611.3131/171

The Minister in Venezuela ( Nicholson ) to the Secretary of State

No. 910

Sir: I have the honor to refer to my cablegram no. 4 of January 18, 8 a.m.,2 submitting additions to the list of Venezuelan products to be considered under Article I of the projected Reciprocal Commercial Agreement between the United States and Venezuela. A copy of the Venezuelan list with translation is submitted to the Department herewith.2

In reply to a memorandum from this Legation, the Venezuelan Foreign Office transmitted with the list of Venezuelan products, a memorandum outlining the conditions under which the Minister of Hacienda has been authorized to include petroleum and its derivatives in the Venezuelan list of products to be discussed during the negotiations. Copies of these memoranda are also enclosed.

The American producers of petroleum in Venezuela have made persistent representations to the Foreign Office in an effort to persuade the Venezuelan Government to include petroleum and its derivatives on the list. It will be noted that petroleum has been included for discussion in bargaining only under certain conditions. Dr. Gil Borges, the Minister of Foreign Affairs, stated to me that every effort is being brought to bear by the Venezuelan Government upon the petroleum companies to persuade them to establish refineries in Venezuela. He also stated that it was the opinion of government officials that Venezuela should receive a portion of the benefits that have tended to increase to such a large extent the prosperity of the islands of Aruba and Curacao through the refining of Venezuelan petroleum.

Respectfully yours,

Meredith Nicholson
[Page 957]
[Enclosure 1]

The American Legation to the Venezuelan Ministry of Hacienda

Memorandum

1.
The Government of the United States of America does not approach the question of granting or requesting duty concessions on the basis of a narrow balancing of volume of trade involved in concessions granted and concessions obtained.
2.
The policy of the Government of the United States in negotiating trade agreements is to obtain the reduction or amelioration of restrictive barriers to international trade and thereby expand trade along natural lines. In considering possible trade agreement concessions it has in general followed the rule of principal supplier. In selecting the products included in its tentative list for submission to the Venezuelan Government the United States Government was largely guided by its position in regard to such products in the Venezuelan market. It is to be expected that the Venezuelan Government will include in its list, now being prepared, those products of which Venezuela is a principal supplier in the United States market and with respect to which it desires to maintain or increase its position in that market.
3.
Crude petroleum and fuel oil are among the principal exports of Venezuela to the United States and consequently it would seem desirable that these products be included in the preliminary lists. Such procedure would enable the Government of the United States to make a public announcement of all articles with respect to which concessions might be considered and thereby obviate any unnecessary delays should the question of crude petroleum and fuel oil be raised at a later date.
[Enclosure 2—Translation]

The Venezuelan Minister for Foreign Affairs ( Gil Borges ) to the American Minister ( Nicholson )

Memorandum

Memorandum of the Minister of Foreign Affairs for His Excellency the Minister of the United States, with respect to the inclusion of petroleum exported directly from country to country in the reciprocal trade treaty which it is intended to conclude.

The Ministry of Hacienda has been authorized to include petroleum and its derivatives in the list of Venezuelan products of the soil or of industry of Article I of the projected Reciprocal Trade Treaty between [Page 958] Venezuela and the United States, under the following conditions and reservations:

1.
Only those petroleums and their derivatives shall be understood to be included in the list and subject to the terms of the treaty which are exported directly from Venezuela to the United States.
2.
Those petroleums and their derivatives which leave Venezuela for Curacao, Aruba or any territory other than that of the United States, and which cannot, in consequence, be considered as a direct export from country to country, shall not be included under the terms of the treaty.
3.
Petroleum and its derivatives shipped from Venezuela shall not be considered to be included in the trade balance between the two countries for the purposes of demanding advantages or favors from Venezuela equivalent to advantages or favors which may be granted in the United States to the importation and consumption of the said petroleum. Therefore, Venezuela shall not be obliged to grant tariff reductions nor any other favor or advantage to the importation of American products in return for favors, reductions or advantages granted in the United States to the importation and consumption of petroleum and its derivatives.
4.
As every favor or advantage granted to the importation and consumption in the United States to petroleums exported directly from Venezuela shall be an added gain for the petroleum companies, the inclusion of this product in the treaty, is subordinated to the condition that the petroleum companies which exploit the product agree with the Government of Venezuela in refining 50% of the petroleum exported in this country. This proportion may be reached gradually within the period and in accordance with such conditions as may be stipulated between the National Government and the Companies.

  1. Not printed.
  2. Not printed.