But this by no means says that if a State trading deal has been made in a commodity which is in burdensome surplus, that that commodity is then not subject to an agreement. That is not the exception, sir. It is only that these principles do not fit a deal between a buyer and a seller. The CHAIRMAN. I continue opaque. Well, let us go on to (c). [Reading:] to arrangements relating to fissionable materials, to the traffic in arms, ammunition, and implements of war and to such traffic in other goods and materials as is carried on for the purpose of supplying a military establishment, or, in the time of war or other emergency in international relations, to the protection of the essential security interests of a Member. Are there any limits of any kind anywhere in this chapter or in the charter on the scope of that subparagraph? Mr. PHILLIPS. I believe that these same points are found in the commercial policy section, and chapter VI on restrictive business practices makes specific reference to this exception here. So I believe that there is no place in the charter where we do not have the military exception. The CHAIRMAN. Could arrangements of the kind which are privileged by this subsection be in any way referred to the review or the judgment or the decision of the Organization, or any part of the Organization, or to the International Court of Justice? Mr. PHILLIPS. I believe not, sir. Of course, any agreement in which we enter into negotiations and then after negotiations submit to the Congress, would be our own determination as to whether or not we were in any way jeopardizing our own security. There is nothing in this chapter that transmits to the Organization any such authority. The CHAIRMAN. Well, then, the answer is "no"? Mr. PHILLIPS. Is "no." If, and I think this is true, this section has been carefully drawn. It was drawn pretty much by the military people and I believe they felt that it covered any possible contingency. The CHAIRMAN. I notice a comment in that article which reads: The Committee was of the opinion that arrangements relating solely to the equitable distribution of commodities in short supply and mentioned in this Article should be short-term arrangements of a transitional character. That is not stated in the article, is it? Mr. PHILLIPS. It is not stated in the article. The CHAIRMAN. Will it be stated in the article? Mr. PHILLIPS. If not in the article, it will be certainly part of the record, sir. The CHAIRMAN. There will be an official interpretation? Mr. PHILLIPS. Yes, sir. The CHAIRMAN. It will be to that effect? Mr. PHILLIPS. Yes, sir. The CHAIRMAN (reading): ARTICLE 60. DEFINITIONS 1. For the purposes of this Chapter, the term "primary commodity" means any product of farm, forest, or fishery, or any mineral, which enters world trade in substantial volume in a form customarily called primary, and may include such a product on which minor processing has been performed in preparation for export. The term may also cover a group of commodities, of which one is a primary commodity as defined above and the others are commodities (whether primary or non-primary) which are so closely related to the other commodities in the group that they can conveniently be dealt with in a single arrangement. First, as to the meaning of the word "mineral." Usually the word "mineral" is taken to include "oil." Is that your own interpretation of word? Mr. PHILLIPS. I believe that that would be included; yes, sir. The CHAIRMAN. Give us some examples of these associated products that would come under the definition of paragraph 1 of article 60. Mr. PHILLIPS. What they were specifically aimed at was, I believe, as I mentioned earlier, the fats and oils situation, where fats and oils are thought of more or less as one commodity. The CHAIRMAN. I am very sorry, Doctor, but that seems to be a vote. I hate to ask you to come back this afternoon for a very short review of this chapter, but could you be back at 2:30? Mr. PHILLIPS. I would be glad to; yes, sir. The CHAIRMAN. We will recess until 2: 30. (Thereupon, at 12 noon, a recess was taken until 2:30 p. m. of the same day.) AFTERNOON SESSION (The committee reconvened at 2: 30 p. m., upon the expiration of the recess.) The CHAIRMAN. The hearing will come to order. STATEMENT OF WILLIAM TAYLOR PHILLIPS, ACTING CHIEF, INTERNATIONAL RESOURCES DIVISION, DEPARTMENT OF STATE, WASHINGTON, D. C.