may be used to purchase foreign currencies accruing under title I in order to meet costs (except the personnel and administrative costs of cooperating sponsors, distributing agencies, and recipient agencies) designed to assure that commodities made available under this title or under title III are used to carry out more effectively the purposes for which such commodities are made available or to promote community and other self-help activities designed to alleviate the causes of the need for such assistance: Provided, however, That such funds shall be used ony to supplement and not substitute for, funds normally available for such purposes from other non-United States Government sources," and by inserting after the word "costs" in the last sentence the words "or for the purchase of foreign currencies".

(11) Section 101 of such Act is amended by striking out in subsection (f) the words "from the government or agencies thereof" and further by striking the period at the end of subsection (f) and adding the following: ", and which are not less favorable than the highest of exchange rates obtainable by any other nation.".

SEC. 2. Subsection (b) of section 612 of the Foreign Assistance Act of 1961, as amended, is amended (1) by redesignating it as subsection (t) of section 104 of the Agricultural Trade Development and Assistance Act of 1954, as amended. (2) By striking "this Act" and substituting "the Foreign Assistance Act of 1961, as amended.".

(3) By changing the period at the end of the subsection to a comma and adding "except that in the case of any such foreign currencies acquired through operations under title I of the Agricultural Trade Development and Assistance Act of 1954, as amended, the United States dollars received from the sale of such foreign currencies shall be deposited to the account of the Commodity Credit Corporation and shall be treated as a reimbursement to Commodity Credit Corporation under section 105 of this Act."

SEC. 3. Section 416 of the Agricultural Act of 1949, as amended, is amended by adding the following at the end of such section: "The assistance to needy persons provided in (4) above shall, insofar as practicable, be directed toward community and other self-help activities designed to alleviate the causes of the need for such assistance.".

Hon. ALLEN J. ELLENDER,

DEPARTMENT OF AGRICULTURE, Washington, D.C., October 10, 1963.

Chairman, Committee on Agriculture and Forestry,
U.S. Senate.

DEAR MR. CHAIRMAN: This is in response to your request for a report on S. 1498, a bill to amend section 304 of the Agricultural Trade Development and Assistance Act of 1954, commonly known as Public Law 480 (83d Cong.).

S. 1498 would amend section 304 to (1) provide for the use of title I of the act for "alternative marketing and purchasing opportunities" to assist friendly nations to be independent of trade with the Soviet bloc and (2) add areas and nations dominated or controlled by the Communist regime in China to the countries from which the United States would seek to assist friendly countries to be independent in their trade.

The Department does not recommend enactment of the provision for alternative marketing and purchasing opportunities but has no objection to the provision adding areas dominated or controlled by the Communist regime in China.

Considerable use is made of the title I, Public Law 480 authority to assist friendly nations to be independent of trade with the Soviet bloc. Sales of U.S. surplus agricultural commodities for foreign currencies are made to these countries, thereby making it unnecessary that they obtain these commodities from the Soviet bloc. The proposed amendment of section 304 would neither broaden nor facilitate the use of title I.

If the proposed language regarding alternative marketing and purchasing opportunities contemplates the use of title I proceeds to purchase other commodities from friendly countries in order to make them independent of trade with Sino-Soviet bloc countries, we believe this would be neither practicable nor desirable. It is highly unlikely that arrangements could be made with participating countries to purchase or effectively use commodities in this manner. In the administration of title I, Public Law 480, we have not experienced the need to use foreign currency proceeds for the purpose of preemptive purchases. More

over, we believe it would be undesirable that legislation be enacted which would suggest that the United States intends to use the title I authority for this purpose.

With respect to adding areas dominated or controlled by the Communist regime in China to those countries from which the United States would seek to assist friendly contries to be independent in their trade, we have been advised by the Department of State that it considers this change useful and desirable and entirely consistent with U.S. policy regarding the Communist Chinese regime. Therefore, the Department would have no objection to the enactment of this proposal.

The Bureau of the Budget advises that there is no objection to the presentation of this report from the standpoint of the administration's program.

Sincerely yours,

Hon. ALLEN J. ELLENDER,

CHARLES S. MURPHY, Acting Secretary.

DEPARTMENT OF STATE, Washington, October 11, 1963.

