Foreign Relations of the United States, 1958–1960, Volume V, Microfiche Supplement, American Republics

VE–11. Memorandum of a Conversation, Department of State, Washington, June 5, 1958¹

Washington, June 5, 1958

SUBJECT

• VENEZUELA—Petroleum Matters.

PARTICIPANTS

• The Secretary
• Dr. Carlos Perez de la Cova, Minister of Mines and Hydrocarbons of Venezuela
• Dr. Eduardo Acosta, Venezuelan Chargé d’Affaires
• Dr. Morales Crespo, Director of Political Economy, Ministry of Foreign Affairs of Venezuela
• Sr. Alirio Parra, Petroleum Counselor, Embassy of Venezuela
• ARA - Assistant Secretary Rubottom

The Minister conveyed to the Secretary greetings and best wishes on behalf of himself and the provisional governing Junta of Venezuela. He expressed appreciation for the consultations undertaken by the United States with his Government in respect of the voluntary oil import restriction program resulting from the current slack in demand for petroleum and petroleum products, referring first to a visit of Mr. Rubottom to Caracas last February and then to the technical talks carried out by Messrs. Mann, Carson and Thompson ten days later. He said that his Government was aware of the world-wide problem faced by the oil industry and had felt that the consultations had been mutually beneficial. He recalled that the Government of Venezuela was confronted by many serious problems of both an economic and political nature as it undertook to lead the Venezuelan people back to democratic constitutional government. While his Government had not entirely agreed with the U.S. position, the talks had made it easier to explain to the Venezuelan people the reasons for the U.S. program.

The Minister then alluded to the steps taken by the United States Government since the March consultations, (1) additional restrictions on crude oil imports and extension of the Buy American Act² to the purchase of petroleum products by U.S. Government agencies, both announced on March 25, 1958; and (2) the announcement of yesterday of the inclusion of certain refined products on the list of items to be restricted for import into the United States.

The Minister said that he had been instructed to propose to the Secretary that the United States Government issue a statement of intent to take no further restrictive measures affecting the importation of petroleum products. He said that he had also been asked to raise the question of revising the list No.1 of the U.S.-Venezuelan Trade Agreement, i.e., the items on which Venezuela has granted concessions to the United States, as compensation for the reduced oil exports to the United States due to the U.S. voluntary restrictions.

The Secretary then carefully analyzed the approach which the United States has taken to the subject of trade with Venezuela and the other nations with which it maintains friendly relations, making the following principal points: (1) his own philosophy was perhaps best expressed in a statement in which he collaborated when he was a member of the Commission for the Establishment of a Durable and Just Peace on Sept. 18, 1941 in which the principle was clearly set forth that the U.S. should consult with its trading partners prior to taking any important steps affecting their joint trade in order to avoid as far as possible damaging the economy of its friends; (2) governments, by their very nature, are expected to defend the interests of their own citizens and, unless this is done, they will be unable to govern; (3) at the same time that the domestic interests are being considered, governments should take into account the economic and political effects of important decisions on their trading partners who must also look after the interest of their own people, and this the United States has undertaken to do; (4) one of the best examples of our dedication to the principle of free and unrestricted trade is the reciprocal trade legislation, extension of which is now being debated in the Congress; (5) no nation in the world has taken as enlightened an attitude toward trade as the United States, nor has any other nation ever shown as much concern for the well being and the interests of its trading partners as has the United States; (6) the United States, in its dealings with Venezuela, has shown just as much consideration for the Venezuelan oil industry as it has shown for its own; (7) he hoped that the Government of Venezuela would recognize the extent to which the United States has defended the Venezuelan oil industry, in the face of very strong efforts to restrict imports to a far greater degree than they are presently being restricted under the voluntary plan, and that it would interpret and explain this action on our part to the Venezuelan people; (8) only 25 years ago the world saw the United States enact the Smoot-Hawley Tariff, and later withdraw from the London Economic Conference, to its own detriment and that of the rest of the world; (9) this government is now scrupulously avoiding that kind of action and is, in fact, doing everything possible to consider the economic interests of its allies, although obviously, in a time of economic recession, all nations must share a part of the burden. The Secretary told the Minister that the actions taken by this Government on March 25 were designed simply to equalize the burden between the foreign producers of oil and that imposed on United States producers.

The Secretary declared that he simply could not approve any statement that would suggest that the United States would take no further steps to restrict petroleum imports. He underlined his hope that this would be the case, and stressed that all of the American people were working hard to bring an end to the economic recession and that we now hoped that the upturn was about here. Nevertheless, he was in no position to make the kind of commitment for the future requested by Dr. Perez de la Cova.

The Secretary said that he was not acquainted with the technical question raised by the Minister in regard to the U.S.-Venezuelan Trade Agreement, but was sure that there were officials in the Department who could take up this matter with him. Dr. Perez de la Cova recalled that Mr. Rubottom had been head of the U.S. negotiating team in 1952 when the Treaty had been consummated. It was agreed that the Minister would discuss this question with Mr. Rubottom and those officers in the Department responsible for economic affairs.³

1. Source: Department of State, Central Files, 831.2553/6–558. Secret. Drafted by Assistant Secretary Rubottom; approved in the Executive Secretariat.
2. Reference is to Title III of the Appropriation Act of 1933 (Public Law 428), enacted March 3, 1933. For text of the Act, see 47 State 1439.
3. The points made here by Dr. Perez de la Cova regarding the petroleum issue were reported in a conversation he had with Douglas Dillon, the Deputy Under Secretary of State for Economic Affairs, on June 6. That conversation was recorded in a memorandum drafted by Bernbaum on June 9, not printed. (411.316/6–658)