and petroleum products for the Fourth Quarter 1976; (b) establish export controls on two additional products, naphtha and petroleum coke; (c) establish procedures to implement the export restriction contained in the Naval Petroleum Reserves Production Act of 1976 (P.L. 94-258; 90 Stat. 303; 42 U.S.C. 6501 et seq.); and (d) clarify the Department's regulations dealing with exports of crude oil and partially refined petroleum.

For the Dept. of Commerce announcement and the resulting revisions of the Export Administration Regulations (15 CFR Part 368 et seq.), see Fed. Reg., Vol. 41, No. 196, Oct. 7, 1976, pp. 44155-44161.

Export Credits

On June 9, 1976, the United States issued a declaration on official support for export credits. The Export-Import Bank simultaneously issued a new set of international rules for government-assisted export credits to implement the policy. The Department of State, in an accompanying statement to the press, described the policy declaration as unilateral in nature and carrying no legal obligation. It called it "a measure of progress in a long and continuing effort by industrial countries to reduce counterproductive competition in export financing." It added that the objective was to insure that competition continued to be based on comparative advantage and such factors as price, quality and delivery terms, and to minimize distortions introduced through concessional financing. The U.S. declaration follows:

At the end of their economic conference in November 1975, at Rambouillet, France, the Heads of State and Governments of France, Germany, Italy, Japan, the United Kingdom and the United States declared that their Governments would intensify efforts to achieve a prompt conclusion of discussions then underway, among themselves and Canada, concerning export credits. Renewed discussions among these Governments have resulted in a consensus that counterproductive competition must be avoided with respect to government-supported export credits. Recognizing this consensus, the United States Government wishes to declare that it fully supports the principle of cooperation in order to reduce counterproductive competition in governmentsupported export credits. The guidelines for Eximbank-supported credits for civilian goods and services will be set forth in a Declaration by the Export-Import Bank of the United States under its statutory authority. The United States Government intends to apply the same guidelines to any other official export credit support program for similar goods and services.

The United States Government invites other governments to apply similar guidelines so as to broaden the attempt to reduce counterproductive competition in government-supported export

credits.

Dept. of State Bulletin, Vol. LXXV, No. 1933, July 12, 1976, p. 48.

The Export-Import Bank declaration of June 9, 1976, set forth guidelines which, it said, would result in somewhat higher minimum interest rates on officially supported credits from competitors and shorter terms on some credits from Eximbank. The guidelines follow:

For a period through June 30, 1977, Eximbank intends to apply the following measures to export credits, including leasing, on a trial basis, in the expectation that the official export financing agencies of the major trading nations will do the same. Other exporting countries also are invited to apply comparable measures. (1) Cash payments will be a minimum of 15 percent of the export contract value.

(2) Eximbank's interest rates will continue as at present, ranging from 8 1/4 percent to 9 1/2 percent on direct loans with flexibility to meet competition in certain transactions. However, the minimum blended competitive interest rates will not be less than 8 percent for credits over 5 years to highly-developed countries, 7 3/4 percent to intermediate countries, and 7 1/2 percent to the less-developed countries. For two-to-five year credits, the minimum blended interest rates will be 7 3/4 percent to highly-developed countries and 7 1/4 percent to all others.

(3) Maximum repayment terms will be 10 years to less-developed countries and 8 1/2 years to other countries. When credit authorizations to highly-developed countries have repayment terms of more than 5 years, information will be given 7 days in advance to other export financing agencies.

(4) If Eximbank intends to exceed the guidelines described above, it will so inform other agencies 7 days in advance, with an additional 9 days allowed for discussion, upon request. In addition, prompt information will be exchanged: (a) where credits are entered into under existing commitments; and (b) where credit terms have been set to meet the terms offered by other countries. (5) These guidelines will not apply to agricultural commodities, aircraft (including helicopters), and nuclear power plants. The guidelines for downpayments and maturities will not apply to satellite ground stations. Additionally, conventional power plants and steel mills will be exempt from maturity guidelines up to maximum present practices, with 7 days advance information to other countries for transactions exceeding 5-year repayment terms to highly-developed countries, 8 1/2 years to intermediate countries, and 10 years to less-developed countries.

(6) Any credit which has a grant element of 25 percent or more of the value of the goods and services exported, as already defined by the Development Assistance Committee of the OECD, is exempt from the guidelines. Any mixed credit having a grant element of less than 15 percent would result in 7 days advance information. Credits having a grant element of at least 15 percent but less than 25 percent would result in prompt information.

These guidelines and procedures will become effective on July 1, 1976.

Export-Import Bank news release, June 9, 1976. As a result of negotiations among major exporting countries, six other countries-Canada, France, the Federal Republic of Germany, Italy, United Kingdom, and Japan-unilaterally declared that after July 1, 1976, they would each generally observe:

- interest rate minimums of 7 1/2 percent for sales in developing countries, 7 3/4 percent for intermediate countries and 8 percent for developed country markets; maximum maturities of 10 years for developing countries and 8 1/2 years for all others; and - 15 percent downpayment minimums.

The declarations are statements of national policy and do not constitute an international agreement.