Chairman, Committee on Agriculture and Forestry,
U.S. Senate.

DEAR MR. CHAIRMAN: Your letter of May 10, 1963, requested a report on S. 1498, a bill to amend section 304 of the Agricultural Trade Development and Assistance Act of 1954.

Senate bill 1498 would add a specific reference in section 304 to the use of title I of the act to provide "alternative marketing and purchasing opportunities," as a means of assisting friendly nations to be independent of trade with the Soviet bloc. Secondly, the bill would add areas controlled by the Communist regime in China to those countries from which the United States would seek to make friendly countries independent with regard to trade.

The Department believes that the first of these additions would be both unnecessary and undesirable, but that the second would be desirable.

There is no need to add specific reference in section 304 to the provision of "alternative marketing and purchasing opportunities" for friendly nations. The administration is already authorized by section 304 to do this, and the new language would not add to its authority in this connection.

However, the language on "alternative marketing and purchasing opportunities" would have certain undesirable effects. It would indicate that Congress expects the administration not only to sell surplus agricultural commodities, but also to use some of the foreign currency proceeds deriving from such sales to purchase other commodities in order to render some countries independent of trade with Sino-Soviet bloc countries. Thus the new language would suggest, although this may not have been intended, that the U.S. Government is about to embark on a major campaign of preemptive buying of commodities throughout the world. The Department considers that it would be unfortunate to convey any such impression to the less developed countries. It is likely that many of them would soon urge the U.S. Government to buy from them large quantities of various commodities which they might otherwise sell or barter to Communist countries. This Government would be faced with the unpleasant alternatives of accommodating a number of these countries, which would involve expenditures far out of proportion to the potential gains involved in temporarily decreasing somewhat their trade with Communist countries, or of disappointing these governments by rejecting such offers. Furthermore, any preemptive purchasing by this Government might serve to stimulate uneconomic production in these countries and to arouse expectation that surplus commodities could always be disposed of in the United States.

The Department of State has not encountered a situation in recent years where it appeared desirable and practicable to influence the trade of a free world country with a Communist country by resorting to preemptive purchases with funds derived from the sale of surplus agricultural commodities. Under these circumstances it must oppose a provision which would suggest that the U.S. Government intends to make a regular practice of such a technique. If a highly unusual situation should arise in which it would be desirable to resort to preemptive buying, this could be done even without the additional language contained in Senate bill 1498.

The second change which would be effected by Senate bill 1498 would add areas controlled by the Communist regime in China to those from which the U.S. Government should seek to make friendly countries independent in their trade. The Department considers that this change would be a useful and desirable one entirely consistent with the U.S. policy regarding the Communist Chinese regime. It wishes to support that part of Senate bill 1498 which would serve this purpose.

The Bureau of the Budget advises that, from the standpoint of the administration's program, there is no objection to the presentation of this report for the consideration of the committee.

Sincerely yours,

FREDERICK G. DUTTON,

Assistant Secretary (For the Secretary of State).

DEPARTMENT OF AGRICULTURE,

Washington, D.C., February 18, 1964.

Hon. CARL HAYDEN,

President Pro Tempore

U.S. Senate.

DEAR SENATOR HAYDEN : One of the deep satisfactions that come to me as Secretary of Agriculture is the fact that I am able to play a part in carrying forward our Nation's highly successful agricultural export program under Public Law 480. I know that many of my friends in Congress feel exactly the same way.

Public Law 480 currently is making a greater contribution than at any time in its nearly 10 years of operation. Shipments of U.S. agricultural products under the program reached an alltime high record of more than $1.6 billion, export market value, in calendar year 1963. Not only are such shipments putting food and fiber into the hands of needy foreign friends and accelerating their growth programs, but also they effectively serve our farm and business communities by building future foreign markets for our efficiently produced abundance. Hundreds of thousands of jobs on our farms and in our towns and cities depend wholly or substantially on the production, processing, transporting, and related activities brought about by Public Law 480.

The programs, operating in more than 100 nations, have begun to make a contribution to economic growth that is even more dramatic. More than half a million workers in 19 countries are paid directly in U.S. food under Public Law 480 food-for-work programs. Many thousands more are employed as a direct result of the use of local currencies for economic development projects.

