The Secretary of State to the Minister in Venezuela (Nicholson)
44. The Department is disturbed by the proposed increases in the Venezuelan customs tariff reported in your despatch No. 424 of August 21, 1936, and believes that you should promptly seek an appointment with the Minister of Foreign Affairs and express the hope that the Venezuelan Government will decide to suspend the imposition of any decisive increases in its customs tariff, at least until after the forthcoming Inter-American Peace Conference.17[Page 970]
It is believed advisable that your presentation should cover the following points which should be embodied in a memorandum to be left with the Minister.
- According to information received by this Government, the proposed increases of Venezuelan duties on many products of importation are not large. This Government notes with gratification that duties would be reduced on other products, a number of which figure in trade between the two countries.
- On a considerable number of items, however, which moreover are of importance in American export trade with Venezuela and other countries, extreme increases have been proposed according to reports received by the Department. As examples of the increases so reported may be mentioned the suggested increases on oatmeal, metal furniture, passenger automobiles, radio receiving sets, electric refrigerators, typewriters and cash registers.
- It may be observed that the efforts of liberal forces in this country desiring to prevent the adoption of measures which would impair the full restoration of mutually profitable trade between this country and other nations are greatly weakened when such nations increase barriers against exports of this country’s products. As the Venezuelan Government is aware, legislation was proposed in the last Congress of the United States the effect of which, if enacted, would be to restrict the entry of certain Venezuelan products. The arguments of opponents of this proposed legislation would lose greatly in effectiveness if it were shown that, in the meantime, Venezuela had increased its tariff barriers against American export trade, even if the final tariff revision should not contain all of the extreme increases in duties which, according to current reports, have been proposed.
- This Government is not solely concerned however with the possible adverse effect on American trade of the proposed heavy increases in the Venezuelan customs duties on certain products. It is particularly concerned with the general outlook, both as regards international trade and international relations. At this time of critical difficulties in international trade and relations the announcement by a country of Venezuela’s importance in international trade, of decisive increases in its tariff barriers to such trade would be an unfortunate development.
- This Government fully realizes the difficult problems of trade and finances with which Venezuela, in common with other countries today, must contend, and does not desire to interpose in any way in the efforts of the Venezuelan Government to solve these problems in its own way. The hope is expressed, however, that the Venezuelan Government will decide to suspend the imposition of any decisive increases in its customs tariff at least until after the forthcoming Inter-American Conference for the Maintenance of Peace, at which it is hoped the nations of this hemisphere will have the opportunity of consulting jointly, for the purpose of promoting their mutual interests and of giving effective consideration to the problem of arresting the imposition of barriers to mutually profitable trade.
After study of this memorandum please advise Department by cable if you have any suggestions for change, either in substance or tone. [Page 971] Also, please report briefly by cable, fully by air mail, the course of your conversations.
The reference to the proposed legislation in the memorandum, the result of which, if enacted, would be to restrict Venezuelan exports to the United States, is to the Disney Bill.18
No definite decision has been reached as to whether it may be possible to negotiate a trade agreement with Venezuela, but you may inform the Minister orally that the Department is giving very serious study to the possibility of such an agreement. For your confidential information you are advised that although the Trade Agreements Committee has not passed on the question, an interdepartmental committee has been formed to collect data and study the possibility of such agreement. You may also state orally to the Minister that in the trade agreements thus far concluded by this Government it has been the rule to base reciprocal concessions on the tariff rates which were in effect prior to the negotiations and not on tariffs increased coincidently with or subsequent to conversations looking forward to a trade agreement.