-Resumed The CHAIRMAN (reading): 1. For the purposes of this Chapter, the term "primary commodity" means any product of farm, forest, or fishery, or any mineral, which enters world trade in substantial volume in a form customarily called primary, and may include such a product on which minor processing has been performed in preparation for export. The term may also cover a group of commodities, of which one is a primary commodity as defined above and the others are commodities (whether primary or non-primary) which are so closely related to the other commodities in the group that they can conveniently be dealt with in a single arrangement. You gave as an example fats and oils? Mr. PHILLIPS. Yes, sir. The CHAIRMAN. Can you think of anything else? Mr. PHILLIPS. Not in that grouping. Unless you group together a group of two commodities, one of which would be an obvious primary commodity and the other perhaps a substitute or synthetic product; such as synthetic and natural rubber. Those were the cases we had in mind all through the drafting. 2. For the purposes of this Chapter, the term "Member" or "non-Member” shall be taken to mean a Member or non-Member of the Organization with its dependent territories. If a Member or non-Member and its dependent territories form a group, of which one or more units are mainly interested in the export of a commodity and one or more in the import of the commodity, there may be either joint representation for all the associated territories or, where it is so desired, separate representation for the territories mainly interested in export and separate representation for the territories mainly interested in import. Is that all subject to the principle which we have discussed that in the end, and when it comes to voting or drawing an agreement, the consumers and the producers shall have equal voice? Mr. PHILLIPS. Yes, sir. The CHAIRMAN. What are the dependent territories of the United States in the sense of the words as they are used here? Mr. PHILLIPS. I should think Alaska would be the principal example. It is a little hard to conceive of Alaska wanting to be, let us say, a consumer, while the United States wanted to be a producer or vice versa. This would apply mainly to British territories under which, for example, in rubber, Ceylon or Malaya might wish to be producers while the United Kingdom itself might wish to put forth its views as a consumer. The CHAIRMAN. No matter how they shuffled themselves around, in the end there would be that equality between consumer and producer interest, so far as making a contract is concerned? Mr. PHILLIPS. That is right. The CHAIRMAN (reading): 3. A regulatory agreement is an intergovernmental commodity arrangement involving regulation of the production, export or import of a commodity or regulation of prices. I think that is clear. Let me come back again now to your statement made early during your examination that all these intergovernmental agreements will come to the Congress for approval. What is your affirmative support for that statement in the language of the charter? Mr. PHILLIPS. I believe, sir, that in the language of the charter, nothing is said. That would be in accordance with our own internal structure. The way we would handle regulatory agreements, which require in effect legislation, is this: They would have to come to the Congress, in the first instance, for approval, and in the second instance, for implementing legislation if needed, and thirdly, for funds. The CHAIRMAN. Well, of course, if the agreement required implementation of the type that did call for funds, or did call for an internal governmental mechanism, that would have to be set up and you would have to be set up and you would have to come to the Congress. Mr. PHILLIPS. That is right. The CHAIRMAN. And is it your thought, then, that it would be impossible to draw up an intergovernmental arrangement that would not have to be implemented in the way you suggest? Mr. PHILLIPS. I can think of none that involve regulation at all that would not have to be implemented, sir. The CHAIRMAN. So that is the basis for your theory? The CHAIRMAN. Well, of course, that is true as to most every participation that we have in this charter Organization. In the end there has to be money to support the workings of the plan. We, I assume, will contribute the principal part of the money. The Con gress, therefore, will have to appropriate it, and in that sense, the Congress would have a theoretical control over everything in the charter. Mr. PHILLIPS. More than theoretical, sir, I believe. The CHAIRMAN. It can be made more than theoretical. However, the course of our history shows that once this country has made an international commitment, it has rarely been sabotaged by the appropriations route. All students of the subject realize that you can, in effect, repeal even a treaty if the treaty must be implemented with funds. But I do not know whether