of any of the basic pertinent statutes: the Export Control Act, the Agricultural Act of 1949, and the Commodity Credit Corporation Charter Act.3 I have examined the history of the declaration with care and find no indication that Congress itself viewed the amendment as more than an expression of its policy, to be given consideration by the Executive in making decisions within the framework of authorizations and prohibitions established by prior law. Representative Latta, who sponsored the declaration, himself stated that its purpose was to have the Department of Commerce know "what the sense of this Congress is" with respect to the transactions in question (107 Congresisonal Record 13746). And Representative Hoeven, one of its supporters, pointed out that the amendment "pertains only to the policy section of this bill" (id. at 13747). At no point in the legislative consideration of the declaration was any effort made ot revise or to repeal the statutes that would have to be deemed amended if the policy were to be given binding legal effect. The Congress could, of course, have embodied its policy in a provision of positive law to which the executive branch would have been bound to adhere. That it did not choose to do so is significant, not only in establishing that section 2(c) is without legal effect but in determining its proper interpretation and application as policy. Congress evidently contemplated that situations might thereafter arise in which the considerations of policy to which it was directing attention should not be decisive; that it would be necessary for the executive to consider and appraise the policy thus declared and to determine whether its application would serve the national interest in particular situations. Both Congress and the courts have traditionally sought to avoid restricting the executive unduly in matters affecting foreign relations because of the need for flexibility in this area and the fact that the Constitution entrusts the external affairs of the Nation primarily to the executive. United States v. Curtiss-Wright Export Corp., 299 U.S. 304, 319–321 (1936); Chicago & S. Air Lines v. Waterman S.S. Corp., 333 U.S. 103, 111-114 (1948). If, therefore, the executive branch should determine that permitting the sales in question would serve the national interest at this time, its action would not only be lawful but consistent with the intention of Congress as to the manner in which section 2(c) was to be interpreted and applied. III. THE BATTLE ACT I agree with the Under Secretary that the Mutual Defense Assistance Control Act of 1951 (65 Stat. 644, as amended; 22 U.S.C. 1611 et seq.) (the Battle Act), presents no legal obstacle to sales of agricultural commodities to Eastern European bloc countries. The Battle Act was designed to supplement the Export Control Act of 1949 (63 Stat. 7, as amended; 50 U.S.C. App. 2022-2032), which authorizes the President to "prohibit or curtail the exportation from the United States *** of any articles, materials, or supplies *** except under such rules and regulations as he shall prescribe." Pursuant to the Export Control Act, a comprehensive system of export licensing was set up to control the shipment of commodities from the United States to foreign countries. See House Report 318, 82d Congress, 1st session (1951). The Battle Act added to this system of regulation a mechanism for inducing other countries to embargo the shipment to the Soviet bloc of "arms, ammunition, and implements of war, atomic energy materials, petroleum, transportation materials of strategic value, and items of primary strategic significance used in [their] production." See Senate Report 698, 82d Congress, 1st session (1951). The act provides (sec. 103, 22 U.S.C. 1611(b)) for the termination of all military, economic, or financial assistance to any nation upon the recommendation of the Administrator of the program, subject to review by the President in certain instances, if it "knowingly permits the shipment to any nation or combination of nations threatening the security of the United States, including the Union of Soviet Socialist Republics and all countries under its domination," of any of the embargoed materials. The act contains a further declaration of policy regarding the export, by countries receiving assistance, of other commodities "which in the judgment of the Administrator should be controlled." Section 201, 22 U.S.C. 1612. If a country receiving assistance 3 Export Control Act of 1949 (63 Stat. 7, as amended, 50 U.S.C. App. 2021 et seq.) (authorizing the President to regulate exports, including their financing, transportation, and other servicing); Agricultural Act of 1949, sec. 407, supra (CCC authorized to sell agricultural commodities for export at less than support prices); Commodity Credit Corporation Charter Act, sec. 5, supra (CCC empowered to procure agricultural commodities