831.24/1040
The Ambassador in Venezuela (Corrigan) to the Secretary of State
[Received October 19.]
Sir: Referring to the proposal to simplify our export controls with Latin America through modification of the Decentralization Plan, as outlined in the Department’s circular airgram of August 23, 7:00 p.m.,33 supplemented by circular telegram of August 31, 4:00 p.m.34 and subsequent communications, I have the honor to summarize below the developments in Venezuela from the time the original proposal was submitted to the local authorities on September 4, to the issuance of the Ministerial Decree of October 5 by which the Venezuelan modified version of the Department’s proposal was adopted to become effective October 15.
On receipt of the Department’s circular telegram of August 31, 4:00 p.m., instructing the Embassy to propose “Alternative 3” to the Venezuelan authorities for consideration and possible adoption, Mr. Groves, Counselor for Economic Affairs, arranged an appointment for September 4 with Dr. Uslar Pietri, Minister of Finance, and Dr. González-Gorrondona, President of the Import Control Commission. At this conference, the Department’s proposed modification was outlined verbally, and a memorandum (dated September 3) setting forth the plan in some detail was left with the two officials; a copy of this memorandum, and of the memorandum of conversation dated September 4, are attached as enclosures Nos. 1 and 2.35
After one or two intervening conversations with the import control authorities, designed to expedite their reply, a memorandum was received from Dr. Gonzáleiz-Gorrondona on September 14, in which the Commission expressed willingness to release from control a list of some 59 items of the Venezuelan import schedule which—with two or three exceptions—would doubtless be included among our list of general license products, the other products which we presumably would release from control, the Commission indicated it wished to retain under import permit requirement. Dr. González-Gorrondona’s memorandum, a translated copy of which is attached as enclosure No. 3, was transmitted to the Department in summary form in the Embassy’s urgent telegram No. 847 of September 17, 9:00 p.m.—copy of which is attached as enclosure No. 4.
[Page 304]In subsequent conversations relative to administrative details of the new scheme, the Commission stated that the new plan would be made operative by October 1 at the latest, as indicated in Embassy’s telegram No. 866 of September 22, 9:00 p.m., a copy of which is attached as enclosure No. 5. In the latter telegram, the Import Control Commission’s decision was reported, to make the requirement of import permits applicable to imports from all countries, in order to eliminate the question of discriminatory treatment which might otherwise arise.
It was not, however, until October 5 that the official Resolution of the Minister of Hacienda was published (Official Gazette No. 21,222—October 5, 1943), announcing the modification in the import control procedure to become effective October 15. In this decree a list of the fifty-nine (in whole or in part) tariff positions for which import permits would not be required, was included; a translation of the Ministerial Resolution of October 5 is attached as enclosure No. 6.
The Import Control Commission has informed the Embassy, and the public through the daily press, that the importation of materials from the United States remaining under estimate of supply will continue to require the same documentation after October 15 as hitherto. In addition, however, the importer after October 15 will be required to present copy No. 6 of the import recommendation when clearing these shipments through customs. The importation of articles under general license in the United States will require the Venezuelan import permit, for which purpose the Commission will continue temporarily to use the import recommendation form as hitherto, copy No. 6 of which will be returned to the importer to serve as the permit for clearance of goods through the Venezuelan customs (it is reported that a substantial quantity of these forms was printed and they will continue to be used on all controlled shipments from the United States in order to be sure that all forms are consumed, since they are sold at 50 céntimos (U.S. $0.15) per set.) A new and simpler form has been prepared for use as an import permit on shipments arriving from other countries.
Regarding import recommendations that have been approved hitherto by the Import Control Commission and the Embassy for goods now placed under general license, the Commission stated that such goods will be cleared through Venezuelan customs on the basis of the approved copy of the import recommendation held by the local importer, regardless of when they may arrive or when the recommendation was issued.
