611.3131/99: Telegram
The Minister in Venezuela (Nicholson) to the Secretary of State
[Received 3:52 p.m.]
34. Department’s telegram No. 20, April 21, 5 p.m. In an interview yesterday the Foreign Minister stated that a preliminary study of the exchange control article caused him to fear that provisions as now worded would prejudice the entire agreement. He said that while this opinion remained to be confirmed by other interested government departments, he felt sure that Venezuela could give no assurance that exchange would be made available for all imports of American goods because the country is dependent for its supply of foreign exchange upon the daily sales of drafts by the oil companies. In view of the unpredictable fluctuations in the available amount thereof he said the Venezuelan Government was averse to entering into any undertaking with respect to exchange transactions and in the event of an exchange control probably would be disinclined to impose any such measure as a quantitative limitation on the importation of American goods for the purpose of protecting the value of its currency.
When asked what form of assurance he might consider giving to the effect that the other provisions of the proposed agreement would not be rendered ineffective through the operation of an exchange control, the Minister said that the matter was predicated upon a condition which did not exist and which was contrary to [Page 768] Venezuela’s experience, or, he said, that Venezuela was one of the few countries in the world which did not impose quotas, license systems, or other trade barriers and that since the proposed general provisions seemed to deal chiefly with these subjects he felt the negotiations were being needlessly compulsory.
The Minister then volunteered to submit a tentative alternate draft of a trade agreement embodying the views of the Venezuelan Government in short and concise form. Although it was made clear to him that the reciprocal trade agreements negotiated by the United States are generally standardized as to form, the Minister said that he thought it would be unwise to proceed with negotiations until he had had an opportunity to draw up such a draft and to conduct an exchange of views thereon.
In reply to my representations on the contents of the Department’s telegram No. 20 accompanied by an aide-mémoire for greater clarity, the Foreign Minister said that the most-favored-nation principle was already being extended to the United States in accordance with the Legation’s request last December, the results of which were reported in despatch 579 of January 12, 1937.12 While expressing his approval of the principle, he was obviously unwilling to enter into any official commitment that it would constitute the basis for negotiations until he had drawn up the alternate draft referred to.
While the Venezuelan Government has previously stressed its desire to negotiate a trade agreement I believe that its examination of the proposed general provisions has at this particular time a fundamental difference in the viewpoints of the two governments as to the form such an agreement shall take. Owing partly to its lack of technical experience and to its policy of confining the provisions of commercial agreements to the simplest terms, I doubt whether the Venezuelan authorities can be prevailed upon to accept any provisions such as those embodied in the exchange control article.
- Not printed.↩