for sale to foreign governments, and to export such commodities, or cause them to be exported, and to aid in the development of foreign markets for these commodities). from the United States does not effectively cooperate in controlling exports of such commodities, all military, economic, or financial assistance is to be terminated upon a determination by the President of noncooperation. Section 203, 22 U.S.C. 1612b. As indicated by the above summary of its provisions, the Battle Act did not purport to regulate private U.S. shipments to Soviet bloc countries, which were already subject to regulation under the Export Control Act. The Battle Act relates, rather, to trade with the Soviet bloc by countries receiving aid or assistance from the United States. Moreover, the transactions to which this opinion relates would be purely commercial in nature from the standpoint of the purchasing countries, and would therefore not involve "economic or financial assistance" within the meaning of the Battle Act. The Commodity Credit Corporation assists exports of agricultural products through the payment to U.S. exporters of subsidies designed to eliminate the impact on such exporters of the domestic price support program and thereby enable them to compete on an equal basis with foreign exporters. However, as the Under Secretary's letter states, the only "assistance" involved in the payment of such subsidies redounds to the benefit exclusively of U.S. producers and exporters." As to both points, the following colloquy between Senator Sparkman, the floor manager of the Battle Act in the Senate, and Senator Kem, who advocated a more stringent bill, is instructive (97 Congressional Record 10675): "Mr. SPARK MAN. I should like to say that it does not make any difference what the United States is receiving [from the U.S.S.R.]. That is not the question. The question relates to trade between Soviet countries and countries to which the United States intends to extend help. "Mr. KEM. Exactly. "Mr. SPARK MAN. Either economic or military. It has nothing to do with trade between the United States and Russia or any other country. "Mr. KEM. I did not intend to imply anything else." Accordingly, it is clear that the act has no application to the contemplated transactions. IV. THE EXPORT CONTROL ACT The Under Secretary's letter properly states that in any event the export of agricultural products to the Soviet Union and to bloc countries would require the issuance of licenses in accordance with the export control regulations promulgated pursuant to the Export Control Act of 1949, supra. I am not aware of any other Federal statutes relevant to the problems involved. Accordingly, it is my opinion that the transactions described in your letter could be accomplished in conformity with the laws of the United States. Sincerely, ROBERT F. KENNEDY, EXPORT-IMPORT BANK OF WASHINGTON, MEMORANDUM FOR THE SENATORS ATTENDING CONFERENCE IN SENATE CONFERENCE The Export-Import Bank has announced it is prepared to guarantee U.S. commercial banks on "commercial credits" established by these banks to finance the sale of U.S. wheat and other grains to the U.S.S.R. and other countries within the Soviet bloc. The conditions of any such guaranteed credit transaction are to be these: the buying country must pay at least 25-percent cash prior to shipment. The balance of 75 percent can be payable over an 18-month period, with This view is supported by my recent opinion to the Secretary of Agriculture of Aug. 29, 1963, regarding the applicability of the Cargo Preference Act to export sales on long-term credit negotiated by the Secretary of Agriculture with domestic exporters under title IV of Public Law 480. While the opinion concludes that the Cargo Preference Act applied because the purpose of the title IV long-term credit program was in substantial part "to assist" the foreign economy, it was stated that if the Department of Agriculture should sell surplus agricultural commodities to a domestic exporter for export purposes under a program designed to dispose of the goods on the best possible terms and conditions, "the resulting export is a purely commercial transaction * * and, hence, not subject to the Cargo Preference Act even if the United States advances credit to the exporter and the ultimate purchaser is a foreign government." equal payments to be made each 6 months. The credit will carry interest at 5 percent per annum. To date, Export-Import Bank has issued three guarantees aggregating $4.5 million covering sales of corn to Hungary. The Export-Import Bank has offered to guarantee these transactions because it has been found that the U.S. commercial banking system is not prepared to grant credit (even for a term shorter than 18 months) in the amounts necessary to finance the proposed grain sales without the intervention of the Export-Import Bank in the form of a