members of the Latin American free trade area from the application of temporary measures adopted to safeguard the balance of payments. They stressed the economic disadvantages of such discrimination and urged that it be eliminated.

A scheduled consultation with Chile was postponed until the spring of next year to give the contracting parties an opportunity to appraise complex new financial developments which occurred in that country just prior to the 20th session.

3. The 1963 consultation arrangements The Committee on Balance of Payments Restrictions also proposed and the contracting parties approved consultations to be conducted in the spring and fall of 1963 with Burma, Chile, Denmark, Finland, Indonesia, Israel, Japan, New Zealand, South Africa, Turkey, United Arab Republic, and Yugo

slavia.

4. Expiration of the "hard-core" waiver

The contracting parties agreed that the validity of the "hard-core" decision of March 5, 1955, should not be further extended. Only two contracting parties (Belgium and Germany) had even made limited use of the procedures established in the decision of March 5, 1955, whereby contracting parties emerging from balance-of-payments difficulties could retain restrictions for a temporary period, not to exceed 5 years. The U.S. delegation, in suggesting that the "hardcore" decision be permitted to expire upon its termination date (December 31, 1962), noted that the decision contained criteria which would be useful if the contracting parties were requested in the future to grant a waiver of a similar nature under article XXV.

B. RESIDUAL IMPORT RESTRICTIONS At the 20th session, the contracting parties agreed to continue notification and examination procedures designed to maintain maximum pressure for the removal of quantitative import restrictions still applied by some countries in contravention of GATT rules.

The adequacy of notifications of restrictions received from individual contracting parties under these procedures was examined by a group of experts in February and May 1962. On October 22, the council of representatives reviewed the operation of the entire arrangement, including consultations which have been held with a number of re

stricting countries at the request of the United States and Uruguay.

The contracting parties of the 20th session agreed to continue the procedures in their present form and urged governments to respond more fully to the invitation to notify

restrictions. Lists of restrictions will be reviewed from time to time by the council.

The U.S. delegation, noting the value of the notification procedures, stated that its Government expected to make energetic use of the consultation and complaint procedures of GATT in dealing with residual restrictions adversely affecting U.S. exports.

C. AUSTRIAN IMPORT RESTRICTIONS Austria took the occasion of this session to

announce a program effective from January 1, 1963, to reduce the disparity between liberalization actions applicable to countries of the Organization for Economic Cooperation and Development (OECD) and those applying to GATT contracting parties, not members of the OECD. Under the new program, Austria's liberalization rate for GATT countries will amount to some 93 percent of its imports. In making this announcement, Austria noted that this extension of liberalization was done not only in the interest of a liberal trade policy but as a means of con

tributing to the export earnings of less developed countries.

Several countries commended Austria and expressed the hope that the move would serve as an example to other European countries. With respect to restrictions still remaining, Austria announced that their gradual removal will continue, that global quotas have been instituted for OECD countries with respect to all industrial and some agricultural products, and that it is intended to extend these quotas to all GATT countries in the near future.

Since Austria emerged from balance-ofpayments difficulties and disinvoked the provisions of article XII (see section IV (a)) in November of 1961, it is under obligation to remove all import restrictions inconsistent with GATT provisions. In this connection, Austria has stated its readiness to enter into consultations with any interested contracting party on these remaining restrictions.

D. GERMAN IMPORT RESTRICTIONS

The contracting parties approved the report of the working party on German import restrictions, noting that the waiver granted to the Federal Republic of Germany on May 30, 1959, of certain obligations under article XI of the general agreement, would expire at the close of the 20th session. The U.S. delegation and the delegations of several other contracting parties expressed disappointment that the Federal Republic intended to retain restrictions on a number of

products beyond the expiry of the waiver, despite the fact that such restrictions would then be applied in a fashion inconsistent with the provisions of the general agreement. Referring to these restrictions in working party discussions, the U.S. member stressed that certain of these restrictions fell on products, i.e., apples and pears and some canned fruit, on which the EEC has given tariff concessions to the United States; and that unless these restrictions were to be removed, the United States appeared to have no alternative to taking action on this problem under article XXIII of GATT.

The delegate of the Federal Republic pointed out that, leaving aside products for set, the remaining quantitative import rewhich specific dates of liberalization were strictions applied by the Federal Republic number of textile products, and a few cerelated to certain agricultural products, a ramics. He stated that the Federal Republic was ready at all times to consult with contracting parties about trade problems caused

by these restrictions. He stated also that the Federal Republic would always be willing to take part in any common action by the contracting parties toward seeking multilateral solutions for certain of the products still under restriction.

While taking favorable note of the willingness of the Federal Republic to consult on outstanding problems, a number of the contracting parties emphasized that Germany bring its import regime into conformity with should take steps on its own initiative to

GATT.

