US Department of State 

Dispatch, Vol 2, No 30, July 29, 1991

Title:

Greece: The Enduring Dream of Democracy

Bush Source: President Bush Description: Remarks before the Greek Parliament, Athens, Greece Date: Jul 18, 19917/18/91 Category: Speeches, Testimony, Statements Region: Europe Country: Greece, Turkey, Cyprus Subject: Military Affairs, NATO, Democratization, History [TEXT] Thank you, sir, for the welcome and may I pay my respects to President Karamanlis, Prime Minister Mitsotakis, President of the parliament, Mr. Tsaldaris; Mr. Papandreou [the former Prime Minister], who I had the privilege of meeting not so long ago; and members of the Vouli. Let me first thank you for the extraordinary honor of speaking to you. It means a great deal to follow in the footsteps of such great men as Dwight Eisenhower and General Charles de Gaulle, who spoke here. No American can come to Athens without feeling a kind of sacred awe. All that Americans are, all that Americans stand for, all that we hold most dear has roots right here in a great city and the great country where democracy was born 2,500 years ago. Every American student learns to appreciate the magnificence of the Parthenon and Delphi, the cool Aegean Sea. We learn that the great disciplines--philosophy, theology, drama, literature, mathematics, biology, zoology, and, of course, politics were born on these shores. I expect all the rest of them are alive, but I'm sure politics is still alive on these shores. We see in your monuments and museums the seeds from which our republic of freedom grew up. After 2,500 years, mankind is only beginning to grasp the magnitude of what your forefathers achieved. Through dozens of generations, through the rise and fall of great empires, through wars and plagues, through depressions and economic revolutions, through the triumphs and travails of human affairs, one thing has endured. The dream of democracy. And so today, as old despotisms melt away and a commonwealth of freedom arises around the globe, we can truly say that our future--the world's future--began right here. Although I've not visited--well, I visited Greece in 1960, and then once again I believe in 1979. I haven't been here that much lately, but I feel at home here. I have the honor to share this chamber today with the man who symbolizes ancient Greek principles and modern Greek courage, President Constantine Karamanlis. Then-Prime Minister Karamanlis hosted President Eisenhower back in 1959 and has done business with every American president since Harry Truman. He restored democracy to Greece in 1974 and made it possible for Greece to assume its present stature as a bulwark of stability. He built firm relations with the West and helped secure Greek membership in the European Community [EC]. He ensured that Greece would play an important role in the Atlantic alliance, and he enlarged Greece's international responsibilities, its international influence, its international importance. To honor this great man and to stress the special quality of our renewed relations with Greece, I now would like to invite your president to join us in Washington next year for a state visit, and I hope you will accept, Mr. President. I hope you will accept so that the American people can express their heartfelt gratitude to you, their admiration for you, and their respect for Greece. And today, I also want to repeat my invitation to another great man, a man I admire and respect, your prime minister, Constantine Mitsotakis. I have asked him to make an official visit to our capital, and this trip would let the whole world know that our friendship, like the ideals that link us, will endure. As I stand here today, I'm happy to say that our relations are stronger than ever. We have tightened our economic ties with agreements on customs and civil aviation and tourism. We've made great progress together in the international fight against terrorism, and with this visit, I hope that we can make this special relationship stronger still. We can build a more vibrant economic relationship. While the United States is the largest external investor in Greece, we want to do more. We want to ensure that American capital and know-how will be able to contribute to lasting Greek prosperity. And I, therefore, ask our Secretary of Commerce [Robert Mosbacher] to lead a presidential trade and investment mission to Greece this autumn. We can strengthen our security relationship. We already have forged solid ties through NATO. This year the United States will provide $350 million in security assistance to Greece. We've just agreed to lease you two Knox-class frigates, and we will expedite the shipment of 10 F-4E aircraft to you and deliver 18 more this fall. These agreements express our determination to stand by you now and in years to come. You stood squarely with the international coalition that liberated Kuwait from Saddam Hussein, and this kind of cooperation is not new. In the Persian Gulf--as in Korea and the two world wars--Greece sided with the forces of freedom. Now we face a new world, a world in which military confrontation is being pushed aside by constructive economic competition, a world in which nations struggle to build and perfect democracy. Although we've got no road maps to guide us through this world, we have a sure compass in principles both our nations hold dear: peaceful settlement of disputes, free enterprise, an open world economic system, and--underlying it all--democracy. Here in Greece, you command an especially vivid view of the world. Here in your unique location at this historic time, we can see the challenge and the promise of what we refer to as the new world order. To the north, Europe's first post-Cold War crisis has erupted. The peoples of Yugoslavia struggle to secure new-found freedoms and overcome the pull of ancient hatreds. The international community, rallied by the bold initiative of the EC, appeals to the Yugoslavs to chart a new future, a democratic future, through peaceful negotiations. And we call upon the leaders there to spare their people from dreadful civil war. As an EC country with a stable democracy, you can help nations such as Albania and Bulgaria who struggle along the road to freedom. Struggle they might, but look back at very recent history. Who would have predicted that these countries now want to go down freedom's road, democracy's road? Your Balkan neighbors, including Yugoslavia, look to you for guidance and help and hope. A kind of youthful optimism flourishes everywhere. The emerging democracies of Europe, peoples throughout the Soviet Union, men and women, young and old throughout the world, aspire to achieve the ideals first sketched out here in Greece. But ideals are important only if they can shape actions. You understand this. We are encouraged that your government is advancing new ideas to foster stability in the Balkans and the Aegean. The opportunity for a new era of accommodation in this region beckons. With that in mind, I must report that my meeting with Mr. Gorbachev yesterday was in that spirit of cooperation as the Soviet Union seeks to do more according to democratic principles. I'm hoping that the arms control agreement that we worked out yesterday with Mr. Gorbachev--the first to reduce these strategic arms in history--proves to be of benefit to all the countries around the world, particularly in this region. You and Turkey face a great challenge to resolve these old disputes that divide you. More than 60 years ago, Eleftherios--and I've got to watch my pronunciation--Venizelos signed treaties of friendship and commerce with the father of modern Turkey, Kemal Ataturk. I pray that your two nations might follow the example set by these giants. Today, with new leaders of vision, your nations enjoy a unique opportunity to overcome the misunderstandings of the past and begin to heal the deep wounds that scar Cyprus, that divide families and friends on that island. In the new world that I have discussed, none of us should accept the status quo in Cyprus. Today I pledge that the United States will do whatever it can to help Greece, Turkey, and the Cypriots settle the Cyprus problem and do so this year. In the end, the ties that bind the United States and Greece go far deeper than economic or military necessity. You see, as many of you know, Greek-Americans have enriched our country enormously in every profession, in every region, in every walk of life. Two distinguished businessmen and old friends have accompanied me on this trip, Alex Kortelas and Alex Spanos, both of whom have made a tremendous imprint in our country. And, of course, our able ambassador, Michael Sotirhos, serves our nation well. We have subtler ties, too. Cities across America take their names from such places as Athens, Corinth, Delphi, and Sparta. Near one of my favorite fishing spots lies the town of Marathon, Florida. And, of course, my country would not exist if your forefathers had not developed the world's most revolutionary idea: democracy. Our founding fathers studied your history closely and revered deeply the works of the ancient Greeks. Thomas Jefferson, the author of our Declaration of Independence, once observed, "Greece was the first of civilized nations presenting examples of what man should be." Yet we also must remember that the powers of ancient Greece fell because they could not set aside old hatreds, because they refused to acknowledge common ties, common principles, common acts, common aims. We must resolve not to repeat their mistakes. Tomorrow I have a wonderful opportunity. I shall visit the Acropolis and stand near the temples where our ancient forefathers charted ideals for the ages. As we gather here today, let us agree to build a new Acropolis, a monument not of marble or steel but of something far less fragile, a monument of deeds and ideals, a new world order erected upon timeless ideas born right here. That new world order can help us achieve our dreams of collective security and individual liberty. Every nation must assume some of the burden of building this order, and every nation must accept its responsibilities for building a sound international economy. Every nation must do its duty to preserve freedom and enterprise. America and Greece have special responsibilities in this quest. The United States as the world's strongest democracy. Greece is the world's first. But if we engage fully in the changing world beyond our borders, we can build an order in which all nations enjoy prosperity, democracy, and peace. Eleutherios Venizelos once claimed "that America has realized the ideals of ancient Greece. No two elements come closer to each other than do the Greek and the American." That tremendous compliment also outlines our common challenge to work even more closely in securing a new world order dedicated to freedom and enterprise. We live in exciting times. Who would have dreamed that the changes taking place in the Soviet Union would offer this promise of freedom and democracy? Who would have dreamed the captive nations of Eastern Europe are free and are on the path that you set many thousands of years ago, the path to full and free and fair and open democracy? So, for those who are gloomy about the present, I say you shouldn't be; there's plenty of room to be optimistic. And I'm delighted; I feel more of a sense of optimism coming to democracy's birthplace. I want to thank you for the extraordinary honor of inviting me to address this special session. I stand here surrounded by the grandeur and echoes of the ages, a proud son of the ideals that your land gave the world. And so, like all friends of liberty, I leave you now. And I must say, "zito i ellada." Thank you very, very much. I'd like to just present to your president and your prime minister, and really to the Greek people, a replica of our Declaration of Independence, a document that symbolizes our profound ties to you and our timeless debt to the people and the legacy of Greece.
US Department of State Dispatch, Vol 2, No 30, July 29, 1991 Title:

