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[T]he United States proposes the establishment of an International Resources Bank (IRB). This new institution would promote more rational, systematic, and equitable development of resources in developing nations. It would facilitate technological development and management training in the developing countries. It would help insure supplies of raw materials to sustain the expansion of the global economy and would help moderate commodity price fluctuations.

The International Resources Bank would mobilize capital for sound resource development projects by assisting individual resource projects to secure direct financing and issuing bonds which could be secured by a specific commodity. Alternatively, these bonds could be retired through delivery of a specific commodity. "Commodity bonds" of this type could greatly improve conditions of supply and market access and help developing countries to stabilize export earnings.

To enhance confidence for both host governments and investors the International Resources Bank would begin operations with a capital fund of $1 billion. It would participate with foreign investors and the host government in project agreements specifying the conditions of the investment on a basis acceptable to all parties. Such an agreement could include a formula for production sharing and arrangements by investors to help develop the managerial, technological, and marketing capabilities of the host country. The Bank would support guarantees of both investor and host nation performance in accordance with conditions established in the project agreement.

To insure effective coordination with other public institutions, the International Resources Bank could be associated with the World Bank Group, in a form to be worked out by the participating countries..

The United States will . . . continue to seek commitments of reliable supply in the context of specific arrangements negotiated for individual commodities.

This four-point program-a new International Resources Bank, a case-by-case effort to improve conditions of trade and investment in primary products, stabilization of export earnings, and improved market and supply conditions-recognizes that these issues are linked; yet it permits pragmatic and flexible treatment of specific problems. . . .

Let me now turn to another area of major concern: the application of technology for development.

We must pursue a comprehensive approach which provides a broad range of programs and incentives to transfer both technology and the fundamental skills that will give it root and effectiveness. To promote this, the United States proposes a fivepoint approach:

First, to adapt technology to the needs of developing countries, the United States supports the establishment of a network of research and development institutions at the local, regional, and international level. We need to strengthen global research capacities for development and to expand intergovernmental cooperation. Therefore we propose the following:

-An International Industrialization Institute should be established to encourage research and development of industrial technology appropriate to developing countries.

-The Energy Commission of the Conference on International Economic Cooperation should establish an International Energy Institute to facilitate energy research and the application of energy-related technologies to the special needs of developing countries.

-We should extend existing networks for applied research in the fields of agriculture, health, and education.

-Satellite technology offers enormous promise as an instrument for development. Remote-sensing satellites can be applied to survey resources, forecast crops, and improve land use in developing countries. They can help to foresee and evaluate natural disasters. Modern communication technologies, including satellites, have large untapped potential to improve education, training, health services, food production, and other activities essential for development. Therefore, from July through October of this year the United States will make available to interested developing countries demonstrations of the various applications for development of the experimental ATS-6 communications satellite, the Landsat remote sensing satellite, and high resolution photography. We are prepared to cooperate with developing countries in establishing centers, training personnel, and where possible, adapting our civilian satellite programs to their needs. -The United States will play a leading role in applying water resources technology to such objectives as improving the quality and productivity of agriculture and developing new industry. . . . -The technology necessary to mine the deep seabed, to manage fisheries, and to exploit the vast potential of the oceans is rapidly being developed. The United States has made major advances in this field. We plan to invite scientists, managers, and technicians from different countries to participate in our scientific projects. And we strongly support provisions in the law of the sea treaty which will provide incentives for sharing of deep-seabed technology appropriate to developing-country needs.

-Finally, there is a pressing need to develop new ways to use technology to improve the basic condition of the poor. The United States is increasing the technical component of its development programs to provide basic nutrition, health, and education services.

The second element of our program is to improve the amount and quality of technological information available to developing countries and to improve their selection of technology relevant to their needs.

Third, to nurture new generations of technologists and technology managers, the United States proposes a priority effort

to train individuals who can develop, identify, and apply technology suited to the needs of developing countries. . . .

The fourth element of our approach is to make the process of transferring existing technology more effective and equitable.

The United States recommends that voluntary guidelines be developed that set forth the conditions and standards of technology transfer which encourage, facilitate, and maximize the orderly transfer of technology.

The fifth element of the U.S. program is to set goals for achievement before and during the U.N. Conference on Science and Technology for Development, now proposed for 1979. The United States strongly supports this conference and its objectives. Preparations for it provide a major opportunity for both developed and developing countries to review their responsibilities for the sharing and use of technology.

Rising import costs caused in large part by higher oil prices, and reduced export earnings resulting from recession in the industrialized nations, have generated unprecedented international payments deficits. Although global economic recovery has begun, many countries will face persisting deficits this year.

A major institutional effort must be made if these countries are to avoid severe cutbacks in their imports and consequent reductions in their economic growth. There are three priority areas:

-We must insure that flows of funds for development projects are neither reduced nor diverted by short term economic problems. In addition, long term financing must be increased and its quality enhanced.

-We must enable private markets to continue to play a substantial role in providing development capital.

