There is attached a recommendation by the Interdepartmental Committee on
Trade Agreements requesting your approval of the results of the
negotiations of a supplementary trade agreement with Venezuela.
I believe that the results of the negotiations are such that you may give
effect to them under the authority of the Trade Agreements Act [Page 1629] of 1934, as amended. In
addition they are consistent with the recommendation of the National
Security Council of March 5, 1952.
If you approve the Committee’s recommendation and if the signature text
can be prepared in time, it is planned to sign the agreement in Caracas
on August 27, 1952. Publicity with regard to the details of the
agreement will be released simultaneously by both Governments, but such
release may not be made until sometime during the following week.
I recommend that the recommendations of the Committee be approved.
[Annex]
Memorandum by the Chairman of the
Interdepartmental Committee on Trade Agreements (Corse) to the President
2
secret
Washington, August 25,
1952.
Subject:
- Request for Presidential Approval of Results of Trade
Agreement Negotiations with Venezuela.
On August 29, 1951, you approved the recommendation of the
Interdepartmental Committee on Trade Agreements to enter into
negotiations for the purpose of supplementing the 1939 Trade
Agreement with Venezuela.
Public announcement of intention to negotiate such a trade agreement
was also issued on August 29, 1951. All other procedural steps in
connection with the preparations for the negotiations as set forth
in Executive Order No. 10082 and the Trade Agreements Extension Act
of 1951 have been taken. Specifically, 1) a list of products on
which concessions might be made by the United States was attached to
the public notice of intention to negotiate; 2) this list was
transmitted by you to the United States Tariff Commission in order
that that Agency might report the limit below which concessions in
its opinion could not be granted without causing or threatening
serious injury to the domestic industry producing like or directly
competitive products (popularly known as peril point findings); 3)
opportunity to file written briefs and to present oral testimony
with regard to all aspects of the negotiations was given to
interested persons; 4) the United States Tariff Commission reported
its peril point findings to you on December 27, 1951; 5) digests of
trade information on United States import products and on United
States export products were made available to the Interdepartmental
Committee on Trade Agreements by the United States Tariff Commission
and the Department of Commerce respectively.
[Page 1630]
After consideration of the information obtained through the above
procedural steps, the Committee obtained your approval on March 17,
1952 of the following two recommendations:
- 1.
- Offers by the United States and requests of Venezuela by
the United States on the basis of an offer of 10½ cents on
Venezuelan oil.*
- 2.
- An offer going below 10½ cents† provided that the
Venezuelans refused to negotiate on the basis of
recommendation 1, and that reciprocal concessions were
obtained from Venezuela commensurate to the value of
concessions granted by the United States. Other offers by
the United States would remain within the peril point
findings of the Tariff Commission.
Negotiations with the Venezuelans were begun on the basis of
recommendation 1. Every effort was made to persuade the Venezuelans
to negotiate on the basis of a 10½ cent offer. Despite intensive
negotiation, the Venezuelans refused to accept such an offer as
providing a basis for an agreement and were prepared to break off
the negotiations and to give notice of termination of the 1939 Trade
Agreement. At that time, with the approval of the Trade Agreements
Committee, the additional offer on Venezuelan oil, as provided for
in recommendation 2,‡ was made and reluctantly accepted by the
Venezuelans as providing, from their point of view, a valid
concession on Venezuelan oil.
Having surmounted this important obstacle, it was possible to bring
the negotiations to a successful conclusion. The text of the
agreement is attached as Appendix A.3
As compared to the 1939 agreement, Venezuela grants new or improved
concessions on $154 million of imports from the United States; on
$12 million of imports they are withdrawing the 1939 concessions;
[Page 1631] and on $6 million of
imports the new agreement provides for higher Venezuelan rates than
in the 1939 agreement. The trade coverage of the 1939 agreement as
supplemented by the new agreement is $240 million or about 60 per
cent of total United States exports to Venezuela. Under the 1939
agreement, only 35 per cent of our exports were covered. Among the
important items receiving new or improved duty concessions are
apples, pears, certain dried vegetables, rolled oats, wheat flour,
barley malt, baby and dietetic foods, wrapping paper, laboratory and
refractory glass products, galvanized iron sheets, enameled iron and
steel manufactures, builders’ hardware, table flatware, unassembled
trucks and passenger cars, motorcycles, aircraft and parts,
trailers, radio and television receivers including parts,
phonographs including combinations and parts, phonograph records,
automatic refrigerators, scientific apparatus, hand tools,
photographic products, office machinery, electric motors, pumps,
numerous types of industrial machinery and apparatus and parts,
generators and transformers. Among the products on which new
bindings of duty-free treatment were granted by Venezuela are road
building, textile and printing machinery; stoves, heaters and ovens,
and parts for agricultural machinery. The agreement, as revised,
covers 179 Venezuelan tariff items as compared with 88 in the 1939
agreement. It includes products of interest to practically every
important group of United States exporters. The concessions by
Venezuela have particular significance in as much as that country
has no balance of payment difficulties in purchasing from the dollar
area.
