financial areas, the parties agreed to cooperate in encouraging the continued flow and U.S. direct investment to Brazil, including efforts to facilitate tripartite investments joining U.S. and Brazilian enterprises with capital from oil-exporting countries. In this connection, the Secretary and the Minister agreed on the need for a bilateral tax treaty to avoid double taxation, and agreed that discussions on the subject should be held in the near future.

Within the framework of a memorandum of understanding signed by the Secretary of State and the Brazilian Foreign Minister in Brasilia February 21, 1976, and in order to emphasize the importance of continued consultations, Secretary Simon and Minister Simonsen agreed to co-chair a consultative group on trade, investment and financial issues within the area of responsibility of their respective departments.

Tin

Commodities Agreements

The Fifth International Tin Agreement entered into force (provisionally) for a five-year period on July 1, 1976, with the United States participating for the first time in the 20-year history of International Tin Agreements. Like its predecessors, the agreement is aimed at stabilizing tin prices within limits agreed on jointly by its producer and consumer country members.

The United States signed the Fifth International Tin Agreement on March 11, 1976, and the President transmitted it to the Senate on June 23, 1976, for advice and consent to ratification. Since the Senate had not acted on the agreement prior to July 1, U.S. participation was effected provisionally, based on a U.S. notification of intention to ratify deposited with the United Nations on June 29, 1976. Inasmuch as the required number of ratifications were not deposited by July 1, 1976, the agreement itself came into force provisionally. In accordance with its terms, it may remain in force provisionally for up to one year and will come into force definitively when the required number of ratifications have been deposited (i.e., by governments representing at least six producing countries holding together at least 950 votes as set out in annex A to the agreement and at least nine consuming countries holding together at least 300 votes as set out in annex B). A government giving a provisional notification may withdraw on 30 days notice.

On September 15, 1976, the Senate advised and consented to ratification of the Tin Agreement, and the U.S. ratification was deposited on October 28, 1976.

President Ford's message transmitting the agreement to the Senate described its chief features as follows:

-An International Tin Council which meets on a regular basis to consider important issues and make decisions. Votes are divided equally between producer and consumer members as groups. Within the two groups votes are apportioned among members on the basis of their share of world production or consumption. Thus, the larger producers and consumers carry more weight in the Council's proceedings, but neither producers nor consumers as a group can dominate the Council. Normally, decisions require a simple majority vote of both producers and consumers, but certain important decisions require a two-thirds majority vote of both. As a member of the Council, the United States would hold the largest number of consumer votes.

-A buffer stock consisting of at least 20,000 metric tons of tin or its equivalent in money. Sales are made from the buffer stock as the tin price approaches the agreed ceiling in an effort to defend the ceiling, while purchases are made as the price approaches the agreed floor in order to defend the floor. Producer members are required to make contributions to the buffer stock proportional to their share of world production. Consumer members may make such contributions on a voluntary basis and four-The United Kingdom, France, Belgium, and the Netherlands-have elected to do so. Both during the course of the negotiations of the Fifth International Tin Agreement and since that time, we have made clear that, should the United States elect to join, we would not make a contribution to the buffer stock.

-Provision for the imposition of export controls on producers. Export controls are usually imposed only after the buffer stock of tin metal has risen to over 5,000 metric tons as a result of efforts to slow falling prices.

-A requirement that member governments consult with the International Tin Council before making disposals from national stocks. For some years we have consulted with the International Tin Council as a matter of routine before making disposals from our strategic stockpile. This requirement, therefore, would not constitute any change for us. We have made clear, however, that we retain our right to make disposals from the stockpile as we see fit. For the President's transmittal letter, the report of the Department of State, and the text of the Fifth International Tin Agreement, see S. Ex. J, 94th Cong., 2d Sess.

Coffee

The International Coffee Agreement, 1976, entered into force provisionally on October 1, 1976, with 41 exporting and 20 importing member countries, including the United States. The agreement was signed by the United States on February 27, 1976, and on April 5, 1976, President Ford transmitted it to the Senate for advice and consent to ratification (S. Ex. H, 94th Cong., 2d Sess.). It was the outgrowth of nearly a year of negotiations between 43 exporting countries and 18 importing countries at the International Coffee Organization in London, which was established under the Coffee Agreement of 1962 and continued under the Coffee Agreement of

1968. The following is an excerpt from the President's message transmitting the 1976 agreement:

On July 17, 1975, the coffee growing regions of Brazil were hit by the most severe frost since 1918, destroying hundreds of millions of coffee trees and thus sharply reducing the productive capacity of the world's largest producer for the next several years. The world faces a period of short supply of coffee. How long this period may last will depend on how well the international coffee community can manage its efforts to restore production and stocks. The International Coffee Agreement of 1976 was concluded after the Brazilian frost and takes into account our experience in the 1962 and 1968 Agreements. It contains a number of new features designed to deal with the situation we expect to face in the future. The agreement contains strong new incentives for the early restoration of normal supplies to consumer member markets. The most important features of the new Agreement are the following:

The Agreement is intended to stabilize prices within the range of long term market trends and to encourage the restoration of adequate production levels. There are no fixed price objectives.

Consumers are provided with assurances there will be no restriction on the flow of coffee to the market while prices are high. Thus, the Agreement commences with its export quotas in suspense. Producers have assurances of renewed consumer cooperation should a temporary production surplus reappear. The Agreement should act as a stimulus to producing countries to restore production to levels adequate to meet consumption needs at reasonable prices.

