Mr. CONNALLY, from the Committee on Foreign Relations, submitted the following REPORT [To accompany S. 3304] The Committee on Foreign Relations having had under consideration a bill (S. 3101) to amend the Economic Cooperation Act of 1948, as amended, report its own bill (S. 3304) favorably to the Senate and recommend that it do pass. 1. GENERAL PURPOSES OF S. 3304 Title I of the bill continues the European recovery program by authorizing not to exceed $2,950,000 for the fiscal year 1950-51. It also permits the Economic Cooperation Administration to use in fiscal 1951 an estimated 149.1 million dollars which it now appears will be saved out of funds appropriated for fiscal 1950. Title II provides for the continuation of our aid to Korea for another year in an amount not to exceed $100,000,000. Title III continues through June 30, 1951, the availability of funds first appropriated in 1948, but still unexpended, to enable the President to give economic assistance to any place in China and in the general area of China which is not under Communist control. It also provides that for so long as the President deems it practicable not less than $50,000,000 of such funds shall be available only for assistance in areas in China. Title IV authorizes the appropriation of not to exceed $27,450,000 as a contribution by the United States to assist the United Nations in carrying out certain direct relief and works programs in the Near East for the benefit of Palestine refugees. 1 2. COMMITTEE ACTION In connection with its consideration of title I, the committee held public hearings on February 21, 22, 23, 24, 27, and 28, at which time it received the testimony of Administrator Paul G. Hoffman; Secretary of State Dean Acheson; W. Averell Harriman, United States special representative in Europe; Richard H. Bissell, Assistant Economic Cooperation Administrator; C. Tyler Wood, Assistant Administrator for Operations, ECA; James Cooley, general counsel, ECA; Ben H. Brown, Jr., Deputy Assistant Secretary of State for Congressional Relations; Dallas Dort, special assistant to the Assistant Secretary of State for Economic Affairs; the ECA mission chief to the United Kingdom, W. John Kenney; to France, George B. Bingham; to Italy, James D. Zellerbach; and to western Germany, Robert M. Hanes; and a number of private citizens. On March 3, the committee recalled Administrator Hoffman to secure further information in public hearing. At a public hearing on March 7, the committee received the testimony of the following individuals on title II dealing with Korean aid: Administrator Hoffman; Secretary Acheson; Edgar A. J. Johnson, Director, Korea Division, ECA; and Arthur C. Bunce, chief of the ECA mission to Korea. Executive sessions were held to perfect the bill on March 10, 15, and 21, at which time title III dealing with China was considered and a number of important amendments to S. 3101 were agreed upon. On March 24, the committee voted to include as title IV of the bill under consideration Senate Joint Resolution 153 dealing with Palestine refugees, reported by the committee to the Senate on February 14 and accompanied by the committee Report No. 1275. On March 24, the committee reported its own bill incorporating the amendments discussed in section 3 to the Senate for favorable action. PART I. THE ERP PROGRAM A. BACKGROUND 3. SUMMARY OF AMENDMENTS APPROVED BY THE COMMITTEE Title I of S. 3304 consists of amendments to the Economic Cooperation Act of 1948. The more important of these amendments are summarized here; some of them will be discussed in more detail in later sections of this report. 1. Authorization for transfer of funds (sec. 102). - This section authorizes the ECA Administrator to transfer funds not to exceed a total of $600,000,000 to any central institution (such as the proposed European Payments Union discussed hereafter) or to any participating country in connection with the institution's operations, in order to promote the transferability of currencies or the liberalization of trade. Transfer of funds under this section will constitute an important part of ECA's program to encourage European integration. 2. Forward contracting guaranties (sec. 103). -Last year the investment guaranty provision (sec. 111 (b) (3)) was amended by adding subparagraph (iv), to permit coverage of contracts for capital goods and related services under which payment was to be made after June ! 30, 1950. The amendment now proposed will bring this provision up to date and will make it clear that such a guaranty is to be issued only against a long-term contract running beyond the end of the fiscal year in which the guaranty is made. 3. To promote dollar savings (sec. 104). This amendment of the original act is designed to encourage western European countries to reduce their dollar purchases to the greatest extent possible consistent with the recovery objectives, so that American aid may be kept at a minimum and the burden on the American taxpayer thereby reduced. 4. Discrimination against American business (sec. 104 (b)).This amendment states it to be the sense of Congress that participating countries shall not impose certain types of business restrictions that discriminate unreasonably or unjustifiably against American business enterprises seeking to import commodities into the participating countries, where such importation would further the European economic recovery program. The amendment would not prevent the imposition of import controls made necessary by balance of payments or national security considerations. 5. Authorization (sec. 105 (a)). -This amendment is described in the preceding section. 