-We must see to it that the domestic economic policies of all our countries are sound. They should not place undue pressures on payments positions by unnecessary accumulations of debt. And we must give particular attention to those countries unable to avoid critical debt problems.

Many countries have had to resort to short term external borrowing to finance their deficits. Debt payment burdens are mounting: a number of countries are experiencing serious problems in meeting their debt obligations.

Generalized rescheduling of debts is not the answer. It would erode the creditworthiness of countries borrowing in private capital markets. By tying financing to debt, it obscures the significant differences among countries and prevents an appropriate focus on those in most urgent need. And it would not be

fair to those nations which have taken strong policy measures to reduce their obligations.

The debt problem must be addressed in relation to each country's specific position and needs. The United States stands ready to help countries suffering acute debt service problems with measures appropriate to each case. The procedures must be agreeable to creditor and debtor alike. The device of a creditor club is a flexible instrument for negotiations.

To improve the basis for consideration of balance-of-payments problems of particular developing countries, the United States proposes that the Finance Commission of the Conference on International Economic Cooperation or another mutually acceptable forum examine the economic and acute financing problems of developing countries.

The needs of many nations in the developing world are great, but the special requirements of the poorest countries are massive. This conference has a collective moral responsibility to respond to this challenge. We must devote major efforts to improve programs for the poorest countries and to devise new ones where necessary, for without adequate assistance the poorest will be condemned to continuing poverty and helplessness. We must increase resource flows, improve their terms, and enhance their quality. And aid must be given on softer terms, because the poorest countries are by definition unable to service debt except on a highly concessional basis.

Resource flows to the poorest countries must be freed from restrictions on procurement sources and the financing of local costs which distort the design of projects, waste resources, and cause excessive reliance on imported equipment.

*

Dept. of State Bulletin, Vol. LXXIV, No. 1927, May 3, 1976, pp. 657-671.

In the final session of the UNCTAD IV Conference a resolution proposing further study of the U.S. proposal for an International Resources Bank was defeated by two votes, with 31 votes in favor, 33 votes against, and 90 countries abstaining or absenting themselves. On May 31, 1976, the Conference adopted by consensus a resolution on commodities. The United States joined in the consensus, but with a statement, noting that the United States would "participate without any commitment in preparatory meetings to examine whether further agreements for financing of buffer stocks including common funding are desirable."

A consensus resolution on debt called for improvements in the present case-by-case approach to debt relief.

A consensus resolution on market access, restrictive business practices, and industrialization was approved, but the United States and 15 other countries abstained on a resolution dealing with transnational corporations and expansion of trade in manufactures and semi-manufactures.

A resolution on strengthening of the developing countries' technological capacity included included proposals from Secretary

Kissinger's address. Another consensus resolution dealt with drafting a code of conduct for the transfer of technology.

In still another consensus resolution, UNCTAD IV established a clear distinction between the problems of the "least developed countries" and "landlocked and island countries." It affirmed that while the latter category required "specific action," the least developed countries needed a broad range of "special measures."

U.S. endorsement was given to a consensus resolution that called on developed countries to facilitate the economic cooperation programs of developing countries. It stressed the importance of increased cooperation between the less developed countries and included agreement by the developing countries to support this cooperation where possible in the areas of economic integration, multinational marketing enterprises, and feasibility studies for multinational ventures. An interpretive statement by the developed countries pointed out that the private sector within free market economy countries was free within given limits to make its own decisions and that governments could seek to influence but not ultimately control the commercial decisions of the private sector.

A joint statement by Secretary of State Henry A. Kissinger and Treasury Secretary William E. Simon, issued at Washington on June 1, 1976, expressed regret at the defeat-and the manner of defeat-of the U.S. proposal for the International Resources Bank, but stated that the IRB proposal would be advanced again and the United States would expect it to be "considered with the same respect and care which the United States will lend to the study of the proposals which the LDC's will table."

For the joint statement by Secretaries Kissinger and Simon, U.S. statements of reservations, explanations, and interpretations concerning the UNCTAD resolutions, and a summary of the UNCTAD resolution on commodities, prepared by the Bureau of Economic and Business Affairs, Dept. of State, see Dept. of State Bulletin, Vol. LXXV, No. 1935, July 26, 1976, pp. 133-138. For the resolutions and recommendation adopted by UNCTAD IV, see U.N. Doc. TD/INF. 14, June 16, 1976, and TD/RES/98(IV), June 21, 1976. For a statement by Ambassador Jacob M. Myerson, U.S. representative in Committee II at the United Nations, in explanation of U.S. vote on the report of UNCTAD on its fourth session, and reaffirming U.S. positions on the issues involved, see Press Release USUN-190 (76), Dec. 15, 1976.

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Transnational Corporations, Foreign
Investment, and Tax Law

Transnational Corporations

Corrupt Practices

Monroe Leigh, Legal Adviser of the Department of State, in an address before the Southwestern Legal Foundation at Dallas on

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