Those coffee producers who perform best during the next two years will be rewarded with a permanent increase in their basic quotas, which is an additional incentive to ship to the market every available bag of coffee.

Quotas will go to those countries which have coffee available to ship through a new and more flexible system of annual quota distribution.

The Agreement is the most generous in its quota allocation to the smallest producers, and allows them the highest growth rates.

Now, as in 1962 and 1968, coffee remains in financial terms the most important non-petroleum commodity exported by developing countries. A large number of developing countries in Latin America, Africa and Asia rely on coffee as a major source of their export earnings. Altogether, 43 producing nations participated in the negotiation of the new Agreement and are expected to join it. As the world's largest consuming country, coffee is also important to the United States. In 1974, we imported coffee valued at $1.5 billion. In that same year, we exported agricultural and manufactured products to the coffee producing countries worth over $15 billion.

We and the other consuming countries have constructed a unique cooperative relationship with the coffee producing countries

within the framework of International Coffee Agreements. We have attempted, with a good measure of success, to find constructive solutions to the problems which affect the production and trade of coffee. I strongly urge this mutually beneficial effort as represented in the new Agreement be continued.

The Senate gave its advice and consent to the 1976 Coffee Agreement on August 23, 1976, and the President ratified it on September 21, 1976. The Administration indicated it would seek implementing legislation to participate in the agreement for three years of its six-year duration, to permit consideration of the longer term implications of the agreement.

See also S. Ex. Rept. 94-30, 94th Cong., 2d Sess. For the text of Ch. IX "Consultations, Disputes and Complaints," see post, Ch. 13, § 1, pp. 629–630. Wheat

On June 17, 1976, the United States deposited declarations of provisional application, "within the limitation of the United States internal legislation and budgetary process," of the 1976 Protocols for the Third Extension of the Wheat Trade Convention and the Food Aid Convention, constituting the International Wheat Agreement, 1971. The Protocols, which extend the 1971 Wheat Agreement until June 30, 1978, were signed for the United States on April 5, 1976, and were transmitted to the Senate on June 18, 1976, for advice and consent to ratification (S. Ex. I, 94th Cong., 2d Sess.). The President's message of transmittal was accompanied by a report by the Department of State which described the Protocols as follows:

Further extending the Wheat Trade Convention maintains the framework for international cooperation in collecting, analyzing and disseminating data on the international wheat situation with particular reference to supply, demand, trade and prices. The International Wheat Council will continue to meet semi-annually. An Advisory Subcommittee on Market Conditions meets monthly. This extension of the Food Aid Convention again maintains the commitments of the parties to provide minimum annual quantities of food aid to developing countries. The contributions of the United States under the Food Aid Convention are made up of commodities sold or donated under P.L. 480 or through other bilateral AID programs. The European Economic Community (EEC) had not completed all internal clearances among its member states at the time the text of the Protocol was signed and did not sign. There is, however, provision for the EEC to accede to the Protocol. If it does, its minimum annual contribution will be at the same level as currently-1,287,000 tons. The United States and Switzerland intend not to deposit ratifications of the extending protocol for this Convention unless the EEC becomes a party to the Protocol.

Therefore at the time of signature, the following written statement was submitted by Secretary of Agriculture Earl L. Butz:

I wish to state on behalf of the Government of the United States of America that the instrument of ratification of the Protocol for the Third Extension of the Food Aid Convention, 1971, by the United States will not be deposited if the other major donors do not become parties to that Protocol.

The phrase "major donors" in this statement was intended by Secretary Butz to refer primarily to the EEC.

The International Wheat Council, meeting in London June 29-July 1, 1976, granted the Government of the United States an extension of time until December 31, 1976, for the deposit of its instruments of ratification of the 1976 Protocols. On June 29, 1976, a conference of governments in London determined that the conditions had been met by June 18, 1976, for entry into force of the various articles of the two protocols in accordance with their terms.

See also S. Ex. Rept. 94-31, 94th Cong., 2d Sess., and statement by Joseph A. Greenwald, Assistant Secretary of State for Economic and Business Affairs, submitted to the Senate Committee on Foreign Relations on July 27, 1976, Dept. of State Bulletin, Vol. LXXV, No. 1939, Aug. 23, 1976, pp. 279-281.

The Trade Act of 1974

Secretary of State Kissinger, in a statement before the Sixth General Assembly of the Organization of American States (OAS) on June 9, 1976, discussed the Trade Act of 1974 (88 Stat. 1978; 19 U.S.C. 2101-2487) in relation to Latin America's trade opportunities as follows:

The preferences system contained in the U.S. Trade Act has been in effect since January. It gives Latin American countries duty-free entry on more than I billion dollars' worth of their exports to the United States. Even more important, it provides vast opportunities for Latin America to diversify into new product areas in its exports to the United States.

In addition to the effort we will undertake to end the exclusion of Ecuador and Venezuela from the benefits of the U.S. Trade Act, President Ford has asked me to state today that:

-He will make every effort to add to the preferences system products that are of direct interest to Latin America.

-The executive branch will bend every effort to accommodate the export interests of Latin America in all matters in which we have statutory discretion. President Ford's recent choice of adjustment assistance rather than import restrictions in response to the petition of the U.S. footwear industry clearly demonstrates the commitment of the U.S. Government to a liberal trade policy and the use of the Trade Act to expand trade in the hemisphere.