petitive advantage in international trade. The negotiations are to take place after the Secretary advises the President of such manipulation.

Title II

Section 2101 encourages the President to continue to consult with Mexico to expand mutually beneficial trade and investment. Section 2204 establishes the Trade and Development Program as a separate agency apart from the Agency for International Development. The Trade and Development Program is required to: promote private sector trade relating to bilateral development projects; annually report to Congress; and establish an advisory board. There is authorized to be appropriated not more than $10 million in Fiscal Year 1988 and Fiscal Year 1989. In addition, not more than $10 million is authorized for certain education and training programs. The Trade and Development Program shall be represented at each meeting of the National Advisory Council on International Monetary and Financial Policies.

Section 2205 requires the President to establish an interagency groups on countertrade. The interagency group shall review and evaluate United States policy on countertrade and offsets, the use of countertrade and offsets in U.S. exports and bilateral aid, and the need and feasibility for cooperation with other countries to reach agreements. The interagency groups shall make recommendations to Congress and the President.

Section 2205 also establishes within the International Trade Administration, an Office of Barter. The office shall monitor trends in international barter, organize and desseminate information regarding barter, notify federal agencies of opportunities to barter government-owned commodities and provide assistance to enterprises seeking barter and countertrade opportunities.

Section 2301 is titled United States and Foreign Commercial Service. This provision establishes a U.S. and Foreign Commerce within the International Trade Administration. The general purpose of this service would be to identify United States businesses with the potential to export and provide advice and information such as economic conditions, market opportunities, regulations, and marketing design.

Section 2302 is titled Commercial Service Officers and Multilateral Development Bank Procurement. This provision directs the Secretary of Commerce in consultation with the Secretary of the Treasury to appoint a procurement officer who will act as liaison between the business community and the multilateral development banks concerning possible projects.

Section 2311, requires the Secretary of Commerce to submit a report to the Committee on Banking, Housing and Urban Affairs of the Senate and the Committee on Banking, Finance and Urban Affairs, Foreign Affairs and the Judiciary of the House of Representatives, on the activities of the Department of Commerce to promote the formation of export promotion intermediaries.

Section 2429 transfers responsibility for such other statutes that relate to national security to the Under Secretary of Commerce for Export Administration.

Section 2430 authorizes additional appropriations for programs administered by the Under Secretary of Commerce for Export Administration.

Title III

Subtitle A-Exchange Rates and International Economic Policy Coordination

Section 3001-3006 is titled the "Exchange Rates and International Economic Policy Coordination Act of 1988". The purpose of this subtitle is to make exchange rates and the level of foreign borrowing matters of conscious policy rather than inadvertent side-effects for other policies. It establishes the achievement of macroeconomic policies and more stable exchange rates consistent with a more appropriate and sustainable balance in the current account as an important policy goal. The subtitle directs the President to pursue negotiations with other countries to improve the coordination of macroeconomic policies of the major industrialized nations, and to achieve macroeconomic policies and stable exchange rates consistent with a more appropriate and sustainable level of trade and current account balances. In bilateral negotiations the Secretary for the Treasury is directed to analyze annually the exchange rate policies of foreign countries, in consultation with the IMF, and consider whether countries manipulate the rate of exhange between their currency and the U.S. dollar for purposes of preventing effective balance of payments adjustments or gaining unfair competitive advantage in international trade. If the Secretary decides that such manipulation is occurring with respect to countries that have material global current account surpluses and have significant bilateral trade surpluses with the United States, the Secretary is directed to initiate negotiations with such foreign countries on an expedited basis, in the IMF or bilaterally, for purposes of prompt adjustment. The Secretary is not required to do so in cases where negotiations have a serious detrimental impact on vital national economic and security interests, in which case the Secretary shall inform the Chairman and the Ranking Minority member of the Committee on Banking, Housing and Urban Affairs of the Senate and of the Committee on Banking, Finance and Urban Affairs of the House of Representatives.

The Secretary, in consultation with the Chairman of the Federal Reserve Board, is directed to submit to the aforementioned committees a report on or before October 15 on international economic policy, including exchange rate policy. The Secretary is also directed to consult with the House and Senate Banking Committees on his report, and after each such consultation, the Committees and to report to their respective bodies on the consultation.

Subtitle B

Section 3101-3113, is titled "The Third World Debt Management Act". This subtitle directs the Secretary of the Treasury to study the feasibility and advisability of establishing the International Debt Management Authority. If the initiation of international discussion with regard to such authority would result in material in

crease in the discount at which sovereign debt is sold, materially increase the probability of default on such debt, or materially enhance the likelihood of debt service failure or disruption, the Secretary is directed to include in his interim reports an explanation for such a determination.

Unless such a determination is made, the Secretary of the Treasury shall initiate discussions to negotiate the establishment of the International Debt Management Authority, which would undertake to purchase sovereign debt of less developed countries from private creditors at an appropriate discount, enter into negotiations with the debtor countries to restructure the debt to each current debt service burden and provided additional opportunities for economic growth in both debtor and industrialized countries and assist the creditor banks in the voluntary disposition of their Third World Loan portfolios.

At the end of the 6-month period beginning on the date of enactment of this Act and at the end of the 12-month period beginning on such date of enactment, the Secretary of the Treasury shall submit a report on the progress being made on the study or in discussions, to the Committee on Banking, Finance and Urban Affairs of the House of Representatives and the Committee on Banking, Housing, and Urban Affairs and the Committee on Foreign Relations of the Senate. At the conclusion of the study or discussions, the Secretary is directed to transmit a report to the Committee on Banking, Finance and Urban Affairs of the House of Representatives and the Committee on Banking, Housing, and Urban Affairs and the Committee on Foreign Relations of the Senate, together with recommendations for legislation.