Multilateral Trade Negotiations

The U.S. representative to the Multilateral Trade Negotiations (MTN) at Geneva introduced on July 19, 1976, a U.S. negotiating proposal for an improved multilateral safeguard system. The proposal was for an international code supplementing article XIX (Emergency Action on Imports of Particular Products) of the General Agreement on Tariffs and Trade (GATT) (TIAS 1700; 61 Stat. (5), (6); 4 Bevans 639) and for agreement of governments on certain additional obligations to ensure effective and equitable operation of the code. It was offered as an attempt to address the shortcomings in current practice including "the evident reluctance of governments to rely on the currently agreed safeguard procedure; and second, the lack of specificity under the current procedures to adequately protect the interests of both importers and exporters." Excerpts from the U.S. proposal follow:

The code would embody a set of principles aimed at establishing a more orderly procedure in the application of safeguard measures. A major feature of such a code would be a constraint on retaliatory action against countries imposing safeguard measures when a proposed safeguard action meets certain specified criteria and conditions. There would be no obligation to provide compensation. Furthermore, the system would apply to voluntary restraint agreements and take into account the special needs of developing countries.

Agreement on the proposed set of principles and new obligations would, the United States Government believes, assure greater uniformity in the application of safeguard measures and achieve a better balance than we now have of rights and obligations of contracting parties in the conduct of international trade under the General Agreement. Both uniformity and a better balance would be achieved by the new prescribed conditions governing the application of safeguard measures and extending the new code

obligations to safeguard actions which governments now take outside the present GATT article XIX system.

The proposed supplementary code would be designed to remedy several serious weaknesses which have become evident in the operation of the present GATT article XIX safeguard system. These weaknesses include the lack of suitable specificity in the conditions for safeguard action; the reluctance of governments to use and adhere to the procedures of GATT article XIX, apparently from concern that it would lead to trade disputes and retaliation or that they would be unable to offer adequate compensation; the lack of assurance that safeguard measures are being applied only when warranted and maintained only temporarily; the absence of international agreement to avoid the embargo or rollback of imports below representative trade levels; and the increasing tendency of governments to resort to special bilateral arrangements outside GATT article XIX without adequate regard for the interests of third countries.

The code should embody the following features:

1. It should bring within the new system all types of measures, including voluntary export restraints, imposed to provide domestic industries with temporary relief from injurious import competiton.1

2. When governments apply safeguard measures that are in conformity with the agreed criterion and conditions of the code, they would not be subject to retaliation, nor would there be any obligation for them to provide compensation. Noncompliance with the agreed criterion and conditions, however, could warrant retaliation.

3. The criterion for import relief measures would be an increase in imports of a product that is causing or threatening to cause serious injury to domestic producers of a like or directly competitive product.

4. There would be public domestic investigations and decisions on safeguard actions, including an examination by an independent body, public hearings where importers and other interested parties could present their views, and a published report of the decision.

5. The imposition of safeguard measures would have to conform to certain conditions:

(a) The duration of safeguard measures would be limited to a specified time period.

(b) Import relief would not be reimposed unless a specified time period had elapsed since the relief was terminated.

(c) Import relief would have to be phased down to the extent feasible during the period of such relief as a spur to progressive adjustment of the industry.

(d) Any quantitative restrictions imposed would have to permit the importation of a quantity or value of the article which was not less than that imported into the country during the most recent representative period.

(e) Safeguard actions should be accompanied by efforts of the domestic industry to adjust.

6. Governments would be required to give notification of the intent to impose import relief a specified number of days prior to

taking such action, except in emergency situations.

7. Governments taking safeguard measures would be required to consult with countries having a trade interest affected by the measure, including countries potentially affected by trade diversion resulting from the imposition of such measures. Time limits would be established for completion of the consultations.

8. The code would establish a standing committee, composed of several parties to the code, to facilitate the smooth functioning of the system. This monitoring committee might serve such functions

as:

(a) Receiving and distributing notifications of actions being taken.

(b) Expediting arrangements for consultations if requested, including participation by third countries.

(c) Providing advisory services, when requested, to help settle disputes.

9. Differences of opinion regarding the conformity of measures taken to the agreed criteria and conditions would usually be resolved in the consultation process. For cases where this was not possible, the monitoring committee would conduct an inquiry regarding the basis for the dispute and give recommendations to the parties involved. In connection with any such inquiry, any party to the dispute could request review of the facts and application of code provisions to the case by an independent advisory body. The conclusions of the advisory body would be reported to the committee. Measures not conforming to agreed criteria and conditions could be subject to retaliation.

10. The new multilateral safeguard system should be designed normally to permit, in accordance with agreed criteria, continued market access with moderate growth for developing signatory countries which are small suppliers of a product with respect to which safeguard action is taken. This provision would no longer be applicable to individual developing countries when they achieved a certain level of economic development.

In conjunction with the new safeguard mechanism created by the proposed code, the United States seeks agreement on a range of broader obligations necessary to establish the effective and equitable operation of that mechanism.

It will be essential . . . that the obligations be accepted at least by signatories to the new safeguard code. These obligations

are:

1. Governments should undertake an obligation to notify and consult in the GATT on all trade-restrictive actions, whether taken under article XIX, under some other GATT article, or outside the GATT. The rationale for the restriction and the specific GATT provisions being invoked should be identified.

2. Governments should agree to bind all their tariffs at the end of the MTN.

3. In order to provide increased tariff stability, governments should agree not to resort to the periodic "open season" provisions of article XXVIII:1, nor reserve the right to do so under article XXVIII:5, for renegotiation of tariff concessions. The procedures of paragraph 4 of article XXVIII, which require GATT authorization, would continue to be available for such renegotiations.