dealing with this same subject appearing in the House-passed bill. The Foreign Assistance Act of 1961 already has a provision aimed at cutting down competition with U.S. industries through loans abroad. I ask unanimous consent that section 620 (d) of the Foreign Assistance Act of 1961 be printed in the RECORD at this point in my remarks. There being no objection, the section was ordered to be printed in the RECORD, as follows: (d) No assistance shall be furnished under section 201 of this Act for construction or operation of any productive enterprise in any country where such enterprise will compete with United States enterprise unless such country has agreed that it will establish appropriate procedures to prevent the exportation for use or consumption in the United States of more than 20 per centum of the annual production of such facility during the life of the loan. In case of failure to implement such agreement by the other contracting party, the President is authorized to establish necessary import controls to effectuate the agreement. The restrictions imposed by or pursuant to this subsection may be waived by the President where he determines that such waiver is in the national security interest. Mr. GRUENING. Even a cursory reading of this provision indicates that it is severely limited-more limited than it should be to protect adequately U.S. business. As I shall demonstrate shortly, many industries in the United States have lost their foreign markets to a considerable extent. It should be noted that the provision on this subject in the present law-section 620 (d)-is limited to development loans. It has been further limited by the interpretation of its provisions by the Agency for International Development. I ask unanimous consent that Order No. MO-1016.1 of the Agency for International Development Manual entitled "Impact of Aid on the U.S. Economy Competition With U.S. Enterprise," effective August 1, 1962, be printed in full at the conclusion of my remarks. The PRESIDING OFFICER. Without objection, it is so ordered. (See exhibit 1.) Mr. GRUENING. This is a truly reThis is a truly remarkable document. It is an attempt to give to the congressional directive contained in section 620 (d) of the Foreign Assistance Act the narrowest possible interpretation. In the first place, Mr. President, there is a curious shifting of the burden of proving that the granting of the loan will lead to competition with U.S. business. Thus paragraph II-A of this order provides as follows: A. Likelihood of competition: Section 620 (d) will apply in those cases where there is substantial evidence that competition in the U.S. market will take place during the life of the loan. It should not be considered applicable in those cases where there is only a possibility that such competition will occur or where there is no reasonable expectation that competition will develop prior to repayment of the loan. Under this paragraph, Mr. President, note that it must be proven by "substantial evidence that competition in the U.S. market will take place." However, if there is a possibility that such competition will occur, the loan may still be granted. Apparently it must be proven by the strongest evidence that there will be competition. In these enterprisesIn these enterprisessuch as steel mills, for example-why should there not be the requirement that it must be proven by substantial evidence that there will not be competition with U.S. industries? But this strange order weakens the congressional directive contained in section 620 (d) even still further. Paragraph II-B provides: B. U.S. market: The restrictive provision applies only with respect to direct competition in the U.S. market. It is not designed to limit exports for use or consumption outside the United States even though such exports would compete with U.S. enterprises in foreign markets. Observe, Mr. President, the only consideration is the market for the particular product in the United States. lar product in the United States. The paragraph specifically decrees that exports outside the United States are not to be considered even though such exports would compete with U.S. enterprises in foreign markets. The proverbial man from Mars, Mr. President, would have great difficulty understanding our actions during the past 10 years. He would have seen the United States of America, a great export nation, deliberately using its funds to establish abroad, steel mills to compete abroad with our steel mills, paper mills to compete abroad with our paper mills, textile mills to compete with our textile mills, and so on and on and on. At the same time the man from Mars would have heard the AID administrators proudly proclaim that 80 percent of the AID dollars are spent in the United States. Of course they are now. That was not so a few years back. But even so, Mr. President, should not the AID