PART I CHAPTER 2-DEVELOPMENT ASSISTANCE Title 1-Development Loan Fund Increase in interest rates (Senate-Section 101(a)) The Senate amended section 201(d) of the act to raise the minimum interest rate on development loans and Alliance for Progress loans (as well as Public Law 480 hard currency credit sales) by an additional 1 percent from 2 percent to 3 percent during the grace period and from 22 percent to 32 percent after the grace period. The House bill contained no comparable provision. The committee of conference agreed to leave unchanged the interest rate during the grace period and to raise the interest rate after the grace period from 2% percent to 3 percent. The managers on the part of the House noted that the interest during the grace period had been raised twice during the past three years. Since the grace period is one during which a facility or enterprise for which a loan has been made is beginning to contribute to the economic growth of the country, too costly an interest rate would slow its contribution. In the case of the postgrace period, it was agreed that a modest increase was acceptable in view of the cost of borrowing in the United States. Title III-Investment Guaranties Investment guaranty ceilings (House-Section 103 (a) and (b) (1) and (2)) Section 103 of the House bill increased the ceilings for investment guaranties as follows (these are limitations on the volume of guaranties which may be issued and do not involve the authorization or appropriation of funds): Specific risk from $8 billion to $9 billion; Extended risk from $475 million to $625 million; Extended risk for purposes other than housing from $315 million to $465 million; and Guaranties to credit unions from $1,000,000 to $1,500,000. The Senate amendment made no increases in the existing investment guaranty ceilings. The committee of conference agreed to split the differences between the existing ceilings and the ceilings provided in the House bill. The new ceilings are as follows: Specific risk, $8,500,000,000; Extended risk for purposes other than housing, $390,000,000; Extended risk guaranty termination date (House-Section 103(b) (3)) The House bill eliminated the termination date on the extended risk guaranty authority. The Senate amendment left unchanged the termination date of June 30, 1970. The committee of conference agreed to June 30, 1971, as the termination date for this program, an extension of 1 year beyond the Guaranties of investment in foreign financial institutions (SenateSection 103(b)) The Senate amendment prohibited payment of losses incurred by a U.S. investor through attribution to a foreign institution's losses on its investments and provided that no payment could be made under guaranties of U.S. investments in such institutions except where such institutions are or are likely to become insolvent due to an insured cause. The House bill did not contain a comparable provision. The managers on the part of the House accepted the Senate provision. It was the understanding of the House conferees that insolvency means inability to pay debts as they become due, including inability to pay dollar repayable loans; that the amendment does not prohibit normal conpensation, regardless of solvency of the foreign institution, for direct losses on its noninvestment assets, i.e., losses due to inconvertibility of the foreign institution's own local currencies or due to war, revolution or insurrection damage to, or expropriation of, the foreign institution's own tangible property; and that the term "foreign bank, finance company or credit institution" refers to the domicile of the corporation-it does not refer to U.S. banks, finance companies, or credit institutions doing business abroad. The Agency for International Development has in recent months been expanding its program for guaranteeing investments by U.S. investors in foreign financial institutions. Certain aspects of AID's operations involve procedures and policies, the implications of which have not been adequately explored and evaluated by the Congress. The managers on the part of the House recognize the desirability of encouraging private investment by U.S. investors in foreign financial institutions and do not wish to foreclose efforts by the Agency for International Development to devise procedures for removing obstacles to such investment. They agreed with the Senate conferees, however, that the present program of attribution coverage for losses on the foreign institution's investments should be suspended pending further study. Ceiling on Latin American housing guaranties (House—Section 104) The House bill provided for a ceiling of $600,000,000 on investment guaranties for Latin American housing, an increase of $100,000,000 over the present ceiling. The Senate amendment retained the existing ceiling of $500,000,000. The committee of conference agreed to split the difference, establishing a ceiling of $550,000,000 (this is a limitation on the volume of guaranties which may be issued and no authorization or appropriation of funds is involved). Title IV-Surveys of Investment Opportunities Surveys of investment opportunities authorization (House-Sections 106 and 107; Senate-Section 104) The House bill amended section 231 of the act in order to make the program more attractive and useful to small and medium-sized enterprises. Under this program, which has been operating for several years, the Agency for International Development reimburses United States firms up to 50 percent of the cost of pre-investment feasibility and market studies which they undertake in contemplation of possible investment in the developing countries. The U.S. firm makes the survey and if it decides to make an investment, the Agency for International Development pays no part of the survey cost. In case the firm decides that the opportunities are not sufficiently favorable to justify an investment, the Agency for International Development pays up to 50 percent of the cost of the survey. The managers on the part of the House believe that this program should be continued and accepted a compromise providing that no changes should be made in existing law relating to this program and that no additional funds should be authorized for it. It was the understanding of the committee of conference that all of the funds which have been authorized have not been appropriated and that the program can be carried forward under the existing authorization. CHAPTER 3-INTERNATIONAL ORGANIZATIONS AND PROGRAMS Contributions to international organizations and programs (HouseSection 111(a); Senate-Section 107(a)) The House bill authorized an appropriation of $130,000,000 for fiscal year 1969 for these programs. The Senate amendment authorized an appropriation of $135,000,000 for fiscal year 1969 but earmarked $80,000,000 of that amount for the United Nations Development Program. The managers on the part of the House accepted the Senate amount but rejected the earmarking provision. The executive request for these programs was $143,000,000, including $80,000,000 for the United Nations Development Program. To leave the latter amount untouched while reducing the total