Titles I and II of the Agricultural Trade Development and Assistance Act of 1954, as amended (Public Law 480, 83d Cong.) are authorized through the remainder of this calendar year. I am enclosing a draft of a proposed bill to extend these authorities.

It is proposed that (1) the authority to enter into agreements under title I be extended 5 calendar years through December 31, 1969, and increased by $7.1 billion for the 5-year period with a limitation of $2.5 billion in any calendar year with provision for the carryover of uncommitted authorizations from prior years, (2) the use of foreign currencies be authorized for procurement of equipment, materials, facilities, and services for internal security programs, in addition to the military categories presently authorized for the common defense, (3) the existing 25-percent limitation on loans to private business firms be eliminated, (4) authorization be included for the sale of title I currencies for dollars to voluntary agencies and to U.S.-flag vessels for payment of certain expenses incurred under the act, (5) the requirement of reports on activities under the act be changed from every 6 months to each year, and (6) the title II authority be increased to $450 million for each of the calendar years 1965 through 1969 and authority to make general average contributions be extended to title III and related shipments.

Title I of Public Law 480 authorizes the President to enter into agreements with friendly nations or organizations of friendly nations to provide for the sale of surplus agricultural commodities for foreign currencies. Congressional authorizations for the 5-year period January 1, 1960, through December 31, 1964, total $9.5 billion, with a maximum of $2.5 billion during each of the calendar years 1961 through 1964. Programing for the past 5 years resulted in costs to the Commodity Credit Corporation of approximately $9 billion. However, it is an

ticipated that dollar reimbursements to the Commodity Credit Corporation from other agencies of the U.S. Government as a result of loan repayments and sales of title I currencies will provide approximately $1 billion so that authorization of further appropriations of $7.1 billion plus carryover of uncommited authorizations will be sufficient. Public Law 87-128 which extended title I authority through December 31, 1964, did not include the provision for the carryover of uncommited authorizations from prior years which had been included in previous extensions of title I. The enclosed draft of a proposed bill requests that this provision be restored to eliminate administrative and accounting problems which have resulted.

The request for a 5-year extension of the title I program is presented to permit continuation of orderly programing and shipment of agricultural surplus to food and fiber deficit areas of the world, principally less developed nations. Enactment of the proposal will facilitate efforts to make maximum utilization of our agricultural abundance under the food-for-peace program and to continue to negotiate agreements on a long-term basis where there are oportunities to program commodities and it is in the interest of American agriculture to do so.

The foreign currency uses now include authorization for procurement of military equipment, materials, facilities, and services for the common defense. In order to make clear that this authority can be used for activities in support of counterinsurgency programs, such as the Vietnam strategic hamlet program, and other activities vital to counteract Communist-inspired subversion and insurgency, we are requesting that the authority be changed to delete reference to "military" goods and services and to make explicit that the authority may be used to procure any goods and services necessary for the "common defense" including within that concept "internal security programs.“

Public Law 480 now provides a limit of 25 percent on the amount of foreign currency that can be set aside in each agreement for loans to private business firms. There may be occasions when it would be beneficial to the developing countries and to the United States to provide for a larger share of title I currency for this purpose.

Amendment of section 104 is requested to provide for the scale of title I foreign currencies to U.S. voluntary agencies for use in paying expenses abroad in connection with the distribution of donated commodities and to U.S.-flag vessels for use in paying port fees, unloading, lightering, and other charges at destination in connection with the carrying of Public Law 480 cargo. It is now necessary for these users to purchase foreign currencies abroad to pay these expenses and the sale of title I currencies for this purpose would represent a dollar saving to the United States in countries where it is not necessary to purchase currencies to meet other U.S. obligations. This amendment would facilitate the negotiation of agreements providing for the use of funds for these purposes.

The act provides that a report on activities be made every 6 months. The 19th semiannual report now in preparation, as well as the several immediately preceding reports, reveal that these summaries of statistics and factual information will serve the purpose at considerably lower cost if they are submitted annually. Additional timely information is made available to the committees, Congress, and the public as it becomes available and is most useful.