administrators in the past have considered the end result years from then when the steel mills built with AID funds could compete abroad for steel orders against our own steel producers? And with our steel mills operating well below capacity they are, in addition, forced to compete with steel produced in modern plants erected with AID funds. In the past 5 years the Export-Import Bank has loaned for steel mill construction and expansion of facilities the sum of $327.8 million-all U.S. dollars. In the past 5 years the World Bank has loaned for steel mill construction and expansion the sum of $380.3 million, a good portion in U.S. dollars. In the years between 1954 and 1962 AID and its predecessors have granted and loaned the sum of $249.3 million for steel mill construction and expansion of facilities. These three agencies alone account for loans and grants to erect and expand steelmaking facilities abroad of $957.4 steelmaking facilities abroad of $957.4 million. I ask unanimous consent that tables showing these loans for steelmaking be printed at the conclusion of my remarks. The PRESIDING OFFICER. Without objection, it is so ordered. (See exhibit 2.) Mr. GRUENING. Mr. President, the gentleman from Texas, Representative BOB CASEY, has obtained from the Library of Congress a listing of loans and grants to steel industries abroad, to pulp and paper plants abroad, to petroleum and related facilities abroad, to chemical plants abroad, to aluminum plants abroad, to plastic plants abroad, and to rubber plants abroad. He is greatly to be commended for obtaining such a list. It is admittedly an incomplete list since the Library of Congress forwarded it to him with this caveat: The enumeration of total foreign aid to specific industries can be undertaken with only limited success. *** The Agency itself does not compile aid figures according to industry or by name. According to that chart, in the years from 1945 to 1963 the United States has given or loaned for steel mills the total sum of at least $1,735,685,782. Is it any wonder, Mr. President, that now-but a few years later-our steel industry is operating at less than capacity, that our textile industry is in difficulty, and so on? Add this, Mr. President, to the facts disclosed to the Senate by the distinguished senior Senator from Illinois [Mr. DOUGLAS] on July 15, 1963, when he disclosed the shocking dual rate system under which imports into the United States pay lower ocean freight rates than must be paid to export the very same item from the United States. The wonder, Mr. President, is that our balance-of-payments problems is not worse than it is. No, we cannot be complacent about the fact that 80 percent of the AID dollar is spent in the United States when it is being spent to build up industries abroad which will compete on advantageous terms with U.S. industry in the years ahead. It is time that we stopped using tax dollars from U.S. industry to build up competition with that very same industry abroad. But, Mr. President, let us continue to study the amazing AID document issued to implement the congressional directive contained in section 620 (d) of the Foreign Assistance Act of 1961. Paragraph III states that the directive is limited to development loans and only development loans for productive enterprises. It does not apply to commodity import loans, loans to development banks, technical assistance loans, stabilization loans or program loans where the loan cannot be clearly identified as aiding a productive enterprise which will compete in the U.S. market. The paragraph does make a concession for loans to development banks or program loans by saying it is applicable only where it is known that the loan will be used to assist enterprises which will compete in the U.S. market. Note here, Mr. President, where the burden of proof is placed. It must be known that the industry aided by the loan will compete with U.S. business in the United States to have section 620 (d) of the Foreign Assistance Act of 1961 apply. But even if there is a possibility that the industry aided will compete with the United States in the United States that possibility may be disregarded. Mr. President, it is time we went to the aid of the U.S. businessman. We must do away with the warped thinking which seems to have all too many officials in its sway-the warped thinking that what helps business abroad of necessity helps business in the United States. That just is not so. Therefore, I hope that my amendment-which is exactly the same as appears in the House-passed bill-will be adopted. EXHIBIT 1 IMPACT OF AID ON THE U.S. ECONOMY Section 620 (d) of the Foreign Assistance Act of 1961 prohibits loans to productive enterprises which will compete with U.S. enterprises in the U.S. market unless the country agrees to limit the enterprise's exports to the United States to 20 percent of the annual production of the