would mean that the other 14 programs funded under this authorization would have to bear a disproportionate share of the reduction. The effect of the deletion is to remove any preferential treatment for the United Nations Development Program. PART II CHAPTER 2-MILITARY ASSISTANCE Sophisticated weapons (House-Section 201(a)(3); Senate-Section 201(a)(3)) The House bill provided that none of the funds authorized by section 504(a) of the Foreign Assistance Act shall be used to furnish sophisticated weapons systems on a grant, sale, or loan basis to any underdeveloped country other than Greece, Turkey, Iran, Israel, the Republic of China, the Philippines, and Korea, unless the President determines that such grant, sale, or loan of equipment is important to the national security of the United States and reports within 30 days each such determination to the Congress. The Senate amendment made the following changes in the House version: (1) None of the seven countries listed in the House version were exempted from the restrictions; (2) The restrictions in the House version were not limited to underdeveloped countries; and (3) The illustrative list of sophisticated weapons systems referred to "advanced jet aircraft for military purposes" rather than to "jet aircraft for military purposes." The managers on the part of the House agreed to a compromise under which no countries are named to which the provision does not apply, and the provision is expressly made applicable only to underdeveloped countries. This means the President will have to waive this provision for countries named in the House bill, as well as those not named, if sophisticated weapons are to be furnished to any such countries. The Senate agreed to the deletion of the word "advanced" in reference to jet aircraft which had been inserted by the Senate. PART III CHAPTER 1-GENERAL PROVISIONS Trade of developed countries with Cuba (House-section 301(c)) The House bill added a new paragraph (4) to section 620(a) of the Foreign Assistance Act. This paragraph provided that, notwithstanding section 640 of the act, no loans, credits, grants, or other assistance shall be furnished under the Foreign Assistance Act, and no sales shall be made under Public Law 480, to any developed country which sells or furnishes to Cuba, or which permits ships or aircraft under its registry to transport to Cuba (except for U.S. installations), any equipment, materials, or commodities (other than food and medical supplies), so long as the Castro regime governs Cuba and continues to export Communist subversion to any country of the Western Hemisphere. It further provided that no provision of the Foreign Assistance Act shall be construed to authorize the President to waive the provisions of the paragraph, except to fulfill commitments entered into before the date of enactment of the paragraph or to carry out bilateral or multilateral undertakings relating to the national defense of the United States. The Senate amendment contained no comparable provision. The managers on the part of the House accepted the deletion of this provision. The Senate conferees pointed out that the provisions of existing law (section 620(a)(3) of the Foreign Assistance Act and section 107 of the Foreign Assistance Appropriation Act of 1968) prohibit giving assistance under the Foreign Assistance Act to any country permitting its ships or aircraft to carry commodities to or from Cuba, and that sales of agricultural commodities under Public Law 480 are not made to developed countries. As a consequence, this provision would be more likely to affect our relations with developed countries with which we have agreements relating to our national defense, including our access to military bases, than to persuade other developed countries to cut off trade with Cuba. Sophisticated weapons (House-Section 301 (d); Senate-Section 301 (c)) The House bill adds to the act a new section 620 (v) which directs the President to withhold economic assistance in an amount equiva lent to the amount spent by any underdeveloped country, other than Greece, Turkey, Iran, Israel, the Republic of China, the Philippines, and Korea, for the purchase of sophisticated weapons systems from any country, unless the President determines that such purchase is important to the security of the United States and reports within 30 days each such determination to the Congress. The Senate amendment made the following changes in the House bill: (1) None of the seven countries listed in the House version would be exempt from the restrictions; (2) The restrictions in the House version would not be limited to underdeveloped countries; and (3) The illustrative list of sophisticated weapons systems would refer to "advanced jet aircraft for military purposes" rather than to "jet aircraft for military purposes". The managers on the part of the House agreed to a compromise under which no countries are named to which the provision does not apply, and the provision is expressly made applicable only to underdeveloped countries. This means the President will have to waive this provision for countries named in the House bill, as well as those not named, if bilateral economic assistance is to be furnished to any such countries without the specified deduction for sophisticated weapons purchases. The Senate agreed to the deletion of the word "advanced" in reference to jet aircraft which had been inserted by the Senate. CHAPTER 2-ADMINISTRATIVE PROVISIONS Eligibility of suppliers (House-section 302(a); Senate-section 302(a)) The House bill added to section 621 of the act a new subsection expressly authorizing issuance of regulations determining the eligibility of suppliers to receive payments under the act. Under such regulations eligibility could be denied or suspended, after public hearing, in any case in which the supplier or his agent had, in connection with a transaction financed under the act, (a) offered or accepted a bribe or other illegal payment or credit, or (b) committed a fraud, or (c) acted in any manner which shows lack of integrity or honesty. A debarred supplier would be entitled to have his eligibility reviewed at least once every 2 years. The Senate amendment provided for the same grounds for suspension and debarment, but explicitly provided that the designated grounds are not exclusive grounds and preserve the rights of the Agency to suspend eligibility temporarily for "probable cause," permitted suspension and debarment to extend to affiliates of the suppliers involved, and permitted debarment for as long as 3 years. The managers on the part of the House accepted the modifications of the House language contained in the Senate amendment as being entirely consistent with the objectives of the House provision while making certain minor changes which would improve the effectiveness of its administration. False claims and ineligible commodities (Senate—section 302(e)) The Senate amendment added to the act a new section 640A providing for damages against persons making false or fraudulent claims. for payment from funds made available under the act or covering ineligible commodities or commodity-related services. |