and that under the circumstances Venezuela would have little to gain by entering into reciprocal trade negotiations with the United States. In this connection I may observe, however, that the Venezuelan Government is apparently anxious to negotiate such an agreement for the reasons mentioned in my despatch No. 271 of May 7, 1936.16 Since [Page 968] that date, the Foreign Minister has several times brought up the subject and, I feel sure, would be keenly disappointed if the Venezuelan tariff should prejudice the success of any possible negotiations in the matter of a trade agreement.