611.3131/108
The Secretary of State to
the Minister in Venezuela (Nicholson)
No. 192
Washington, July 14, 1937.
Sir: Reference is made to your despatch No. 743
of June 15, 1937, transmitting a copy with translation of an alternative
draft, dated June 1937, of general provisions of a reciprocal trade
agreement as proposed by the Venezuelan Minister for Foreign
Affairs.
You are requested to present to the Minister a note incorporating the
substance of the enclosed draft, and at the same time to convey to him
orally the substance of the second paragraph of the Department’s
instruction No. 184 of June 11 last. The Department requests also that
you report by telegraph the date of presentation together with any minor
changes in the text of the note which you might have considered
appropriate, as it is the intention of the Department to present a copy
of the note to the Venezuelan Minister in Washington following
presentation in Caracas.
With reference to your despatch No. 747 of June 18, 1937, the Department
notes that you question the importance of a concession with respect to
petroleum in a reciprocal trade agreement with Venezuela. It may be
stated in this regard that, as you are probably aware, Government
officials in Venezuela and the Venezuelan Minister in Washington have at
various times indicated the definite interest of the Venezuelan
Government in import taxes imposed by this Government upon Venezuelan
petroleum. It would seem, therefore, that notwithstanding
representations that may have been made to the Legation appearing to
indicate an indifference towards possible concessions by this country in
connection with the importation of Venezuelan petroleum, the matter is
deemed by the Venezuelan Government to be of sufficient significance in
the Venezuelan economy to cause the Government of that country to attach
considerable importance to such a concession in any possible
negotiations for a trade agreement.
Very truly yours,
For the Secretary of State:
Sumner
Welles
[Enclosure]
Draft of a Note To Be Presented to the
Venezuelan Minister for Foreign Affairs
Excellency: I have the honor to inform Your
Excellency that I have transmitted to my Government the alternative
draft general provisions of a possible reciprocal trade agreement
between the United States and Venezuela which Your Excellency was
good enough to present
[Page 778]
to
me on June 14 last, and to say that my Government has directed me to
make the following statement:
It has been gratifying to the Government of the United States to
learn from the draft general provisions dated June 1937, and
recently submitted by the Venezuelan Government, that the
governments of the two countries are in accord with respect to a
substantial part of the provisions of a reciprocal trade agreement.
The Government of the United States has been particularly pleased to
find in the first part of Article VI of the draft general provisions
a recognition of the most-favored-nation principle as applied to
imports into the two countries. It has also been pleased to note
that Article IV provides for national and most-favored-nation
treatment with respect to internal taxes and charges.
It has been noted, however, that the third limitation placed upon the
first part of Article VI of the draft general provisions submitted
by the Venezuelan Government would appear to render the
most-favored-nation principle with respect to imports non-applicable
in “situations created by trade agreements whereby one of the
contracting parties obtains from another country advantages in
return for equivalent concessions.” It is assumed, however, that in
drafting Article VI of the draft general provisions, the Venezuelan
Government did not intend to propose that the United States would
not be given the benefits granted to other countries by Venezuela in
trade agreements with them, for the United States has in the recent
past been given assurances by the Venezuelan Government of its
disposition to continue to grant to the United States unconditional
most-favored-nation treatment. Further evidence to support this
assumption is found in the position assumed by the Venezuelan
Government at the international conference at Montevideo in 1933 and
at the recent Inter-American Conference for the Maintenance of Peace
at Buenos Aires, endorsing and supporting the principle of equality
of treatment in international trade.
As the Government of the United States has previously indicated, it
will be disposed to make a preliminary public announcement
concerning a trade agreement with Venezuela and to discuss the
schedules, as well as details of the general provisions, of such an
agreement as soon as the Venezuelan Government has agreed to accept
the unconditional most-favored-nation principle as a basis for the
general provisions.
The Venezuelan Government is, of course, aware that the Government of
the United States has in the past four years been urging the
reduction of restrictions upon international commerce and the
removal of inequality of treatment of the kind arising from
exclusive bilateral agreements, the benefits of which are confined
to the parties entering
[Page 779]
into the agreements. As its part, the Government of the United
States has developed a program of reciprocal trade agreements based
upon the unconditional most-favored-nation principle. Since 1934,
the United States has concluded sixteen such agreements, and at the
present time it is negotiating and exploring the possibilities of
additional agreements. It has been the policy of the Government of
the United States to extend the concessions granted in these
agreements to other countries of the world provided that they are
not discriminating against American commerce.
It is of great moment at this time that important commercial nations
such as Venezuela continue to, give support to the liberal forces of
the world which are today endeavoring to widen the adoption of the
policy of equality of treatment as an indispensable basis of any
substantial and permanent improvement in world commerce and in
international good-will, as contrasted with a policy of conditional
treatment, involving discrimination, ill-feeling, and unfavorable
reactions upon the countries providing discriminatory treatment. The
Government of the United States would for this reason, as well as
because of the bearing upon a reciprocal trade agreement between the
two countries, particularly welcome the continued cooperation of
Venezuela in the efforts which the United States is making towards
the objective of improving the condition of international
commerce.