As a result of a press conference to announce the change in import control procedure, held by the Minister of Finance and the President of the Import Control Commission on October 5, the Caracas daily [Page 305] papers of October 6 published the Ministerial Resolution and carried considerable comment regarding the change. El Universal, a leading Caracas daily, carried an account of the conference in which the Minister explained the Government’s principal reasons for retaining import control over many products which the United States was now exempting from export control. In his statement to the correspondents the Minister explained that the additional import control was intended (1) to give preference to the importation of the more essential products, (2) to avoid the importation, at high prices, of excessive quantities of less essential or luxury merchandise, which might then, with an early termination of the war, be dumped on the internal market and cause a serious disturbance of the country’s economic equilibrium and delay the postwar return to more normal conditions. He stated that the import control system would be elastic in operation, and could be modified as conditions required. The Minister also stated that the granting of import permits would be based on imports of the applicant in the year 1939. A translation of the article appearing in El Universal of October 6 is attached as enclosure No. 7.
Despite the assurances given by the Minister of Finance in his press conference that the “import permit” system will be administered with “elasticity”, and despite the other reasons based on “national interest”, advanced by the Minister for this renewed control of imports, there is much misgiving and skepticism in Venezuelan trade circles regarding the near-term outlook under the new system. Fears are expressed that the welfare of the mass of consumers, who are dependent on imports for so much of what they need, will be sacrificed for the advantage of certain special interests; evidence of this fear is indicated in the letter of September 23 from the directors of the National Druggists Association to the Board of Directors of the Caracas Chamber of Commerce, in which the druggists request the cooperation of the Chamber in accomplishing the elimination of “import recommendations” as soon as practicable “in order to facilitate the better development of the country’s commerce, at present seriously handicapped by the restrictions imposed by the Import Control Commission”. A translated copy of the letter from the drug association directors to the Board of the Caracas Chamber of Commerce is attached as enclosure No. 8.
Evidence obtained through the daily press and through private channels indicates that the sentiment in favor of removing trade restrictions, as voiced by the directors of the drug association, are widely shared by representative business interests throughout the country. This is readily understandable when it is recalled that the consuming needs of the population in manufactured articles must be met very largely through importation of foreign products, the great portion of which in recent years have come from the United States.
[Page 306]As the Minister of Finance admitted in his press conference of October 5, it appears that the Venezuelan authorities did not consult the representative trade interests of the country in determining the Government’s policy toward import trade control. This fact occasioned much speculation and considerable resentment in the daily press, the more so since the policy of the United States authorities looking to the removal of trade controls as rapidly as possible, had been widely publicized throughout the country. Typical of the sentiment prevailing in trade circles, prior to the announcement of the Government Resolution of October 5, was the statement appearing in the important Caracas daily La Esfera of October 1, in which the paper says, in effect:
“It was still impossible for us yesterday to obtain any information about the new system of control of imports from the United States. As we have already announced, the Caracas Chamber of Commerce has asked the Import Control Commission for an opportunity to discuss this matter. Yesterday the Commission reassured us that only when the Ministry of Finance was ready could this information be obtained. And so it still is not possible to inform the public about a matter of such interest to all Venezuelans.”
A translation of the brief La Esfera statement is attached as enclosure No. 9.
In view of the widespread Venezuelan business sentiment favoring relaxation of trade controls, it may be expected that the responsible Government authorities will be subjected to considerable—and increasing—pressure as time goes by, to relinquish the extensive control over imports which the Government is now instituting. Nevertheless, from the tenor of press statements, and explanations given to a member of the Embassy staff by responsible Venezuelan officials, it appears probable that the Government’s intention is to retain a fairly extensive control of imports, at least for the duration of the war and probably for the subsequent transition period as well. It may be hoped that some relaxation in the restrictions now maintained on certain classes of commodities from the United States in the semi-essential, or actually even in the essential category, may be relaxed, on the basis of local trade pressure and the informal intervention of the Embassy with the control authorities; typical of this category of products are pharmaceutical preparations, the importation of which is now vary-ingly restricted and not infrequently prohibited altogether.
With the requirement of prior permits on importations from all countries now imposed—except for the list of unrestricted articles enumerated in the Resolution of October 5—(since the Ministerial Resolution of March 15, 1943, applying the Decentralization Plan, [Page 307] Venezuelan controls have applied only to imports from the United States) there would appear to be no discrimination, at least theoretically, in the Venezuelan treatment of trade with various countries. But such a large percentage of Venezuelan imports now come from the United States that the application of the import permit system may involve a de facto discrimination against our trade. Developments in this respect will be watched as carefully as possible and the Department will be kept informed of results.
Respectfully yours,