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USA & Venezuela Industrial Supply Marketplace

US-Venezuela Trade Relations: Partnership Extending from Traditional Closeness
The Start of a Flourishing Foreign Trade

Venezuela is located in northern South America. Once predominantly agricultural, its economy underwent a transformation during the 1970's based on petroleum wealth. The government's control of crucial natural resources resulted in tremendous profits from their exploitation and marketing. As a result of heavy spending and heavy borrowing, however, the Venezuelan economy encountered difficulties in the 1980's as oil prices fell. Inflation rose and the repayment of foreign debt became an important issue. Venezuela, still the richest country in South America in terms of average income instituted an economic austerity program in 1989.

Industrial diversification is a government's priority especially to reduce the country's dependence to oil revenues. The major development plan includes a steel complex, a tractor factory, aluminum plants, and bauxite, gold and timber production. Agriculture is seen by the government as a good opportunity as well. Only about 5% of arable land is utilized, the bulk of which goes for pasture. The main crops grown in Venezuela are sugarcane, bananas, maize, rice, sorghum and cassava. The fishing sector has grown but the timber wealth in the highlands has not been commercially developed.

Venezuela's main highway system is being upgraded in order to be continuously considered as one of the bests in Latin America. An adequate national railroad network has been targeted for improvement while its internal air transport is well developed. Next to petroleum, aluminum is the second most valuable export of Venezuela while there is a necessity to import food and manufactured goods. The relationship between the United States and Venezuela is interpreted to be traditionally close. Their economic warfare was seen to be relevant for world trade and investment. They also fought the battle for drugs and other incidences which affect their population.

The Trade Relations between US-Venezuela: A Focus on Imports and Exports

There are a lot of popular prime commodities that travel between US and Venezuela. They have largely been trading partners and as evidence to this, Venezuela always consider the United States as its largest partner in world trade and the largest import destination as well. The United States Census Bureau showed facts, the latest of which is as of July 2008 and it tracked that the US exports from Venezuela amounted to a seven-month total of $6.57 billion while the imports amounted to a high $32.18 billion mark. In 2006, the following statistics were seen:

  • Venezuelan Exports to US. In 2006, Venezuela exported $37.2 billion worth of prime commodities to the US which had an average increase of 9.4% from 2005. Topping the list is crude oil which earned $27 billion or a percentage increase equivalent to 12.1% from 2005. It was followed by other petroleum products, liquefied petroleum gases (LPG), fuel oil, bauxite and aluminum, semi-finished iron and steel mill products, industrial organic chemicals, coal and related fuels, fertilizers, pesticides and insecticides, and at the 10th spot are vehicle parts and accessories. The latter went down by 11.33% from 2005 at an amount of $155.12 million.
  • Venezuelan Imports from US. The products imported by Venezuela from US showed an increase of 40.3% totaling $9 billion. The number 1 slot goes to organic chemicals which gained an income and percentage of $829.2 million and 111.2% respectively. The top ten lists was completed by other petroleum products, computer accessories, vehicle parts and accessories, drilling and oil field equipment, telecommunications equipment, other household goods, industrial engines, new and used passenger cars, and other industrial machines. The industrial machines showed an increase of 13.22% amounting to $302 million.
  • Fast-Growing US Exports to Venezuela. Sales were fast-rising for some commodities from US to Venezuela and at the top of the chart are tanks, artillery, missiles, rockets and ammunitions with a total increase of $1.4 million at a rate of 594%. The top five highest selling goods were completed by other commercial vessels, other petroleum products, military apparel and footwear and cotton fiber cloth. Being at the top 5, the last product showed an impressive presentation amounting to $11.4 million at a 230% increase.
  • Fast-Growing US Imports from Venezuela. Venezuela's imported products to US also started to soar higher. A commendable 1,857% increase amounting to $7.8 million goes to scientific, medical and hospital equipment. It was followed by tobacco, waxes and non-food oils, electric apparatus and parts, coal and related fuels, and medicinal, dental and pharmaceutical operations. The last spot showed a material increase of 31% with an equivalent amount of $3 million.
Governing Rules of Foreign Trade between the US and Venezuela