In 1950 United States imports from Venezuela of crude petroleum and
residual fuel oil amounted to $288 million or about 90 per cent of
our total imports from Venezuela. It is estimated that the 1950
value of trade on which United States granted improved customs
treatment is about $175 million, of which practically all was crude
petroleum and residual fuel oil. New concessions of potential value
to Venezuela consisted of the binding of existing duty-free entry
for iron ore, deposits of which are now being developed.
The supplementary trade agreement also revises some of the general
provisions of the original 1939 agreement. The more important
changes are (1) a revised provision under which tariff concessions
are better protected against nullification or impairment by the use
of quota restrictions, and (2) the inclusion of the escape clause
pursuant to section 6–b of the Trade
Agreements Extension Act of 1951. The Venezuelans also agree to
extend more favorable customs treatment to products of the Virgin
Islands.
If you approve the results of these negotiations, you are required
under section 4 (a) of the Trade Agreements
Extension Act of 1951 to transmit to Congress, within 30 days after
entering into the agreement, [Page 1632] a copy of the agreement together with a
message identifying the article with respect to which a concession
exceeding the peril point was granted and stating your reason for
such action with respect to such article. A draft message to
Congress is attached as Appendix B.4
In addition to the negotiating difficulty caused by the existence of
a peril point finding by the Tariff Commission at a rate of duty on
Venezuelan oil which was unacceptable to the Venezuelans as a basis
for negotiations, the negotiations were further complicated by the
desire of the Venezuelans to withdraw or modify certain of the
concessions contained in the 1939 Trade Agreement. The products
involved were generally agricultural, but did include a few
industrial products. Generally, the reasons for such withdrawals or
modifications were for the stated purpose of furthering the economic
development of Venezuela. The Committee feels that the new
concessions offered by Venezuela compensate for the concessions
granted by the United States as well as for the 1939 concessions
which Venezuela withdrew or modified. There is attached a
letter5 to you from the Secretary
of Agriculture6 which, while
expressing concern that there may be an unfavorable reaction to the
agreement from the United States agricultural community, does not
interpose objection to the approval of this agreement with Venezuela
because of the very important strategic value present in the other
commodity areas. The Department of Agriculture feels however, that
the new agricultural concessions by Venezuela do not balance the
agricultural concessions in the 1939 agreement which Venezuela is
withdrawing or modifying, and that this is serious in view of the
rising tendency toward agricultural protectionism in Venezuela.
Every effort was made to obtain additional agricultural concessions
from Venezuela but such efforts were not successful.
Although recognizing that the Trade Agreement Act clearly authorizes
the President to exceed a peril point finding by the Tariff
Commission, the member from the Tariff Commission did not feel free,
as a member of the Commission, to cast his vote in favor of a
proposed agreement containing a reduction in the import excise tax
on petroleum below the Commission’s peril point finding. In
addition, it was his view that, considering both the coverage and
the quality of the concessions which would be granted by each
country in the proposed agreement, the balance was decidedly in
Venezuela’s favor. On the other hand, he recognized that there was
room for differences of views regarding the question of balance,
and, further that the issues involved include considerations of
public policy which the President would, of [Page 1633] course, take into account in exercising his
authority under the Trade Agreements Act. In these circumstances he
felt that the proper course was to abstain from voting.
Considering the supplementary agreement in its entirety, it appears
to the Committee that the concessions both ways are substantially in
balance. It believes that proposed United States concessions on the
controversial petroleum items are reasonable ones and ones which
will generally be acceptable to the domestic industry. It is firmly
of the opinion that it will be beneficial to the trade and security
interest of the United States to enter into the agreement.
Your approval of the results of the negotiation with Venezuela is
hereby requested.7