E. BELGIAN IMPORT RESTRICTIONS

At the 10th session, Belgium was granted a waiver permitting the application of import restrictions until December 31, 1963, on some 50 agricultural products, to permit Belgian producers additional time to adjust to import competition. Most of the restrictions concerned have been removed, but a few remain, particularly on fresh fruits and vegetables.

At the 19th session, the Belgian delegation assured the contracting parties that the Belgian Government intended to take appropriate action so as to remove all quantitative import restrictions by December 31, 1962, when the waiver expires. However,

at the 20th session, the representative of the Belgian Government informed the contracting parties that, while conditions in his country were such as to require the continued application of restrictions on certain products by the expiry of the waiver, Belgium would not seek an extension of the waiver. He stated that Belgium would notify these restrictions to the GATT Secretariat in accordance with established procedures. Several contracting parties expressed concern over the prospect of the continued application of Belgian restrictions and asked that a working party meet during the session to examine the situation in greater detail.

In the plenary and working party discussions, the United States and other agricultural exporting nations expressed disappointment that after such a long period, certain import restrictions would remain. The U.S. representatives pointed out that tariff concessions granted to the United States by the EEC on apples, pears, and hops would be considered to be impaired if import restrictions on these products were applied beyond the expiry of the waiver, and that the United States would have no alternative but to invoke the procedures of article XXIII in order to redress the balance of benefits and obligations under the general agreement.

F. U.S. IMPORT RESTRICTIONS

The eighth annual report to the contracting parties was submitted by the United States under the decision of March 5, 1955, which granted a waiver to the United States to exempt from the provisions of the GATT import restrictions maintained under section 22 of the Agricultural Adjustment Act, as amended. The waiver laid down certain reporting requirements on activities under section 22 which the annual report is designed to meet.

Continued progress toward removal and liberalization of import regulations under section 22 were indicated in the report. In introducing the report, the U.S. representative summarized actions taken during the year as further evidence of judicious use of the authority granted to regulate certain imports by both domestic legislation and by GATT. The commitment was also given to make continuing efforts to relax restrictions still in force as quickly as the situation per

mitted.

The report noted that import restrictions were removed during the year on tung nuts and tung oil. The quota for blue mold cheese was increased. The report was supplemented orally with announcement of the rejection, on the basis of an investigation and report of the U.S. Tariff Commission, of a proposal for an import fee on the cotton content of textile imports. This action had been announced subsequent to the preparation of the section 22 report. Currently in force at the end of the period covered, were import regulations on wheat and wheat products; cotton, cotton waste, and cotton picker lap; peanuts; and certain processed dairy products.

The usual working party was organized to examine the report. Its examination followed the general lines of earlier meetings with appreciation expressed where quotas relaxed, and disappointment where progress was not possible (as in the case of cheddar cheese). Concern was centered, as

were

usual, on dairy products. Also highlighted, however, were the new U.S. farm bill and the proposed dairy stabilization scheme-both of which were presented as giving promise of improved supply management through tighter production control. The United States was urged, both in the working party examination and in plenary session where the report was also considered, to consider the possibilities of renouncing the waiver at an early date. Emphasized throughout was

ALLIANCE FOR PROGRESS

Mr. JAVITS. Mr. President, the current issue of International Commerce, a weekly publication of the U.S. Department of Commerce, contains a series of excellent articles on the Alliance for Progress by Teodore Moscoso and Seymour Peyser of the Agency for International Development, and experts of the Department of Commerce and other Government agencies.

There has been much criticism of the Alliance both in the United States and in Latin America. Many feel that progress has been limited, that there is much duplication and lack of coordination among U.S. Government agencies concerned, that the effort thus far has not evolved into a cooperative effort of all the members of the Organization of American States, and so on. As the articles in International Commerce indicate, there has been much, though often undramatic, progress since the signing of the charter of Punta del Este in 1961. Tax and land reform, greater emphasis on education, increasing interest among U.S. investors, have characterized the beginnings of this great and vital effort.

One of the major shortcomings of the U.S. contributions to the Alliance has been the limited role of private enterprise in carrying out the basic objectives of the Alliance. Through the U.S. foreign aid program we have done much to provide essential financial support toward the building of roads, schools, hospitals, power stations, the provision of agricultural credit, and so forth. The specific investment guarantee program has done its part to maintain investor

confidence in the potential of Latin American industry and agriculture. While our investments in Latin America today remains substantial, $8.5 billion, net capital outflow from the United States to Latin America has been limited, averaging under $200 million between 1957 and 1961. Since mid-1961, there have been, on balance, net inflows to the United States from the region. Yet U.S. investments in manufacturing out of retained earnings-a major source of all such investments in less developed countries have risen in the area.