In order for both economies to flourish through time, they found it necessary to put their alliance into agreements, both verbal and written alike. The United States, as always agreed to bilateral and multilateral pacts in order to benefit from their comrades. The most predominant treaty, however, is that of the General Agreement on Tariffs and Trade (GATT) which was helpful not only to the US and Venezuela alone but all other world trade members. The specifications of the GATT include the following:

  • Trade Synergy. This is all about international trade and its governing rules. It also refers to liberalization and domestic environmental regulation. This was specified in the GATT in order to disallow discrimination from stricter rules about production of imported and exported products.
  • Internalization of Environmental Costs. This specifically states that environmental costs may be transferred to other countries by using some measures of trade. This would help to generally provide an effective forum to internalize the expenses which are not currently accounted for in the manufacture and production of certain commodities.
  • Transparency. As there are different accounting procedures and financial standards for each country, this is relevant in order to be able to see the balance of trade. This will help avoid double taxation on parts of both countries involved in the trade. Transparency spells a lot of the scopes and limitations of accountability.
  • Intellectual Property. The US is one of the most aggressive nations fighting for intellectual property. With the presence of the governing rules of the GATT, it had extended its boundaries to support Venezuelan Intellectual Property rights as well.
  • Development. This is adaptable in any international business thus, US and Venezuela were seen to undergo development standing side-by-side together despite objection from their rulers Hugo Chavez and George Bush who have not come to some terms in the world trade scene.
The Many Disputes between US-Venezuela Trade Relations

There were several issues that have bothered the friendship of US and Venezuela. They are bothersome in the sense that there were several speculations on plotting war against each other under the leadership of Hugo Chavez. It was helpful though that some portion of the Venezuelan nation disagreed to the battle launched by Hugo Chavez and at some points; some prominent officials in the government and even in the military forces were trying to ouster the Venezuelan leader. It took several attempts before Chavez was successfully dismissed from his seat in the Venezuelan government.

Other than this very personal disparity between the two nations, they also had the so-called Venezuela Gas Dispute. The Venezuelan Government accused the US of discriminating against its products when the US Congress passed a bill requiring that Venezuelan petroleum products should meet US pollution control standards. The law specifically provides that Venezuelan oil should be reformulated to reduce car pollution. Venezuela addressed this particular problem to GATT since the US government did not want to change the strict imposition of products.

The issue was a bit painstaking for both especially that Venezuela relied too much upon its petroleum wealth and since US was making a ban against the product until it is refined; the other nation was caught in a dilemma. Despite this however, they have agreed to come to terms in order to eliminate health-related aspects affected by oil and other petroleum products. This was necessary in order to strengthen the ties that bind both countries especially that US contributes to at least 65% of sales to the petroleum industry of Venezuela.

The Impact of the Trade Disputes to the Future Generation

The Venezuela-US Gas Dispute may have hindered the relationship between these two nations but it was just mere dirt in the pocket. As proof to their aggression to solve the disparity, the Venezuelan government made a statement thanking the US Senate for its contribution regarding natural gas formulation that will help protect the lives of the people in both nations. This was a good step to bring an end to a long personal battle and to at least revive the 80-years of gasoline trade for both nations.

There are really no known circumstances which could hamper the real deal behind international support. An alliance like this was built in the strongest foundations from the rocks that have shaken them through times to the wars that never happened. There may be some preponderant conflicts but at least the unwavering friendship makes the two countries stick together. This is solid evidence that the future generation of Venezuelans and Americans will benefit from this groundwork.


Note: Trade statistics, industry links, economic projections and global business resources on this page have been compiled from hundreds of trade related websites, government guides and resources on the Internet. We provide this valuable information for industrial suppliers, manufacturers, exporters and importers seeking to enter or expland business opportunities in Venezuela.

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Venezuela's major industries include petroleum (about 78% of it's economy), iron ore mining, construction materials, food processing, textiles, steel, aluminum, motor vehicle assembly

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