there is much history of that kind, if any. Now, may I invite your attention to article 86, paragraph 3 of article 86, which refers to paragraph 2 of article 59, which is a part of the chapter which we have been discussing. I find no paragraph 2 in article 59. Mr. PHILLIPS. That, I believe, is a misprint, sir. Let me look back to the London draft. The CHAIRMAN. All right. Mr. PHILLIPS. Paragraph 2 of article 59 in the earlier draft referred to the fissionable materials exception, traffic and arms, ammunition and implements of war, and that reference should be corrected in this edition. The CHAIRMAN. So that should be article 59, subsection (c)? The CHAIRMAN. Now, you may recall that this morning I asked you whether any part of subsection (c) could possibly be subjected to any decision other than our own. And you were quite certain at that time that it could not be, that we would be the sole judges of those matters. Article 86, paragraph 3, says [reading]: Any justiciable issue arising out of a ruling of the Conference with respect to the interpretation of sub-paragraphs (c), (d), (e), or (k) of Article 37 orand the way you have corrected it subsection (c) of Article 59 may be submitted by any party to the dispute to the International Court of Justice, and any justiciable issue arising out of any other ruling of the Conference may, in accordance with such procedures as the Conference shall establish, be submitted by any party to the dispute to the International Court of Justice. The Members accept the jurisdiction of the Court in respect of any dispute submitted to the Court under this Article. Does that modify your views any? Mr. PHILLIPS. Yes, sir; I believe it does. I was in error. The CHAIRMAN. Do you believe that it will be acceptable to the Congress to have our arrangements regarding fissionable material submitted to the International Court of Justice? Mr. PHILLIPS. I am afraid I am not qualified to go into the justiciable part. The CHAIRMAN. It may be that you have been a little hasty in your correction of paragraph 3 of article 86. It may be that what is meant there is something different from a reference back to subsection (c) of article 59. And so I am going to suggest to you that you sort of brood on that, and let me know later on what the final word is. I feel quite confident that you cannot get congressional approval of anything that would allow our control of fissionable materials or what we intend to do about fissionable materials, or as far as that goes, to the other matters mentioned in article C of article 59, to be referred to any one other than ourselves for decision. Mr. PHILLIPS. I would like to put in a memorandum on that if I might. The CHAIRMAN. Yes. (The memorandum appears as exhibit XIV.) The CHAIRMAN. Have you any further comments you wish to make? Mr. PHILLIPS. No, sir. The CHAIRMAN. I am sorry to have made it necessary for you to come back for such a short session. Mr. PHILLIPS. That is all right. The CHAIRMAN. Thank you very much, Doctor. Mr. PHILLIPS. Yes, sir; thank you, sir. Mr. Stinebower will be the next witness. The CHAIRMAN. Will you take the chair, please, and give the reporter your full name, your residence, and your occupation, and some background on yourself? STATEMENT OF LEROY D. STINEBOWER, SPECIAL ASSISTANT TO THE ASSISTANT SECRETARY FOR ECONOMIC AFFAIRS, STATE DEPARTMENT, WASHINGTON, D. C.; ACCOMPANIED BY JOHN M. LEDDY, ADVISER, DIVISION OF COMMERCIAL POLICY, STATE DEPARTMENT, WASHINGTON, D. C., AND EDMUND H. KELLOGG, DIVISION OF INTERNATIONAL ORGANIZATION AFFAIRS, STATE DEPARTMENT, WASHINGTON, D. C. Mr. STINEBOWER. Leroy D. Stinebower. My residence is Washington. I am special assistant to the Assistant Secretary of State for Economic Affairs. My background is very largely in the Department of State. After college and graduate school and 3 years of teaching I came to the Department of State in 1934 in the Economic Adviser's Office and have been there in one of the economic offices ever since. The CHAIRMAN. What schools did you graduate from? Mr. STINEBOWER. Kalamazoo College in Michigan, and the University of Chicago. The CHAIRMAN. What degrees did you get from the University of Michigan? Mr. STINEBOWER. Master's degree in 1927. The CHAIRMAN. And then you taught where? Mr. STINEBOWER. At Allegheny College from 1928 to 1931. Mr. STINEBOWER. In the department of economics, and in a small school you teach most of the subjects in economics. The CHAIRMAN. Did you specialize in economics in college? Mr. STINEBOWER. Yes; in the latter part of my graduate work at the University of Chicago I specialized in international economic relations. The CHAIRMAN (reading): |