Ex

penditures for fixed investments in plant and equipment also show a relatively well-sustained activity.

Without the aid of private enterpriseUnited States, Latin American, and European-the Alliance for Progress cannot succeed. The senior Senator from Minnesota [Mr. HUMPHREY] and I are cosponsoring an effort initiated by and under the direction of a working party

of the NATO Parliamentarians Conferof the NATO Parliamentarians Conference to bring together United States, Latin American, and European capital in joint ventures in Latin America through joint ventures in Latin America through the Atlantic Community Group for Latin America-ADELA.

The potential of the enormous creative powers of private enterprise remains yet to be harnessed. We must encourage the flow of private investment to Latin America through every possible means including investment guarantees, tax incentives to private investors, technical assistance, as well as loans to build roads, ports, power facilities, and so forth. Our Government must be willing to work closely with enlightened American business enterprise in further expanding the role of our private sector-business, labor, universities, individuals-in implementing the objectives of the foreign aid program in Latin America and elsewhere.

I ask unanimous consent to have printed at this point in the RECORD a series of articles on the Alliance for series of articles on the Alliance for Progress from the November 4 issue of International Commerce, including one by Teodore Moscoso and Seymour Pey

TWO YEARS OF THE ALLIANCE (By Teodoro Moscoso, U.S. Coordinator of the Alliance for Progress)

It is no longer necessary to give a reason for discussing the problems of Latin America. Events there in the past 3 or 4 years have had a powerful impact on the American public. The area has moved from virtual oblivion to the front pages of our newspapers. The image of the sleepy Latino, of the tourist paradise, of the fiesta that yields good pictures for home movies, has radically and rudely changed.

Now we think of Latin America as a hotbed of Castro communism, of feudal rule and unreasonable reluctance to go along with us in policies that we believe are good for the region. The trouble is that these current notions are just as oversimplified as the superficial romanticism that colored our thinking about Latin America in the past.

The one thing that is unquestionably true is the simple but immensely meaningful statement President Kennedy made a few

months ago: "I regard Latin America as the most critical area in the world today." VARIETY

The Latin America with which we deal today is 19 different countries, with 19 different sets of problems and opportunities. Most of the people speak Spanish. The single largest nation-with a third of Latin America's population-Brazil, uses Portuguese. But millions of people in these countries don't speak either of these languages. Guarani is the Indian language of Paraguay. Quechua and Aymara are the major languages many other dialects are spoken by smaller of the Andean countries, and many other dialects are spoken by smaller groups of indigenous people, most of whom do not figure in the money economy and hardly are aware that they are citizens of the countries in which they live.

Some Republics have long traditions of constitutional democracy, while others are only now emerging from a succession of strongman dictatorships. Some have firmly rooted private and public institutions, which need reshaping under the impact of social

ferment and economic pressures. Others have as yet no firm institutional base.

Some are industrially developed, thanks in large measure to immigrants from Europelions of people that helped build our Nation-Italy, Germany, England, Spain, and Portugal. Most are essentially agriculturalwith too many people working too hard to produce too little.

from the same countries who sent the mil

A few Latin American countries boast

highly developed educational systems, with literacy rates comparing favorably to our own. Most are struggling to reduce the waste resulting from mass illiteracy and to give their people the skills so vitally needed for modern development work.

Some have gone through deep political and social revolutions. Most are now at a prerevolutionary stage, bent on massive change, and challenging their own leaders and us to help them do the job in freedom and with a minimum of violence. But changes they want and they will get either with us, or without (and possibly against) us. The man with the hoe will make his voice heard.

DEEP U.S. COMMITMENT

Since the early years of our Republic, the United States has had a deep and unique commitment to the struggle of our fellow Americans for political independence, economic growth and social justice. This commitment has been embodied in the Monroe

Doctrine, the Pan American Regional Organization and the good neighbor policy. It symbolizes the brotherhood of the Western Hemisphere-the common interest of the American peoples for building societies capable of providing solutions to popular demands.

But since World War II, none of these policies have been adequate to deal with the rapidly growing problems of Latin America. An industrial ferment which began in the postwar years-induced in part by the near stagnation of rural economies-brought new millions of unskilled workers to the burgeoning cities.

Since the end of the war São Paulo's population has doubled. Mexico City's population increased by 58 percent between 1950 and 1960. City after city has grown, and the revolution of rising expectations has accelerated in the cities. The back windows of some plush apartment houses in Rio de Janeiro open out on a hillside of huts-the favelas, homes without water, light or sewers.

NO LONGER VALID

The favela dwellers as well as more fortunate citizens with a social conscience, began to ask "Why?" The answer-because this

has always been so no longer is good enough.

