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The other gentleman will remain, will you not. I think it would

. be well if you did.

STATEMENT OF C. W. NICHOLS, DEPUTY DIRECTOR, OFFICE OF

INTERNATIONAL RESOURCES, ACCOMPANIED BY T. C. M. ROBINSON, ASSISTANT CHIEF, COMMODITY DIVISION, DEPARTMENT OF STATE

Mr. NICHOLS. I am C. W. Nichols, with the Department of State, and my associate Mr. Tom Robinson is also with the Department.

I realize that your time is becoming short.

We were told that the committee would be interested in the following things, the policies or the attitudes of the Department concerning exports of rice, the problems in relation to other countries that might be generated by special export programs, and the dangers and the difficulties in these special programs, particularly Public Law 451) from the point of view of the Department of State.

These are somewhat general. And in view of the limited time. if I may, I would like to just comment very briefly and very generally, and then we could, perhaps, move to something more specific.

The Department's interest in the matter, of course, is a derived interest. În trying to carry out international relations in a way that will serve broad objectives we do become involved in trade problems and in trade problems of particular commodities, but the Department does not have any policies of its own as to any one commodity. We try to arrange trade opportunities, in particular commodity situations in such a way that the derived benefits for the United States ininimize foreign friction, but it is not our original objective to discriminate in any way as between commodities.

Let us say, basically, the Department's attitude toward international trade is one of encouraging so far as possible trade on a private basis, inultilateral trade with a minimum of discrimination between countries, or governmental regulations.

For many years there have been severe limitations on the extent to which trade can be conducted in that form. These remain in varying degrees.

We are working on some emergency assistance programs, some charitable donations, the mutual security program, and in particular the Department is taking an active part in the administration of Public Law 480 in the development of the negotiated proposals and in the conduct of the negotiations with other governments, later in this scheduling sometimes of the commodities and the use of the funds.

We recognize that the primary purpose of Public Law 480 has been to dispose of surpluses already generated, but we have, also, recog. nized an opportunity here to supplement levels with consumption to add something to the trade which would have occurred wholly commercially. We have attempted within the terms of the law to assure that these concessional types of programs on noncommercial trade do not damage or do only minimum damage to the basic possibilities of expanding trade on commercial terms.

We have felt that there are some dangers in certain parts of the world of countries becoming too dependent upon such a large fraction of their food supplies coming to them without commercial payment,

CONTENTS

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49

60

Mr. Nichols. To the best of my knowledge, the discussions with India having to do with another Public Law 480 agreement have not been directly affected by the new mills or the financing of new mills. Perhaps, I didn't exactỉy understand the connection you are making.

Mr. GATHINGS. The understanding that I received is that the representatives of India in Washington have been trying to obtain added tonnage of rice in Public Law 480 agreements, but that on the part of the Department of State, you folks have insisted, according to the information that I received, that they should not take rice at all, suggesting that what they needed to do was to run those new mills that have been produced over there with ICA funds, and to take an increased amount of wheat. Of course, we want to move wheat, too. If we have wheat in surplus supply we want to move it. We want to see where that balance is. Whether or not you have insisted that a larger quantity of wheat would be thrust upon these people who have demanded rice, and have customarily eaten rice.

Mr. Nichols. I think I begin to understand the theory, at least. I had not heard either as a fact or as an allegation up to now that wheat in place of rice was being made available for the particular purpose of supplying wheat flour mills which the United States had financed. To the best of my knowledge, sir, there is no basis for that thought.

Mr. GATHINGS. Is there a basis for the thought that the Department of State of our Government is insistent on the people of India eating more wheat when they don't want wheat and want rice?

Mr. Nichols. No, I am not aware of it. It is a large Department. As I mentioned before, there are contracts with people in the trade throughout the Government, throughout the Department. I have been fairly close to this, and I do not know that it has any such element in it whatsoever. There have been discussions off and on since last summer with representatives of the Government of India looking toward another Public Law 480 agreement. And I have no doubt that some time in 1958, probably after the Public Law 480 bill is provided with more authority and extended life that there will be another negotiation.

Mr. GAThings. Mr. Nehru is here now, is that right, and has been?

Mr. NICHOLS. He was recently. I am not sure that he is here at the moment.

Mr. GATHINGS. And he requested quite a large quantity of rice to be made available under Public Law 480; is that right?

Mr. NICHOLS. I believe it was referred to recently. It was referred to last summer. Let me state my understanding of this.

The commodities and the amounts mentioned do not always mean and could not be taken to mean what some might infer.

Some of these quantities have had to do with long-term assurances. They should not be thought of as an Indian statement of near-term consumption requirements.

The general position of the Government of India is related to a 5year program and it is apparent that this program is straining them, so that some of the quantities mentioned apart from what commodity, to be used as the vehicle, really, they were looking toward assurance over a period of several years, perhaps as far as 1960 or 1961, that their whole food grain requirement would not be an unmanageable burden on their limited foreign exchange resources. So that there have been,

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