A study is also required by the Executive Director of the IMF on the impact of the Fund's structural adjustment programs on LDC democracies and the role the fund intends to play in helping to alleviate the debt crisis.

Section 3121, expresses the sense of Congress that federal banking regulatory agencies should provide latitude toward banks in negotiating principal and interest deductions with respect to heavily endebted sovereign borrowers. It also expresses the sense of Congress that federal banking regulatory agencies should; be flexible in determining the value of restructured loans to heavily endebted sovereign borrowers; encourage recapitalization of certain depository institutions through equity financing as appropriate; and ensure that appropriate levels of reserves be established by depository institutions engaged in substantial lending to heavily indebted sovereign borrowers.

This section requires that Federal banking agencies before March 30, 1989 and before April 30 of each succeeding year submit a report to Congress on the following issues: the risk of loan exposure created by lending to heavily indebted sovereign borrowers; the progress made in reducing the risk to the economy of this loan exposure; the relationship between lending activity of U.S. banks and the export of U.S. goods to countries borrowing from U.S. banks' regulatory response in other countries to the international debt problem, and steps taken by heavily endebted sovereign borrowers in the previous year to remove causes of the debt service difficulties.

Section 3122, requires the Comptroller of the Currency, the Board of Governor of the Federal Reserve System and the Federal Deposit Insurance corporation to study the extent of any regulatory obstacle to negotiated reductions in debt service obligation. This report is required to be sumitted to Congress within 6 months of the effective date of this Act.

Section 3123, directs the Secretary of the Treasury, in consultation with the IMF, to conduct a study of the feasibility of reducing the international debt of the poorest of the heavily indebted countries through a one-time allocation by the IMF of limited purpose Special Drawing Rights.

Subtitle C-Multilateral Development Banks

Section 3201 and 3202, directs the Secretary of Treasury to designate an officer of multilateral development bank procurement.

Subtitle D-Export-Import and Tied-Aid Credit Amendments Sections 3301-3304 titled Export-Import Bank and Tied-Aid Credit Amendmens. The subtitle extends the authority of the TiedAid Credit Fund wihin the U.S. Export-Import Bank for one additional year.

Further, the subtitle requires the Export-Import Bank to submit to the Speaker of the House and President pro tempore of the Senate, a report identifying and analyzing the tied-aid credit practices of other countries and make recommendations. In preparing the report, Eximbank is directed to consult with the International Bank for Reconstruction and Development, the International Monetary Fund, and the Development Assistance Committee of the Organization for Economic Cooperation and Development.

The subtitle also requires the Eximbank to sumit a report to the House and the Senate Banking Committees within 90 days of passage of the Act. This report would provide an assessment of recent program changes in increasing United States exports to developing countries and identifying additional specific policy changes which would enable the Bank to increase the financing of United States exports to developing countries and encourage greater private sector participation in such financing efforts.

Finally, the subtitle changes the adverse impact policy of the Eximbank. Instead of determining injury to U.S. economy from when production capacity is expected to become operative, the time is from when the product is first to be sold on the world market. The provision also includes consideration of injury to U.S. employment. The provision defines substantial injury as in excess of 1 percent of U.S. production.

Subtitle E-Export Trading Company Act Amendments

Sections 3401 and 3402 provide for modifications in the manner of determining and evaluating the permissible activities of Export Trading Companies.

Subtitle F-Primary Dealers

Section 3501 and 3502 prohibits the Federal Reserve System and the Federal Reserve Bank of New York from designating or continuing the designation of any person of a foreign country as a primary dealer in government debt instruments if such foreign country does not accord U.S. companies the same competitive opportunities in underwriting and distributing of government debt instruments issued by such country as such country accords to domestic companies of such country.

Subtitle G-Financial Reports

Sections 3601-3604 requires the Secretary of Treasury in conjunction with other Federal bank regulatory agencies to report to Congress on the treatment of United States financial institutions in foreign countries. These sections require that the President conduct discussions with other countries to insure that U.S. financial institutions receive fair treatment in foreign countries which have major financial centers. In addition, these sections also require that the Federal Reserve Board report to Congress on the issues raised by including loan loss reserves as part of a bank's primary capital for regulatory purposes.

Title IV

Section 4310 expresses the sense of Congress that the United States should maintain its historic proportion of food assistance which constitutes one-third of all United States foreign economic assistance. For purposes of this section, foreign economic assistance includes the United States contribution to the International Bank for Reconstruction and Development, the International Development Association, Inter-American Development Bank, the Asian Development Bank, the African Development Bank and any multilateral redevelopment bank.

Title V

Subtitle A-Foreign Corrupt Practices Act; Review of Certain

Acquisitions

Section 5021 provides the President with additional authority to review and prohibit certain mergers, aquisitions and takeovers. The President or his designee is authorized to investigate a merger, acquisition or takeover by or with a foreign person, or a person engaged in interstate commerce, to determine the effect upon national security. If the President determines that the proposed merger, acquisition or takeover would threaten national security, and other provisions of law do not provide sufficient protection for U.S. National Security, the President may suspend or prohibit the proposed merger, acquisition or takeover. The President shall consider the effect of the merger, acquisition or takeover on domestic production needed for projected national defense requirements, the capacity and capability of domestic industry to meet national defense requirements, and the effect of foreign control of domestic industry