Political and economic thinkers in Latin America have understood the seriousness of the problem for a good many years. The United Nations Economic Commission for Latin America proposed comprehensive approaches to the problems of social and economic development in the hemisphere early in the fifties.

In 1954, the Latin American countries proposed to the United States the establishment of an inter-American Development Banka regional equivalent of the World Bank-to concentrate on planning and financing the modernization of Latin America. We said "no." It took the disastrous events of the Nixon trip 4 years later to change our attitude. The Bank became a reality in 1960 and has done a fine job ever since.

The Bank was only a partial answer. In 1958, President Kubitschek of Brazil proposed a comprehensive program of social and economic development under the title "Operation Panamerica." Again, we failed to pick up a plan of action that a Latin American leader who knew the urgency of the situation offered us. Another 2 years later,

reacting to the incidents involving the then Vice President Nixon, we moved ahead another step, with the act of Bogotá, in which we committed ourselves to a major attack on Latin America's social ills.

But it was not until 1961 that we faced up to the problem in all its complex and deeprooted aspects.

TOTALLY NEW

The Alliance represents a totally new approach to U.S. cooperation with our Latin American neighbors. It is not a projection of the bilateral technical assistance programs which were initiated during World War II under the Coordinator of Inter-American Affairs and continued under point 4. These former activities were programs designed to transmit technical know-how through demonstration projects and training of Latin American technicians.

The Alliance calls for major development efforts by all the Latin American countries in which national and international financial, technical, and moral resources are committed to attack the causes of economic underdevelopment, social injustice, and political instability. It is an attempt to change the status quo, and to make change itself the hallmark of a new way of life.

Under the charter of Punta del Este, the primary responsibility for such basic development is placed on the Latin American countries themselves. Each country has agreed to improve and strengthen democratic institutions through the principles of self-determination of its people, to carry out social and economic reform programs and to accelerate the integration of Latin America, and to provide the bulk-an estimated four-fifths of the total resources required.

UNEVEN GAINS

The progress achieved during the 2 years since the charter was signed shows more action by the Latin Americans in the enactment of basic reforms than in the preceding half-century. The picture of tax, agrarian, administrative, and other reforms is encouraging. But it is also uneven.

Some countries have made giant strides while others have only made superficial efforts. In many cases reform laws have been adopted in good faith, but the countries do not have the trained administrators and specialists to implement them and make them effective.

To help the Latin American Governments do this job, we assist them in such areas as national planning, improved revenue collection and public administration. To this technical assistance we add development loans under terms they can afford. But we cannot do the job for them. Only the governments of Latin America can bring about the basic reforms which, soundly conceived and implemented, will ultimately help to make democratic government secure.

Unfortunately, the history of Latin America is full of unhappy experiences with corrupt and irresponsible government, which have bred disillusionment and cynicism among the people, especially the youth. Lack of confidence in their government has made it doubly difficult for Latin Americans to modernize. In less than 2 years the Alliance could not possibly reverse a trend which has such deep historical roots, but a beginning has been made.

TWO-YEAR RECORD

In the 2 years since Punta del Este planning for development has got underway in every member country of the Alliance. Seven countries have submitted blueprints for marshaling their internal resources and effectively utilizing external assistance.

Tax reforms are underway in 11 Latin American countries. In many cases income and property taxes are being applied for the first time in a country's history. We have

made it a policy to work with Latin American Governments in generating internal sources of financing for government programs rather than seek unproductive budget support from us.

An agreement between our Agency for International Development and the Internal Revenue Service warrants special mention. The IRS is undertaking not only to train Latin American officials in the United States, but also to provide technical assistance on the spot in improving tax administration. Cooperation between AID and IRS has already achieved some notable results. Tax administrators from Chile who were trained by the IRS were instrumental in increasing that country's revenues under existing laws and in bringing two tax evaders to justice, the first such cases in Chile's history.

Landholding problems have also received more attention than at any time since the Latin American wars of independence. Prior to the signing of the Alliance Charter, only Mexico, Bolivia, and Venezuela had basic agrarian reform legislation. Since its signing, five more countries have adopted laws and started land redistribution schemes. Five other countries are now studying the most effective and appropriate method to raise both productivity and living standards on the land.

We do not look on land reform as simply the splitting up of large estates and the distribution of the land to peasants. We see it as a complex problem. Aside from changes in landholding patterns-and these need not necessarily be changed in every case-adequate and supervised credit, marketing facilities, technical assistance, and many other elements go into the development of a healthy agricultural economy which can produce abundant food for fastgrowing populations.

Perhaps the most fundamental series of reforms carried out in Latin America dur

ing the past 2 years has been in education,

The Latin American countries have substantially increased their budget allocations to education and have taken other significant steps to develop their most valuable resource-people.