In order to permit continuation of useful activities which have been possible under title II of Public Law 480 (relating to famine relief and other assistance), it is proposed that this authority be extended for 5 calendar years through December 31, 1969. It is also proposed that the authorization be increased to $450 million per calendar year. This amount along with uncommitted authorizations from prior years will provide for an expansion in the economic and community development programs authorized under section 202. The current authorization for title II programs is $300 million per calendar year. However, by utilizing uncommitted authorizations from prior years, programing for fiscal year 1963 was at a rate of $354 million. Section 203 of Public Law 480 also authorizes the use of title II funds to pay certain transportation costs on commodities donated under section 416 of the Agricultural Act of 1949, as amended, and authorizes the payment of charges for general average contributions from title II funds. It is proposed that language be inserted to extend the authority for the payment of charges for general average contributions to commodities donated under section 416 and related statutes when title II funds are used to pay ocean freight charges.

With the possible exception of the increasing operations under title II, enactment of the proposed legislation would result in no increase in employment or administrative costs in the fiscal year 1965. The program cost of $1.5 billion estimated for the fiscal year 1965 takes into account the proposed amendments. The Bureau of the Budget advises that enactment of the proposed legislation would be in accord with the program of the President.

A similar letter is being sent to the Speaker of the House of Representatives. Sincerely yours,

This amendment would:

EXPLANATION

ORVILLE L. FREEMAN,

Secretary.

(1) a. Extend title I for 5 years beginning January 1, 1965, and ending December 31, 1969.

b. Authorize agreements of $7.1 billion over the 5-year period, with not more than $2.5 billion in any one calendar year. In addition, the amendment would (1) provide for additional authorization of agreements by the amounts of reimbursements to the Commodity Credit Corporation from other agencies of the U.S. Government for foreign currencies and repayment of economic development loans in dollars, currently estimated at approximately $1 billion, and (2) provide for carryover of unused authorization from prior years, including the approximately $407 million of unused balance not previously provided for as of December 31, 1961, plus any amount remaining uncommitted from the current authorization on December 31, 1964, projected at approximately $500 million. (A similar provision has been included in every extension of title I authority except that of Public Law 87-128, enacted August 8, 1961. Reenactment of this provision will eliminate administrative and accounting problems resulting from modifications and amendments of agreements which take place after the expiration of the authorization under which the agreements were signed.)

(2) Authorize use of foreign currencies for procurement of any equipment, materials, facilities, and services necessary for the common defense including internal security.

(3) Eliminate the 25-percent limitation on Cooley amendment loans of foreign currencies to private business firms.

(4) a. Facilitate the negotiation of foreign currency amounts for sale to U.S. voluntary agencies as permitted by a new section 612 (b) in the Foreign Assistance Act.

b. Facilitate arrangements to furnish foreign currencies for payment of foreign charges instead of furnishing dollars with which ship operators buy foreign currencies to pay these charges.

(5) Change from 6 months to each year the requirement of reports by the President to the Congress on activities under the act.

(6) a. Extend title II for 5 years through December 31, 1969, and provide for an increase in the annual title II authorization to $450 million compared with the present $300 million. Utilizing unused authorizations from prior years, title II commitments during fiscal year 1963 amounted to $354 million.

b. Extend to title III and related shipments the general average contribution authority now provided for title II shipments. Under general average arrangements, risks and losses to a vessel and its cargo are distributed in proportion to the value of the vessel, the cargo, and the freight to be earned.

SENATE COMMITTEE ON AGRICULTURE AND FORESTRY STAFF SUMMARY OF S. 2687

This bill would amend Public Law 480, 83d Cong., to

(1) Require title I foreign currencies to be convertible to dollars to the extent consistent with the purposes of the act.

(2) Prohibit Commodity Credit Corporation from financing ocean freight charges on title I shipments, except to the extent of the differential required as a result of cargo preference where the U.S.-flag vessel rate exceeds foreign vessel rates.

(3) Limit title I agreements during 1965 through 1969 to $7.1 billion, plus unused authorizations from prior years (estimated at $907 million) and limit agreements during anyone of such 5 years to $2.5 billion; but each of these limits may be exceeded to the extent of the amount of U.S. dollars received by CCC; (i) in repayment of title I loans; and (ii) as reimbursements from other