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  4. Document 888

611.3131/186: Telegram

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

Washington, May 7, 1938—4 p.m.

23. For Daniels. The Legation’s despatch No. 988, April 21. A modus vivendi of such extensive scope as that proposed by the Foreign Minister necessarily involves a number of questions of policy as well as of drafting, and the Department believes that it would require some weeks to negotiate and that this could hardly fail to delay trade-agreement negotiations.

However, inasmuch as the Venezuelan Government desires a modus vivendi pending conclusion of the trade agreement in order to avoid legal or policy difficulties in continuing to grant this country most-favored-nation treatment in the interim, the Department is agreeable to this as a strictly temporary measure. The Department would prefer, however, a brief text confined to customs treatment rather than one dealing incompletely with such questions as internal taxes and quotas. The Department of course hopes during the period of the modus vivendi that the Venezuelan Government will consider the broad most-favored-nation provisions covering customs treatment, as also applicable to such matters as quotas, internal taxes, and exchange control.

You may therefore in your discretion propose to the Venezuelan Government the following counter draft of identic notes, mutatis mutandis:

Excellency: For the purpose of formalizing the result of the conversations which I have had with Your Excellency, I have the honor to inform you that the Government of Venezuela is disposed, pending the conclusion of the reciprocal trade agreement which the two Governments have under consideration, to regulate the commercial relations between the two countries by a modus vivendi on the basis of the application of the most-favored-nation principle, in conformity with the following Articles:

  • Article I. Both Governments agree to concede reciprocally unconditional and unlimited most-favored-nation treatment in all that [Page 975] concerns customs duties and all accessory imports, the manner of applying duties as well as the rule and formalities to which customs operations can be submitted.
  • Article II. The provisions of the foregoing Article shall not apply:
    1.
    To the advantages now accorded or which may hereafter be accorded by the United States of Venezuela or by the United States of America to adjacent countries in order to facilitate frontier traffic; nor shall it apply to advantages resulting from customs unions to which the United States of Venezuela or the United States of America may become a party.
    2.
    To the advantages now accorded or which may hereafter be accorded by the United States of America, its territories or possessions, or the Panama Canal Zone to one another or to the Republic of Cuba. The provisions of this paragraph shall continue to apply in respect of any advantages now or hereafter accorded by the United States of America, its territories or possessions, or the Panama Canal Zone to one another, irrespective of any change in the political status of any territory or possession of the United States of America.
    3.
    To articles transshipped through Puerto Rico or the Virgin Islands and imported into Venezuela.
  • Article III. The present agreement shall come into force this … day of . . . . . , 1938, and shall remain in force for a period of one year or until superseded by a more comprehensive commercial agreement, or until denounced by either country by advance written notice of not less than 30 days.

It is understood that a report of this modus vivendi shall be submitted to the National Congress of Venezuela during its next sessions, in conformity with the provisions of Article XVII of the Tariff and Customs Law of Venezuela.

Accept, Excellency, the renewed assurances of my highest consideration.

It will be observed that the Department has utilized as much as possible of the Foreign Minister’s draft; also, that the Virgin Islands have been included with Puerto Rico at the end of Article II, in order that goods imported into Venezuela, originating in both these territories, would be exempted from the 30 percent surtax. While the Department desires the inclusion of the Virgin Islands, you may, should the Foreign Minister object, eliminate reference to that territory in the modus vivendi.

Hull