All of the hemisphere's resources could be poured into primary education without coming to grips with its need for qualified engineers, economists, professionals, and technicians needed to staff government and industry, to draft and execute national plans, and develop a productive agriculture. Latin America has an estimated 50,000 engineers and technicians in a population larger than our own, while we have over a million and feel we suffer from a shortage.

In husbanding national and inter-American resources for education under the Alliance, we are seeking a balance between primary and higher education. In the first 2 years of the Alliance, more than 8,000 new classrooms have been built and teachers trained to use them. Nearly 4 million textbooks have been distributed, often the first books of their kind ever received by the

children.

We are supporting technical training programs for workers in a score of countries, ranging from apprenticeship in El Salvador and industrial training in Chile to vocational education in Brazil and Ecuador. Some 40 major U.S. universities are working with 60 institutions in Latin America to

help prepare the future professional, technical, administrative, academic, and political leadership of Latin America.

Basic reforms and sound public administration of those reforms are essential building blocks of the Alliance.

PERSONAL INVOLVEMENT

The success of the Alliance will depend not only on governmental action but also

on involving the people of Latin America directly and intimately in the development process.

Special efforts are being made to this end. Individual projects in community development are underway in many countries to make the people themselves protagonists in social, economic, and political development. In Central America and Panama, the rural mobile health project combines minimum medical care for 600 villages with community The health teams, development efforts. made up of local personnel, traveling by jeep, boat, and muleback, collect a nominal and voluntary fee of 25 to 50 cents for treatment and cost of medicine; the fees collected are turned over to committees in each community which invest these fees in community projects of the villagers' choice.

The possibilities for involving the people in their own development under such a project is unlimited, and the response of the people so far has been most encouraging.

PRIVATE U.S. RESOURCES

On a hemispherewide basis, AID has also set in motion programs which harness the resources of U.S. private enterprise, the leading U.S. unions, cooperatives, and voluntary agencies to work on a people-to-people basis.

The Alliance cannot succeed without a healthy and vigorous private sector in Latin America. This is so, not for reasons of verbal convention, but because our economies prove the point pragmatically. An effective market economy must be created and preserved, and the forces of individual initiative allowed to play their creative role in Latin America as they have in Europe, North America, and Japan. Thus, Latin American business must feel that it has a stake in the Alliance.

U.S. investment has not been moving into Latin America at the needed rate, but things are not as bad as some have recently suggested. U.S. firms and investments are already playing a role in the development programs of the Alliance, especially in the key area of manufacturing.

But we are not satisfied. AID has developed a number of programs to assist the private sector play its due role in the development effort. These include direct loans; loans to intermediate credit institutions; investment guaranties and proposed tax credits on investments in developing countries. Particularly promising are joint ventures of U.S. companies with local busi

nessmen.

Such joint ventures can be mutually advantageous to the business partners themselves, as well as helpful in knitting closer ties among the individuals working together in such firms.

LABOR PITCHES IN

On the labor side, the AFL-CIO has lent its support through the Labor Advisory Committee for the Alliance for Progress. Under its guidance, AID has contracted with the American Institute for Free Labor Development to carry out a hemispherewide effort to combine United States and Latin American union resources in training democratic union leaders and developing social projects needed by workers to raise their living standards.

In little more than a year of operations, the institute has helped establish labor leader training centers in four countries as well as a regional training center in Washington; it is now setting up centers in seven other countries. In the social projects area, the institute is working with unions in a score of countries on housing, cooperative, and other activities.

Another area of people-to-people action is in the field of cooperatives. In collaboration with the Credit Union National Association, a center for training credit union

technicians is being set up in Peru and will be working with groups in 16 countries to develop credit unions which will provide the common people of Latin America with the means to save and borrow at reasonable rates.

In cooperation with the National Farmers Union, a people-to-people exchange of 75 farm leaders from 6 Latin American countries has been started to provide agricultural and cooperative leadership training.

One program that has given us particular satisfaction and that has opened up a whole new field for people-to-people participation in the Alliance is the association formed between the State of California and Chile. State government and leaders in key sectors of California's economic life-especially in agriculture-are doing pioneering work today. They are exploring the possibility of making the accumulated experience and the research and development resources of California available to Chile, which is confronted with problems and opportunities of geography, soil, and climate similar to those that California faced long ago.

Success in these California-Chile ventures would undoubtedly lead to other such associations between States or regions of the United States and our Latin American sister republics under the Alliance. It would be another large field for people-to-people action-for the involvement of individuals in this country and in the Latin American countries in a program that must be rooted in understanding and cooperation among our peoples, and not just in agreements of

governments.

