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Contemporary Practice of the United States Relating to International Law

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The material for this section has been prepared by a committee consisting of HAROLD S. BURMAN, STANLEY L. COHEN, THOMAS T. F. HUANG, and SYLVIA E. NILSEN, under the chairmanship of RICHARD B. BILDER, all of the Office of the Legal Adviser, Department of State. Mr. ALFRED P. RUBIN, of the Office of the General Counsel, Department of Defense, has provided the committee with material originating in the Department of Defense.

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1 Reprinted in 58 A.J.I.L. 241 (1964). See pp. 305-318 ibid.

2 Resolution 1903 (XVIII).

1 18 U.S.C. 955 provides: “Whoever, within the United States, purchases or sells the bonds, securities, or other obligations of any foreign government or political subdivision thereof or any organization or association acting for or on behalf of a foreign government or political subdivision thereof, issued after April 13, 1934, or makes any loan to such foreign government, political subdivision, organization or association, except a renewal or adjustment of existing indebtedness, while such government, political subdivision, organization or association, is in default in the payment of its obligations, or any part thereof, to the United States, shall be fined not more than $10,000 or imprisoned for not more than five years, or both. “This section is applicable to individuals, partnerships, corporations, or associations other than public corporations created by or pursuant to special authorizations of Congress, or corporations in which the United States has or exercises a controlling interest through stock ownership or otherwise. While any foreign government is a member both of the International Monetary Fund and of the International Bank for Reconstruction and Development, this section shall not apply to the sale or purchase of bonds, securities, or other obligations of such government or any political subdivision thereof or of any organization or association acting for or on behalf of such government or political subdivision, or to making of any loan to such government, political subdivision, organization, or association.“

2 Under section 407 of the Agricultural Act of 1949 (63 Stat. 1055, as amended, 7 TJ.S.C. 1427), the Commodity Credit Corporation is authorized to sell subsidized agricultural commodities owned or controlled by it for export at less than the domestic price. Representative Latta stated that under the Department of Commerce proposal “the American taxpayer will now [be] picking up the difference between the world price and the domestic price… . The exporter would charge this difference to the taxpayer.“ 107 Cong. Rec. 13746-13748. In fact, as noted by Chairman Cooley of the House Agricultural Committee in debate on the floor of the House, since the commodities in question are surplus, the American taxpayer in each case has already “picked u p “ not merely the difference between the world price and the domestic price, but the entire amount of the domestic price. Export transactions can be said to involve a ” s u b s i d y “ only because the losses incurred in maintaining the domestic price support program are not deemed realized until a sale occurs. The net result of export transactions therefore is to reduce the loss to the taxpayer by the amount of the world market price. Id. at 13747.

3 Export Control Act of 1949 (63 Stat. 7, as amended, 50 U.S.C. App. 2021 et seq. (authorizing the President to regulate exports, including their financing, transportation, and other servicing); Agricultural Act of 1949, section 407, supra (CCC authorized to sell agricultural commodities for export at less than support prices); Commodity Credit Corporation Charter Act, section 5 supra (CCC empowered to procure agricultural commodities for sale to foreign governments, and to export such commodities, or cause them to be exported, and to aid in the development of foreign markets for these commodities).

4 This view is supported by my recent opinion to the Secretary of Agriculture of August 29, 1963, regarding the applicability of the Cargo Preference Act to export sales on long-term credit negotiated by the Secretary of Agriculture with domestic exporters under Title IV of Public Law 480. While the opinion concludes that the Cargo Preference Act applied because the purpose of the Title IV long-term credit program was in substantial part “ t o assist” the foreign economy, it was stated that if the Department of Agriculture should sell surplus agricultural commodities to a domestic exporter for export purposes under a program designed to dispose of the goods on the best possible terms and conditions, “the resulting export is a purely commercial transaction … and, hence, not subject to the Cargo Preference Act even if the United States advances credit to the exporter and the ultimate purchaser is a foreign government.“

Contemporary Practice of the United States Relating to International Law

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