guarantee. Thus, although the Export-Import Bank is not in position to judge whether the grain will be sold for spot cash if no credit is available, the Bank is convinced that if any credit (even 30 days) is necessary to effect the sale, the credit will not be available from the commercial banking system without the guarantee of the Export-Import Bank. Under these same circumstances, in the case of many non-Communist-bloc countries, the Export-Import Bank has frequently given the same full all-risk guarantee to U.S. commercial banks. Newspaper accounts to the effect that the proposed guarantees to the Soviet bloc are a departure from normal more limited Export-Import Bank guarantees are inaccurate. Although the Export-Import Bank has never guaranteed or financed a transaction with the U.S.S.R., it has since its creation in 1934 been legally empowered so to do. The Board of Directors of the Bank believes it would be unwise to deny the Bank the authority to guarantee or finance legitimate commercial trade between the United States and the U.S.S.R. whenever the national interest may call for such trade. It might be mentioned that the counterpart governmental agencies of the Export-Import Bank in Canada and Great Britain have been guaranteeing exports from their coutries to the U.S.S.R. for some time now. In the case of Canada, in fact, credit for sales of wheat is being guaranteed on terms of 3 years for certain of the bloc countries and 18 months for the U.S.S.R. and others. In Great Britain, guarantees are being offered in the case of the export of British-made capital goods and equipment to the U.S.S.R. and other bloc countries on terms at least comparable to those granted on sales to non-Communist countries. WALTER C. SAUER. EXPORT-IMPORT BANK OF WASHINGTON, MEMORANDUM FOR THE SENATORS ATTENDING CONFERENCE IN SENATE CONFERENCE ROOM ON NOVEMBER 15, 1963, ON EXPORT-IMPORT BANK GUARANTEE OF GRAIN SALES TO THE SOVIET BLOC In accord with the agreement reached by the undersigned with the Senate conference group, Bank officials, immediately following the announcement of the understanding in the Senate, began advising (by telephone) interested grain dealers and the commercial bank involved that the Export-Import Bank was not prepared to issue further guarantees in connection with grain sales to Soviet bloc countries. As stated in the first sentence of the memorandum given to the Senators at the conference by the undersigned, the Bank had made a prior general announcement that it was prepared to guarantee U.S. commercial banks on wheat and other grain sales to the U.S.S.R. and other countries within the Soviet bloc. It developed in the conversations with the U.S. grain dealers that, acting in good faith on the Export-Import Bank announcement as well as on export licenses received by the sellers from the U.S. Department of Commerce prior to November 15, they had proceeded to engage ocean shipping space with respect to grain sold under contracts entered into prior to November 15 and had otherwise proceeded to carry out such contracts. The reason why U.S. sellers took the foregoing steps even though the Export-Import Bank had not issued guarantees (except in 3 cases for $4.5 million) with respect to the transactions involved was that shortage of shipping space made it necessary that the grain sellers act speedily. All of the contracts in question involve grain sales to Hungary. It appears quite certain that no contracts have been entered into nor export licenses issued prior to November 15 to the U.S.S.R. The U.S. exporters are Cargill, Inc., Continental Grain, and Garnac. The precise amount of the shipments involved is impossible to state but it can be said that the amounts will be in the range of $25 million. The Board of Directors of the Export-Import Bank is advised by its General Counsel that he concurs with the U.S. grain dealers that the Bank had at least an oral commitment to issue guarantees in connection with the contracts already entered into in good faith by U.S. sellers of grain and which they had proceeded to implement after obtaining an export license from the U.S. Department of Commerce. Accordingly, the Bank will proceed to issue its guarantee in the cases involved and will do with the conviction that it is acting in full compliance with the spirit of the agreement reached by the undersigned with the Senate conference group that the Bank "from that time on and for at least a period of about 2 weeks would not approve further guarantee commitments with respect to grain sales to the Soviet bloc." More specific details of the contracts covering the sale of grain to Hungary which the Bank must meet under the foregoing commitment are listed on the attached sheet. The CHAIRMAN. As I have said, S. 2310 seeks to prohibit guarantees by the Export-Import Bank or any other Government agency of payment of obligations of Communist governments, and