ALLIANCE TAKING HOLD

Today, more than 2 years after the signing of the Alliance Charter, it is safe to say that the Alliance has grown roots. Throughout Latin America, the housing projects, hospitals, water systems and schools that have been built under its banner are tangible evidence that it has got underway. More importantly, the Alliance has made its impact on political, economic and social discussion and conduct in the hemisphere.

Elections have been held where, without the influence of Alliance objectives and charter principles, they might not have been held. Even where unconstitutional changes have occurred, the new rulers are likely to pledge new elections and support for economic and social reform when in the not distant past they could not have cared less.

This represents the real progress that the Alliance has made. Men and women in Latin America today are arguing about policies and programs when in the past they dismissed such subjects as political responsibility, economic growth, and social reform as ivory tower debates.

Our free system of life and government precludes the imposition of social and economic change from above. We have to act within the framework of consent, of change through acceptance rather than fiat. This is a long-term process. But not so long as to be endless. I believe that by 1970 much of Latin America will be sustaining its own growth, equipped with the institutions and human resources to transform itself into a modern society.

But the job will by no means be finished by 1970. The political, economic and social transformation of a continent is not accomplished overnight. What we must seek to provide rapidly is evidence of progress which can sustain the hopes of the people and thus provide the opportunity to complete the long-term task.

The impatience with which some of us view the realization of this program is sometimes inspired by an excessive sense of panic, or by unrealistic expectations of what is possible even in the best circumstances. On the other hand, impatience designed to keep CIX- -1341

up the pressure is healthy and welcome. Working with the dedication that people connected with this program have displayed in the first 2 years, I am confident that we shall accomplish what we set out to do.

ROLE OF PRIVATE ENTERPRISE

(By Seymour M. Peyser, Assistant Administrator for Development Finance and Private Enterprise, AID)

In the minds of the public, the Alliance for Progress is often conceived of in terms of dramatic government projects, dams, roads, harbors, and schools. With attention focused on large distributions of funds by governments, the individual North American or Latin American may be unaware of the vital role private initiative must play in

the Alliance. This challenging endeavor can be successful only if a true synthesis is achieved between government assistance, private investment, and the contributions of voluntary, noncommercial organizations.

One of the functions of my office is to bring the vast resources of private industry into effective participation in the Alliance There are four basic reasons for Progress.

why we are stressing the need for additional private investment in Latin America.

KNOW-HOW IN PRIVATE INDUSTRY

First, the attainment of industrial and

agricultural growth in these nations requires full mobilization of our essential technological and management skills. In general, this know-how-the ability to build and run a large petrochemical complex or to produce canned and frozen food, for exampleis found in private industry.

Second, economic development cannot be accomplished through government assistance alone. There is not enough money in all the public treasures to supply the needed capital. The real wealth of the United States is not in Government, but in the myriad of private individuals and companies throughout the Nation. It has been estimated that to meet the goals of the Alliance for Progress, each year $300 million in new private investment must flow from the United States and other industrialized nations to Latin

America.

Public moneys are, of course, still necessary to do those things which only a government can do for example, building the large infrastructure projects, such as transportation networks and irrigation systems. These facilities, while essential to support a private sector, are not themselves attractive to private investors. Moreover, government funds are required to provide the social progress projects-the schools and the hospitals. But significant industrialization of Latin America can be achieved only through additional infusion of private capital.

ECONOMIC DEMOCRACY

Third, survival or revival of democratic institutions in Latin American nations calls for not only political democracy, but also economic democracy. This kind of democracy is secured only when the economic power of

a nation is diversified and divided between thousands of individuals, private groups, labor unions, and numerous, competing firms. Likewise, a meaningful democracy cannot exist when all economic power is concentrated and under the control of either a few individuals or a monolithic state. Additional investments by many companies and private citizens is essential to create this diversification of wealth and a more equitable distribution of material resources. The input of new private capital can also help build an economic system where businessmen, faced with aggressive competition, will constantly strive to offer the consumer an increasing variety of low-cost, high-quality products.

Finally, the time will come when the Alliance shall have achieved its goal of eco

nomic development and foreign aid will be terminated. During the period in which external assistance is being phased out, private investment and private initiative will be crucial to the continuation of that development.

The U.S. Government, in cooperation with the Latin American nations, has implemented a number of practical programs to attain these goals.

COMMUNICATION WITH BUSINESS

Officials in the Agency for International Development have spoken to thosuands of businessmen, in the United States and overseas, to underscore the need and opportunity for increased investment in Latin America.

We have prepared and distributed almost 30,000 copies of a booklet, "Aid to Business (Overseas Investment)," which describes in nontechnical language all the incentive programs we have to encourage new investment abroad. The continuing demand for additional copies indicates a lively interest and meaningful potential for new private invest

ment in Latin America.

