611.3131/111
Memorandum by the Second Secretary of Legation in Venezuela (Villard) of a Conversation With the Venezuelan Minister for Foreign Affairs (Gil Borges), July 15, 193719
In an informal discussion of the proposed reciprocal trade agreement between the United States and Venezuela, the Foreign Minister stated that given a certain amount of good will on both sides, he was confident that an accord might be reached in spite of the differences between the two drafts. He did not, however, display the same eagerness and interest in connection with the agreement which he had shown at the initiation of discussions; he pointed out that the United States was already receiving most favored nation treatment from Venezuela and that the recent appreciation in the exchange rate of the bolivar amounted to a substantial reduction in the customs duties on American products. He therefore felt that from the point of view of the United States there would actually be nothing further to be [Page 780] gained by a trade agreement, and it was obvious that he saw little advantage to Venezuela in such a treaty.
I referred to the general purposes and underlying philosophy of Secretary Hull’s trade agreements program, and to the desirability of Venezuela becoming a party to the movement for international peace and understanding which it represented, to which Dr. Gil Borges replied that while he personally subscribed to those doctrines Venezuela was compelled to face the world trade situation realistically. Citing the recent commercial agreement between Colombia and Germany20 as an example, he stressed the present tendency toward barter or compensation arrangements and said that Venezuela could not afford to overlook such modern practices in international trade. He said that Venezuela’s policy today was to bring its commercial agreements up to date and that considering the nature of the national economy it would be necessary to look toward methods of trade similar to those adopted by other countries.
The Minister then said that he saw only one serious difficulty in the way of reaching an understanding with the United States in the matter of a trade agreement—that of the unconditional most favored nation principle. Speaking very confidentially, he said that in the case of Germany and Italy, which imposed various restrictions and limitations on Venezuelan trade, he was preparing to abandon the most favored nation principle even though it might involve abrogating existing treaties, because he did not feel his country was justified in according most favored nation treatment to countries which did not reciprocate. In the case of agreements with other countries, Venezuela proposed to revise the terms of those agreements or else enter into new treaties which instead of mentioning most favored treatment would contain barter or compensation provisions. While the United States did not impose any restrictions on Venezuela’s commerce, it was a question as to how far he could go in entering upon a reciprocal trade agreement with it based on the unconditional most favored clause, since that would be in conflict with the policy to be adopted toward other countries.
Dr. Gil Borges said that he wished to make it clear that his attitude was not due to any disinclination to proceed with the proposed reciprocal agreement, or to any “ulterior motives” affecting the United States, but that it was based entirely on the existing financial, commercial and economic situation in Venezuela. This situation, he said, had peculiarities which had to be taken into account and that in view of the realistic commercial policy which his country was now committed to, he could do no less than assume a position in keeping with the facts.