facility for the life of the loan. This prohibition may be waived by the President where it is in the national security interest to do so. II. GUIDANCE All development loan proposals should be reviewed to determine whether the provisions of 620(d) are applicable. In testing loan proposals for this purpose AID will be guided by the following principles: A. Likelihood of competition: Section 620 (d) will apply in those cases where there is substantial evidence that competition in the U.S. market will take place during the life of the loan. It should not be considered applicable in those cases where there is only a possibility that such competition will occur or where there is no reasonable expectation that competition will develop prior to repayment of the loan. B. U.S. market: The restrictive provision applies only with respect to direct competition in the U.S. market. It is not designed to limit exports for use or consumption out side the United States even though such exports would compete with U.S. enterprises in foreign markets. C. Nature of loan: The application of the provision is limited to assistance provided in the form of development loans rather than to all economic assistance under part I of the act. It is further limited to loans for the op development grants, technical cooperation, and procurement outside the United States on the U.S. economy, "with special reference to areas of substantial labor surplus." EXHIBIT 2 World Bank loans for steel mills [In millions of dollars] Colombia, South America_-_-_-. Australia Belgium... Italy-----Italy. Yugoslavia.. India (four loans): eration or construction of productive enterprises. It will not apply to commodity import loans, loans to development banks, technical assistance loans, stabilization loans or program loans where the loan cannot be clearly identified as aiding a productive enterprise which will compete in the U.S. market. In the case of most loans of this type it will be practically impossible to determine what particular enterprise will benefit. In the case of loans to development banks or a program loan where it is known that the loan will be used to assist enterprises which will Japan (10 loans): compete in the U.S. market, section 620 (d) may be applicable. Determination as to the applicability of section 620 (d) will need to be made on the basis of the facts in each such case. In the event a positive finding is made that an aided enterprise will compete with U.S. enterprise, an agreement to establish procedures to prevent exportation for use or consumption in the U.S. market of more than 20 percent of the annual production of the aided enterprise during the life of the loan must be reached. This agreement may be incorporated in the loan agreement or take the form of a separate agreement. The President is authorized to impose import controls necessary to effectuate the objective of section 620 (d) if the agreement is not reached or implemented. Section 620 (d) expressly authorizes the President to waive the restrictions of that section where he determines such waiver is in the national security interest. Authority to grant such waivers is expressly reserved to the President under the terms of Executive Order No. 10973 of November 3, 1961. III. U.S. AREAS OF SUBSTANTIAL LABOR SURPLUS Sections 201a, 211a, and 604a of the 1961 Foreign Assistance Act require the President to take into account possible adverse effects of the use of the Development Loan Fund, Total. 3-- 4.. Total Total loans made for steel 30.0 13.4 12. 1 1.9 8.7 29.2 75.0 20.0 32.5 156.7 5. 13 20.00 8.00 33.00 10.00 22.00. 24.00 20.00 6.00 7.00 2.39 157.52 mills by World Bank-------- 380.32 Lines of credit extended by Export-Import Bank for steel mill construction and expansion of facilities-1958 to 1963, inclusive [In millions of dollars] Total, 26 credits_ AID or predecessor agency obligations for iron and steel projects by country and project, fiscal years 1954-62 84.8 62.3 15.0 6.4 83.9. 30.8 19.4 8.3 16.9 327.8 Economic development projects from U.S.-owned foreign currencies,1 July 1, 1954, to June 30, 1962 AID or predecessor agency commitments for aid to iron and steel industry, summary by country and fiscal year of supporting tables II to IV, July 1, 1948, to June 30, 1962 [In millions of dollars or dollar equivalents] 2 Data on proportion for steel only not available. * Less than $50,000. 1 Represents the use of U.S.-owned foreign currencies generated by surplus agricultural commodity sales under sec. 402 and Public Law 480, title I; India includes the equivalent of $100,000 in fiscal year 1962; all other data are dollar commitments. European iron and steel projects financed in part by the United States under the European recovery program, by country and project, NOTE.-There were no commitments in fiscal year 1953 and fiscal year 1960. fiscal years 1949-51 1 [In thousands of dollars] |