we will also consider Senator Mundt's amendment that I have just discussed. This bill is based on Senator Mundt's amendment to the Foreign Aid Act. By unanimous consent an agreement was reached last Friday, and Senator Mundt withdrew his amendment to the foreign aid bill, and introduced it as a separate bill what is now before us as S. 2310. Under the unanimous consent agreement, we must consider the bill and report it back to the Senate on next Monday, the 25th. On that account the chairman could not refer the bill to the subcommittee headed by the distinguished Senator from Pennsylvania (Senator Clark) as he would ordinarily have done. We may not even have time to have these hearings printed so that those interested would have a chance to read the testimony and know the pros and cons and also have an opportunity to make some comments if they wish for the record. Although we are going to have hearings today and tomorrow and Friday-Saturday if necessary, but we hope that won't be necessary, because we are trying to get these hearings printed. There is bound to be a minority and a majority opinion. We know that in advance because of the vote in the Senate on the question of tabling Senator Mundt's amendment to the foreign aid bill as to the propriety of selling grain to the Communist countries on credit. I say that the unanimous consent agreement is really flattering to our committee because, with all due deference, no other committee in the Senate has acted any more expeditiously than we have. Senator CLARK. Or more responsibly. The CHAIRMAN. Well, from the standpoint of some, yes. With all due deference to those who were in the majority on the mass transportation bill, we did report the bill out. The chairman didn't like it, but we reported it out. And therefore the Senate does assume that we can get together and in a week's time take a controversial bill, conduct the necessary hearings, discuss it among ourselves without filibustering in the committee, and get it back in a week's time. That is very flattering. Some committees say "If you don't give us a bill until the 1st of October don't expect us to get it out until sometime in January." We have a number of important witnesses, but, of course, we will honor the patron of the bill and ask him to be the first witness and then in view of the fact that the Secretary of the Treasury must leave the country tomorrow, we have rescheduled him for this afternoon. He was to appear tomorrow. We will be glad to hear from our distinguished colleague from South Dakota, Senator Mundt. STATEMENT OF THE HONORABLE KARL E. MUNDT, U.S. SENATOR FROM THE STATE OF SOUTH DAKOTA Senator MUNDT. Thank you, Mr. Chairman and members of this expeditious and responsible committee. It is a real pleasure to appear before you in connection with the issues involved in S. 2310. I have a prepared statement, Mr. Chairman, and if it pleases the committee, I would like to request that I be permitted to read it in full before the questions begin, to avoid duplication. The CHAIRMAN. Without objection, you may proceed. Mr. Chairman, almost since the end of World War II-or for more than 15 years the United States has been extending programs of military and economic aid to friendly and uncommitted countriesboth developed and underdeveloped throughout the world in an effort to safeguard those areas and their people from Communist aggression, encroachment, subversion, and takeover. During this period, we have expended over $100 billion of the money of American taxpayers, and our aid has gone to more than 100 foreign countries. Even now, we are still continuing to aid more than 100 countries through the expenditure of our resources and the continuing annual cost of this foreign assistance program is still upward of $3 billion a year annually. The waging of this so-called cold war has been a long, expensive, and exhausting contest for Americans, but it has at least had the redeeming feature of compelling our Communist adversaries to strain themselves to do their best to offset our efforts and to meet the challenge of our American oversea assistance program. Increasingly the Communists have had to divert from their own economy and from the economies of their unhappy satellites, foods and fabrics, grain and machinery, weapons and petroleum, and a host of other products in an attempt to win friends and influence governments, especially in the underdeveloped areas of the world. As a whole family of newly independent nations have come into being, the increasing drain upon the Communist economy and upon that of the United States has become steadily more severe. In this continuing cold war, however, the superiority of our free way of life and our vastly more productive economic system has begun to make its impact felt throughout the world. We have waged our side of this economic war without destroying our own standards of liv |