PILOT COUNTRY PROJECT

AID has also selected Colombia as a pilot country to demonstrate the contribution that private participation can make to economic development. The Embassy and the AID Mission, together with the Colombian Government, selected a small number of industries of a priority nature that would be especially appropriate for private investment. Industries chosen were meatpacking, food processing, metal fabricating, lumber and wood products, and building materials. These industries were identified in the Co

lombian 10-year development plan as meriting special attention since they show the greatest possibilities for import substitution and export expansion.

After identification of these opportunities, the U.S. Government has endeavored to match them with potential American investors. To this end, full use is made of industrial and publications resources of the Department of Commerce, consultations with trade associations, banks and management consulting firms, and ultimately direct contact with individual companies. This special emphasis on Colombia, however, must not be misinterpreted as lack of interest in other nations; we are eagerly promoting private investment in all friendly Latin American nations.

AID further acts as a catalyst in putting together joint ventures between North American and Latin American businessmen. This business community, as well as the Government, has found it is not only good politics, but also good business to invest in ventures in which a substantial equity is held by local partners.

Once a businessman decides he may be interested in a certain venture, the U.S. Goyernment has a series of tools to encourage such investment.

1. Investment survey program: Under this program the Government can underwrite 50 percent of the cost of making an investment survey-for example, the market research, engineering studies, etc. If the entrepreneur goes forward with the investment, he bears the full expense of the survey. Otherwise, the Government reimburses him for one half the cost.

This new program was effectively launched last year with 19 different investment opportunities in Latin America being investigated by American businessmen. These include; for example, a poultry processing industry in Brazil, a cement plant in Colombia, and a truck and bus factory in Chile. Furthermore, AID has under consideration applications for nine more investment surveys in Latin America.

2. Cooley loan program: A certain percentage of the foreign currencies paid to the

United States for sales of surplus agricultural commodities have been reserved for lending to U.S. businesses or their affiliates in the purchasing country. Foreign firms are also eligible if their use of the money will expand markets for U.S. agricultural products. These loans are made and repayable in local currencies and their maturities usually run from 5 to 10 years.

In fiscal year 1963 alone, the equivalent of more than $4 million in local currencies was lent to 10 private firms for investments in Latin America in industries such as glass manufacturing, tires, and electrical products. Over $4 million in local currencies is still available for loans to private firms in Bolivia, Colombia, Ecuador, Paraguay, Peru, and Uruguay.

These then are some of the techniques which we are using to encourage greater participation by the private community in the Alliance for Progress. Through a pooling of all our resources-both public and private-we may hope to realize the goals envisioned by the Alliance. By mobilizing their capital and technological know-how and by taking advantage of what their Government can do to help, the American businessman of vision and ingenuity can make a major contribution to this peaceful revolution in Latin America.

SÃO PAULO CONFERENCE-ALLIANCE MEET IS CRUCIAL

Republics Division, OIRE)

4. Development banks: These are intermediate credit institutions, both government-owned and private, which have been financed by AID, the World Bank, and other international operations. Both dollars and local currencies are available at these development banks for loans to private businessmen. AID and its predecessor agencies have made the equivalent of more than $67 million available to development banks in

Latin America.

5. Specific risk guarantees: This is the oldest and the best known incentive program. It permits the Government of the United States to insure American investors

against the political risks of expropriation, inconvertibility of currency, and war damages. One hundred and thirty-seven guaranties, covering more than $270 million, have been issued for new investments in Latin

America and the program is growing rapidly. Presently pending before the Agency are 771 applications for guaranties worth almost $3 billion for new investments in that region. In the last 10 months alone, the Agency has received applications for about $1 billion in

The second annual review of the Alliance for Progress at São Paulo, Brazil, October 29-November 15, 1963, may well mark a crucial turning point in this significant program. The importance attached by the United States to the meeting is indicated by President Kennedy's designation of Under Secretary of State W. Averell Harriman as Chairman and Ambassador Teodoro Moscoso, U.S. Coordinator of the Alliance for Progress, as Vice Chairman. Assistant Secretary of Commerce, Jack Behrman; Assistant Secretary of State Edwin M. Martin; Assistant Secretary of the Treasury John Bullitt; and Assistant Secretary of Labor Daniel P. Moynihan are alternate U.S. representatives to the Conference. Legislators representing both political parties and both Houses of Congress will be advisers to the U.S. delegation.

The São Paulo Conference brings together high-level officials from the 20 Alliance for Progress member nations. The Conference will analyze the performance of each member country during the past year and make ahead. Problems of Latin America in the recommendations for action in the year trade and commodity field are high on the ministerial level will be preceded by 10 days agenda. The weeklong Conference at the of meetings of experts in such fields as

Latin America.

