611.3131/109
The Minister in Venezuela ( Nicholson ) to the Secretary of State
[Received June 22.]
Sir: I have the honor to refer to the Department’s instruction No. 184 of June 11, 1937, transmitting a draft memorandum to be presented to the Minister for Foreign Affairs on the subject of a possible reciprocal trade agreement, and to the Department’s telegram No. 37 of June 16, 4 p.m.,18 instructing me to report by telegraph as soon as the memorandum had been presented. For reasons which appeared to me to be obvious, I despatched my telegram No. 69 of June 17, 10 a.m.,18 stating that I believed it would be inexpedient to present the memorandum until the Department had had an opportunity to consider the contents of my telegram No. 68 of June 14, 7 p.m.,18 and my despatch No. 743 of June 15 transmitting the Foreign Minister’s alternate draft of a trade agreement and his accompanying comments.
The Legation has studied with interest the Department’s comments in the body of instruction No. 184 of June 11 relative to the possibility [Page 776] of tariff and import tax reductions on the part of the United States affecting, on the basis of 1935 figures, approximately 67 percent of Venezuela’s total direct imports to the United States. While the Legation has not yet received from the Department any figures on this subject other than those contained in the First Report of the Country Committee on Venezuela, and while it cannot, therefore, make any categorical statements on the matter, it may be observed that the 67 percent of Venezuela’s taxable direct exports referred to would appear, on the basis of available figures, to apply almost exclusively to shipments of crude petroleum. If this is the case, such shipments may be narrowed down for practical purposes to those made by the Mene Grande Oil Company (formerly the Venezuelan Gulf Oil Company), since the two other producing companies in Venezuela, the Royal Dutch Shell and the Standard of New Jersey, send the bulk of their production to the Netherlands West Indies of Curacao and Aruba, respectively, for refining and transshipment.
Assuming that the above reasoning is correct, I would hesitate to bring this matter to the attention of the Foreign Minister at present as an inducement for Venezuela to enter into a trade agreement with the United States, because he has stated to me, as reported in my telegram No. 68 of June 14 [No. 64 of May 21, 6 p.m.],18a that he was not interested in a possible concession in respect to oil. The attitude of the Venezuelan Government in this regard, after considerable study, now seems to be that what happens to shipments of petroleum after they leave Venezuelan shores is a matter which concerns the oil companies and not the Venezuelan Government. Efforts of the latter, as I have reported before, are now directed toward a policy of having refineries established in this country.
I assume that the above mentioned 67 percent of Venezuela’s total direct exports to the United States is based on valuation rather than weight and in this connection I may venture a further remark.
The only document definitely known to accompany oil shipments to the United States from Venezuela is the ship’s manifest, and if total exports are computed on the basis of that document they represent an arbitrary value fixed by the Venezuelan Collector of Customs. It is understood that this arbitrary valuation is approximately twice the actual value of the oil, so that unless otherwise corrected a considerable inaccuracy would creep into the figures for Venezuela’s direct oil exports to the United States. Until further information on this subject is made available to the Legation, I shall not attempt to discuss the question with the Foreign Minister.
Respectfully yours,