6. Use of appropriations and counterpart funds in Germany (sec. 105 (b)). Last year's funds for economic assistance to Germany were made available partly through the ECA appropriation and partly through the appropriation for GARIOA (government and relief in occupied areas). The latter portion was available also for other occupation purposes. For the coming fiscal year it is contemplated that there will be no GARIOA appropriation for Germany and that all funds for economic assistance to Germany will come from the ECA appropriation. It is desirable, therefore, to make provision so that both dollars and local currency can continue to be used in case of necessity for expenses in connection with the occupation of Germany similar to those for which GARIOA appropriations were available last year. The proposed amendment is designed to serve this purpose. 7. Other provisions concerning counterpart funds (sec. 106). -Section 115 is amended by the addition of two new subsections. The first incorporates into the law a provision appearing in the 1950 Appropriation Act for ECA (Public Law 327), which directs the Administrator to use counterpart funds under his control to publicize ECA's operations abroad. The second new subsection expresses the intent of Congress that as much as possible of the local counterpart funds shall be used to promote liberalization of trade and transferability of currencies, as well as purposes otherwise consistent with the basic objectives of the act. It also authorizes the Administrator, at his discretion, to obtain the views of any central institution or other organization formed to further the purposes of the act, prior to the commitment of counterpart funds for any particular use. 4. TOTAL COSTS OF ERP AND OTHER AID PROGRAMS Previous authorizations for ERP This is the third time that ERP has been before the Congress. The first act (Public Law 472), Eightieth Congress, was approved April 3, 1948, and envisaged a 4-year program subject to annual review by the Congress at the time funds were requested. The second act (Public Law 47), Eighty-first Congress, was approved April 19, 1949. It amended the original act in several respects, and provided funds for fiscal 1949-50. The first two authorizations aggregated $9,730,000,000. It was originally estimated that the 4-year program would cost approximately $17,000,000,000. It now appears that the total amount required may be less than $15,000,000,000. Postwar dollar assistance to participating countries by the United States and by international financial agencies—through June 19491 A. Total assistance... AGENCY AND/OR PROGRAM [In millions of dollars] B. Grants through United States and international agencies..... 1. American Red Cross_ 2. Interim aid program, 1947-48, Austria, France, Greece, 3. Post-UNRRA program, Austria, Greece, Italy, and Trieste Netherlands, Turkey, and United Kingdom... 5. Army, supplies furnished for civilian use, Austria, Ger many, Greece, Italy, and Trieste 6. Greek-Turkish aid program, 1947-48-. 7. UNRRA, participating countries.. 8. Civilian-type articles purchased with lend-lease funds and furnished through Army channels to Italy. 9. Economic Cooperation Administration.. C. Credit through United States agencies. 10. Agriculture Department (cotton to Germany) ships sold. 13. Reconstruction Finance Corporation, loans made to 14. Office of Foreign Liquidation Commissioner, credits aris- 17. War Assets Administration, credits arising from sales of 18. Economic Cooperation Administration_ D. Credit through international agencies.... 19. International Bank for Reconstruction and Develop ment.. 20. International Monetary Fund Postwar period 17, 297.7 7, 916.2 2.6 557.4 253.8 431.7 1,838.4 517.0 781.8 134.5 3, 399.0 8,344.8 34.2 1,753.3 197.2 2.7 753.1 3,750.0 988.3 11.6 854.4 1,036.7 501.0 535.7 1 The figures are based on assistance actually utilized. They take no account of return aid rendered to the United States (e. g., the value of strategic materials received by the U. S. Government under the European recovery program and reverse lend-lease) or of repayments on credits. Cost of all foreign assistance programs for fiscal 1951 It is estimated by the executive branch that 4.8 billion dollars will be required for all foreign assistance by the United States Government in fiscal 1951, as shown in the next to the last column of the following table. The President's budget asks for 3.1 billion dollars for the European recovery program and other foreign aid." The 2.95 billion dollars requested for ERP falls within the latter figure thus leaving $150,000,000 for “contingencies arising in the field of foreign affairs." ، : It should be noted that the figures in the first three columns of the following table are on an expenditures basis and do not, therefore, correspond to the amounts authorized by the Congress. Total United States foreign aid (budget basis) (adapted from p. M21, President's budget message, excluding “conduct of foreign affairs”) 1 Includes transfer from funds for aid to occupied areas. 2 On Feb. 24, 1950, the President transmitted to the Congress a revised estimate of the Korean aid appropriation request for 1951 of $100,000,000, as compared with the figure of $115,000,000 shown in the budget message and in the above table. Additional expenditures of about $5,000,000 to $10,000,000 in 1951 resulting from extension of China program are included in line I-A, above. 4 Add appropriations to liquidate prior contract authorizations, $500,000,000, Add appropriations to liquidate prior contract authorizations, $13,000,000, Add appropriations to liquidate prior contract authorizations, $513,000,000. 5. SHIFT IN EMPHASIS IN PROGRAM The first 2 years of the recovery program, as noted below, have been marked by success in increasing the industrial and agricultural production of the participating countries. If these gains are to endure and be augmented during the next 2 years and in the period after aid has ceased, the emphasis must now be placed increasingly on economic integration, liberalization of trade, and closing the dollar gap. Permanent stability can only be achieved if western Europe develops the capacity to purchase abroad the foodstuffs and the raw materials needed to keep the industrial machine rolling. 63556-50-2 |