Before these specific risks guarantees can be issued for investments in any nation, the host country must have made suitable arrangements with the U.S. Government to implement the program. In the last year, the geographic scope of this program has been considerably expanded. Three important Latin American nations-Colombia, Venezuela, and Argentina-recently agreed to implement the full guarantee program. The guarantees against inconvertibility of currency are now available in 17 Latin American nations, those covering expropriation in 15 of these nations, and the war risk guarantees in 7.

6. Extended risk guarantees. These guarantees are available for high priority private investments and cover not only political risks, but also all commercial risks except fraud or misconduct on the part of the investor. An extended risk guarantee may be given to cover up to 75 percent of a loan or 50 percent of an equity investment.

7. Latin American housing guarantees. This is a special guarantee program to encourage private investment in selfliquidating pilot housing projects in Latin America comparable to those insured by the Federal Housing Authority within the United States. These guarantees protect the investor against all risks except fraud or misconduct by the investor.

Seven of the guarantees, totaling over $33 million, have already been issued and

land reform, tax reform, and incentives to the private sector.

Meetings at the expert level began on October 29. The U.S. delegation to these meetings is headed by William D. Rogers, Deputy U.S. Coordinator for the Alliance for Progress. Assistant Secretary of Commerce Behrman and Assistant Secretary of Labor Moynihan will be part of that delegation and rethe ministerial sessions. main in São Paulo to join the delegation to

STUDY PROGRESS PACE

The agenda for the meeting was largely determined by the action taken at the first annual review in Mexico City in October 1962. The dominant theme again will be that the rate of progress in the social and economic fields has been much too slow. One of the important determinations made at Punta del Este was that each member of the Alliance should submit a report at the annual meetings showing the extent to which it has met its commitments.

The United States for the first time has submitted a report that sets forth total U.S. efforts in support of the Alliance. It places major emphasis on the role of AID, but also points out the significant contributions of the Departments of Agriculture, Commerce, Treasury, Health, Education, and Welfare, Labor, Defense, and the Bureau of the Budget, Bureau of Public Roads, Federal Housing Administration, Export-Import Bank, and the Peace Corps. Through the coordinated efforts of these agencies the

the following contributions:

In 1962 foreign economic assistance commitments to Latin America amounted to $1,038 million and in the period JanuaryJune 1963, the total was $545.3 million. It vastly increased the number of technicians and technical services available to support Latin American development efforts. It cooperated in major programs in the commodity field and gave increasing recognition in its trade and commercial policies to the problems and needs of Latin America.

TO DISCUSS OAS ROLE

A major development of the Mexico City meeting was the designation of Presidents Alberto Lleras Camargo and Juscelino Kubitschek to draft recommendations for restructuring the Organization of American States to enable it to play a more effective role in promoting the Alliance. Each submitted a report and probably the most interesting debates of the meeting will revolve around their recommendations. Both reports call for the organization of a Committee for Inter-American Development (CID). Lleras proposes it as a subcommittee of the IA-ECOSOC, to function continuously with a full-time chairman, an expert full-time staff, and with the Committee of Nine as senior technical advisers. It would review development plans and actual performance of individual countries, and the general progress of the Alliance

as a whole and make recommendations for improvement to the Alliance countries separately or collectively. Kubitschek is more critical than Lleras, particularly regarding external aid and suggests that the committee control the allocation of funds. The authority to be vested in such a committee, if favorable action is taken, may well be one of the thorniest problems of the meeting.

Another major topic will be the significant developments in foreign trade related particularly to the basic export products. There has been an improvement in prices during the past year, with coffee the major exception. However, the International Coffee Agreement has had a sufficient psychological impact to slow the downward trend and there is a feeling that constructive action has been taken. There is great concern over the

restrictive policies of EEC, particularly in

agriculture and in the relations of the European countries with trading partners in Africa. A great deal of interest will be manifested in the United Nations Conference on Trade and Development to be held early next year. The Latin American countries regard this as an ideal forum in which to urge the developed countries to provide more favorable treatment to less developed countries by reducing tariff and nontariff barriers.

REGIONAL INTEGRATION

The third significant topic will be the importance of regional integration in expanding the market for Latin American products. While the Central American Common Market has made substantial progress and trade within the area has expanded substantially, the record to date of the Latin American Free Trade Association is more modest. In the latter area particularly there is growing recognition that diversification in exports is essential to achieve substantial economic growth. Industrial growth can be accelerated appreciably only by emancipation from the restrictive limitations of internal markets.

Exports of semimanufactures and manufactures to LAFTA members is regarded by the more progressive planners as a prelude to increased efficiency and competitiveness, leading to entrance into world markets. This type of program can only advance, however, if there is general acceptance of the need to lower the protective walls that now safeguard uneconomic high-cost industries.