711.21/8–1849

[Extract]

Memorandum by Mr. Albert H. Gerberich of the Division of North and West Coast Affairs to the Assistant Secretary of State for American Republic Affairs ( Miller )1

confidential

FCN Treaty

The draft of a proposed treaty of Friendship, Commerce and Navigation was handed the Colombian Embassy on October 14, 1948.2 It [Page 612] has been under study by the Colombian Foreign Office since then. It is our belief that Colombia has delayed entering into negotiations until the matter of a double taxation treaty is cleared up. Meanwhile, we continue to operate under the FCN treaty of 1846.3

Tax Treaty

We plan to open discussions with Colombia shortly for conclusion of a treaty to avoid double taxation.4 Mr. Eldon P. King, Special Deputy Commissioner of Internal Revenue, is at present compiling data, receiving suggestions and holding conferences with parties and organizations interested in tax relations problems with Colombia.

Petroleum

During the first six months of 1949, five oil companies announced their intention of withdrawing from Colombia due to unsatisfactory operating conditions.

The Colombian Government has taken cognizance of this situation, and the administration is expected to propose revision of the existing petroleum law to remove obstacles in the way of petroleum development; however, no comprehensive oil legislation is contemplated.

Law 165 of December 1948 proposed a Colombian national oil company to take over the expiring DeMares Concession of the Tropical Oil Company, in which both Colombian and foreign private capital would be asked to participate. To date, Shell and Texas Oil Companies have expressed themselves as not being interested in participating. Tropical Oil Company is willing to participate in future operations of the DeMares Concession only under certain conditions as to organization and administration, or will furnish technical assistance in operating the concession for a maximum period of three years, provided suitable arrangements can be agreed upon.

Missionaries

The problems of Protestant missionaries in Colombia have been twofold: 1. difficulty in obtaining permits to enter and reenter the country; 2. actual attacks on mission stations, sometimes with the encouragement or complicity of church and civil authorities. These problems have been, generally speaking, more acute since the Conservative administration came into power in 1946, but recent events seem to give hope of a turn for the better.

Despatch No. 440 of July 8 from Bogotá5 reports that Protestant missionaries can now enter Colombia, practice and preach their religion [Page 613] and engage in proselyting activities, provided they do so indoors and not in the open air. This is the first relaxation in this respect of the strict attitude of the Conservative Administration since 1946.

There have been no attacks on Protestant Missions in Colombia since April 6 at El Secreto and April 8 at Garagoa, when those Missions were invaded, looted and threatened by mobs.

Bonds

Colombia has arranged, with the approval of the U.S. Foreign Bondholders Protective Council, to resume service on approximately $38,000,000 of municipal and departmental dollar debt in default since 1932. The new bonds will bear 3% interest and will be issued in the face amount of $1200 for each $1000 old bonds and accumulated interest.

The January 1 and July 1 payments on the bonds were deposited with the Schroeder Banking Corporation but have not as yet been paid over to the bondholders due to certain formalities required by our Securities and Exchange Commission.

Currie Mission

A nine-man mission composed of:

Lauchlin Currie Head
Dr. Richard A. Musgrave Chief economist
Jacques Torfs Economist
Carl W. Flesher Industry and electric power
Joseph L. White Transportation
Haywood R. Faison Rivers and Harbors
Raymond C. Smith Agriculture
Roger V. Anderson Finance and Foreign Exchange
Dr. Joseph W. Mountin Health and Sanitation

was sent in July by the World Bank to attempt to assess the economic potentialities of Colombia, appraise the feasibility of various projects which may be recommended to improve the country’s economy, and indicate the respective roles that foreign and domestic capital should play in carrying out the program.

Loans

I understand Mr. Bauer, ED, is briefing you on this subject.6

[Page 614]

Shipping

I understand Mr. Russell is preparing a separate memorandum on this subject.7

GATT

Colombian and American teams are still holding tariff discussions at Annecy, with little likelihood that they will reach an agreement before the Conference closes. The last Colombian offer list showed little improvement in its offers or in the general Colombian position. In the event of failure to reach an agreement it is hoped to terminate the bilateral cleanly, by mutual consent, leaving both countries complete freedom of action for any further negotiations.8

  1. The memorandum was prepared to inform Mr. Miller on current problems in United States-Colombian relations in connection with the Assistant Secretary’s impending visit to Bogotá, August 27–31. A report on Mr. Miller’s visit is contained in despatch No. 676, October 31, from Bogotá, not printed (111.12 Miller, Edward G., Jr./10–3149).
  2. Not printed; for information on the draft, see the memorandum dated October 8, 1948, Foreign Relations, 1948, vol. ix, p. 462. No agreement was reached on a Friendship, Commerce, and Navigation Treaty between the two countries during 1949.
  3. Text in Department of State Treaty Series 54, and 9 Stat. 881.
  4. No agreement was reached on a double taxation treaty during 1949.
  5. Not printed.
  6. On the question of loans to Colombia, see telegram 627, November 15, from Bogotá, p. 620.

    No progress was made during 1949 on settlement of the Colombian lend-lease debt; for a summary of developments on this subject, see footnote 5 to instruction No. 205, November 24, 1948, to Bogotá, in Foreign Relations, 1948, vol. ix, p. 475.

  7. Not printed. For some time, the United States had been protesting the practice of the Flota Mercante Grancolombiana of accepting pesos in payment of freight on southbound cargo from the United States to Colombia, enabling the Flota to carry more than its fair share of such cargo. This practice was alleged by other shippers to be unfair and discriminatory. In October, an agreement was reached whereby the Flota was to start collecting freight in dollars and would move toward collection in dollars only as its contracts for collection in pesos expired. (821.85/8–1049, 8–2649, 10–2149, 11–1849)
  8. See infra.