B. PROPOSED COMMERCIAL CREDITS FROM JAPAN (AS OF OCT. 15, 1967)

C. PROPOSED NORWEGIAN AND DUTCH LOANS (AS OF JAN. 1, 1968)

Source: Economic Planning Board,

sands) (percent) (years)

(years) (percent)

Mr. BEASER. Now, do you have the terms of those loans? Senator GRUENING. We would like to know the interest rate on these.

Mr. POATS. I do not have them on this table, but I can tell you the big Italian and French loans were on terms of about 7 or 8 years at commercial interest rates, around 5% or 6 percent. The Norwegian and Dutch loans I do not have the terms on. The Japanese are going to be coming in with reparation grants for part of their payments to Korea, which will include fisheries material, and these Japanese commercial loans, of course, are on hard terms.

KOREANS GET MINIMAL TERMS OF AID LOANS .

Senator GRUENING. What is the interest rate on the 1968 loans you are contemplating through the Reconstruction Bank?

Mr. POATS. The interest rate to the Korean borrower from the Korean Reconstruction Bank would be, I believe, 6 percent, and the terms would be 10 years or thereabouts.

Senator GRUENING. What is the rate that we

Mr. POATS. The rate that we charge to the Korean Government is a two-step procedure Mr. Beaser mentioned. It would be the minimal terms of AID loans. That is, 2.5 percent during the payment of principal, and 2 percent during the grace period.

THEN MAKE 5.5 PERCENT PROFIT TO REPLACE IN THEIR CAPITAL
OPERATION

Senator GRUENING. So although the American people have to pay about 4 or more percent for money which our Government wants in bond sales and so forth, we are letting the Koreans have it for 2.5 percent and the Korean Government in turn makes a profit of 5.5 percent and puts it into its fishing industry, is that correct?

Mr. POATS. The Korean Reconstruction Bank makes that margin and puts it back into its capital operation, yes.

Senator GRUENING. Do you think that is a procedure that is of interest to the American people?

Mr. POATS. Yes; I think it is very much so. I think this whole process of the development of Korea is moving very rapidly.

We can proceed now in the conception of terminal aid within a few, years. We will be phasing out supporting assistance grants to Korea, which not many years ago were well over $100 million-by 1970 or 1971. We are reducing the size of our loan program as Korea gets access to capital from other sources-it is in the vicinity of $40 million-and we are reducing the Public Law 480 program annually in wheat, so that Korea is now buying from the United States commercially, with its own dollar exchange, about twice as much as we supply in the Public Law 480. This trend is moving very encouragingly and we think the result in Korea is going to be a self-supporting nation, which, of course, is impossible without exploiting all of the potential for the use of its labor and its processing skills to export.

LONG-TERM COVENANT UNMANAGEABLE. WHY?

Senator GRUENING. On page 24 of your statement, you say we finance these ships and so forth, subject to their agreement not to

fish salmon and halibut or crab. As Mr. McKernan points out, they would not fish our shrimp because that is not the kind of shrimp they want. But then you say that while this is the Korean Government's policy, you doubt that a long-term covenant of this sort is manageable. Why not? Do you think they will violate it?

Mr. POATS. I think it will be impossible to negotiate the kind of covenant that would be permanently binding over the many years these ships will be operable. I am sure this present government might attempt to bind the ships to it, but the ships may change hands several times, governments may change. I do not propose to assure that we could enforce such a covenant over the years. Therefore, we are looking very hard at the possibility of deleting this refrigerator ship from the loan.

Senator GRUENING. I think that would be very wise action on the part of the AID. I think it would be very sensible to delete any refrigeration ships. Please let the subcommittee know what the decision will be.

I have no further questions. I want to thank you very much, Mr. McKernan and Mr. Poats. I will renew my suggestions that the State Department consider very seriously, in view of our generous aidpast, present, and prospective that we make a point of excluding Korean fishing vessels subsidized by us from all American waters. We would thereby avoid much misunderstanding and discontent at home.

I now direct that my staff include in the printed record of this hearing any and all papers they deem pertinent to this subject. (The papers alluded to above now follow:)

EXHIBIT 4

NEWS RELEASE FROM INTERNATIONAL NORTH PACIFIC FISHERIES COMMISSION, VANCOUVER, NOVEMBER 11, 1966

VANCOUVER, BRITISH COLUMBIA.-The International North Pacific Fisheries Commission concluded its Thirteenth Annual Meeting at Vancouver, British Columbia, on Friday, November 11, 1966. The final plenary session of the Commission on Friday afternoon marked the conclusion of three weeks of study and discussion of various aspects of international cooperation for the conservation of high seas fisheries resources in the North Pacific Ocean. During the first two weeks. scientists from Canada, Japan and the United States reviewed the results of research carried out by the three countries in 1966 on the salmon, halibut, king crab and groundfish resources and prepared summary reports of their findings for the Commission's guidance. The scientists also exchanged information on high seas fishing operations during 1966.

The Commission operates under the terms of the International Convention for the High Seas Fisheries of the North Pacific Ocean, which was signed by the three governments at Tokyo in 1952. The Convention provides for several kinds of action designed to promote the conservation and proper utilization of the natural resources of the high seas. In the case of resources which are exploited by fishermen of two or more of the member countries, the Commission studies the need for conservation measures, as indicated by the results of scientific research, and if it finds such measures necessary, it recommends them to the member governments for inclusion in the domestic fishing regulations of each country. For certain resources which the Convention characterizes as being already under full exploi tation and under an effective system of conservation management, the Conventiou provides that member countries which have not previously engaged in the fisheries will refrain from doing so. Under this provision Canada abstains from exploiting salmon of the Bristol Bay area of Alaska, and Japan abstains from fishing for salmon in the eastern North Pacific and Bering Sea, halibut in the northeastern Pacific south of the Aleutian Islands and the Alaska Peninsula and herring off most parts of the British Columbia coast. The Commission recommended no changes in these provisions of the Convention at this year's meeting.