411.3131/12–451
Memorandum of Conversation, by Mr. William F. Gray of the Office of South American Affairs
Subject: Renegotiation of U.S.–Venezuela Trade Agreement
| Participants: | Dr. Aureliano Otañez, Minister Counselor, Venezuelan Embassy |
| Mr. Bernbaum—OSA | |
| Mr. Davis—OSA | |
| Mr. Gray—OSA | |
| Mr. Solana1 —CP |
Mr. Otañez called at his request to discuss the matters set forth below relating to the above-captioned subject:
I. U.S. Tentative Request List
Mr. Otañez first expressed appreciation for our having gone to considerable trouble to meet Venezuela’s request for a preliminary list of items. (On November 30, he was given a memorandum2 from the Department enclosing a tentative list of products on which the United States may request tariff concessions from Venezuela.)
He made clear that, while he was not yet prepared to discuss the items in detail or to take any position regarding the tentative request list, he wished to give us his own general views. First, he had the impression that the list was quite extensive. On some items he felt his Government could grant bindings of existing duties—even duty reductions on some; but he was almost certain that on some others no concessions would be possible. He indicated that the textile group would, in his opinion, be particularly difficult, although concessions might be possible on a few classifications.
Mr. Gray emphasized the tentative character of the list that had been presented. He pointed out, for example, that all items on which the trade had made requests for Venezuelan tariff concessions to the Committee for Reciprocity Information were automatically included in the list; it is therefore likely that some of these items will be eliminated from the U.S. definitive request list. Mr. Solana added that the [Page 1668] present list was of course not only subject to deletion but also to addition or other modification.
Mr. Otañez said that he fully understood the preliminary nature of the list but that he nevertheless gained the impression that the U.S. Government holds the view that the Schedules of concessions of the two countries should strike a mathematical balance. He called our attention again to the fact that the Venezuelan Government, since it had asked for revision of the 1939 trade agreement, takes the position that the 1939 agreement is out of balance in favor of the U.S. Consequently, his Government is of the view that in the forthcoming negotiations for a Supplementary Trade Agreement, Venezuela should receive more concessions than it gives. [Throughout the conversation the U.S. participants scrupulously refrained from any discussion as to what the basis for negotiations should be and hence did not attempt to argue this point with Otañez.]3
Mr. Bernbaum asked in what way does Venezuela consider the existing agreement out of balance. In reply, Otañez referred to the present tariff quota arrangement applicable to oil imports into the United States. He also pointed out that the U.S. remains the preponderant supplier of most exports to Venezuela whereas other Countries, to some degree, have been displacing Venezuela as the dominant supplier of petroleum to the U.S. Without pursuing the subject, Mr. Solana and Mr. Gray briefly presented certain statistical information designed to show that it is, at least, a highly debatable question as to whether the existing trade agreement is in fact out of balance to the disadvantage of Venezuela.
Reverting to the tentative list of products, Mr. Otañez then pointed to several other items on which he felt his Government would have difficulty in granting concessions. These were: cotton, beer, cement (Portland), certain iron and steel products, pharmaceuticals and, again, the textile group. Mr. Gray stated that cotton and beer were among the CRI items previously referred to which were automatically included; while he could give no assurances, they might well be dropped from our definitive request list.
Mr. Otañez informed us that he was sending the U.S. memorandum and list today to Caracas; and that his Government would no doubt study the document immediately with a view to determining, and indicating to the U.S. later, the items on which concessions cannot be negotiated.
II. Revision of General Provisions
Mr. Otañez inquired as to our progress on work concerning the revision of the language of the general provisions of the 1939 trade agreement. He was informed that legal officers were actively engaged [Page 1669] in formulating the texts of the revisions which the U.S. intends to propose, and that their work was well-advanced. (Previously, Otañez was told in a general sort of way of the nature of the changes which we would probably want to request.) Mr. Otañez asked that he be notified as soon as we have developed the exact wording of the proposed changes.
III. Allocation of 1952 Oil Tariff Quota
Mr. Otañez then inquired about the allocation for 1952 of oil imports into the U.S. that would enter at the lower (10½¢ per bbl.) tariff quota rate. He hoped that the new country allocations would not result in a smaller percentage share for Venezuela than in 1951. Mr. Gray replied that this Government was now working on the problem and the prospects appeared good that the country quotas would remain the same as in 1951. Mr. Otañez expressed the hope that such would be the case and asked to be informed when the matter is decided. However, he hoped that a Supplementary Trade Agreement could be concluded that would obviate the need for applying such country allocations, a view concurred in by all present.