Strengthening US-Greek Security

Bush Source: President Bush Description: Excerpts from remarks to US and Greek Armed Forces, Souda Bay Naval Facility, Souda Bay, Crete, Greece Date: Jul 19, 19917/19/91 Category: Speeches, Testimony, Statements Region: Europe Country: Greece, Turkey, Cyprus Subject: Military Affairs, NATO, Democratization, History [TEXT] I am pleased to announce today during this visit a series of initiatives designed to strengthen US-Greek security and to help modernize the Greek armed forces. First, I have expressed to Prime Minister Mitsotakis our readiness to lease your country two Knox- class frigates for the Hellenic navy. Secondly, we will accelerate the delivery of 10 F4-E aircraft to Greece this summer, with an additional 18 to follow in the autumn. And finally, we plan to transfer to Greece from existing NATO stocks a large number of tanks and artillery that will measurably increase Greece's defensive capabilities. Each of these steps reaffirms our close and critical defense relationship with our valued NATO ally, Greece. Our support for Greek security will not waver. Greece remains a valued ally, and our friendship with Greece remains part of our destiny. The United States remains committed to helping Greece maintain its ability to perform its vital NATO missions. Greece can be certain that US support will remain steadfast and strong.(###)
US Department of State Dispatch, Vol 2, No 30, July 29, 1991 Title:

US-Greek Economic Relations

Bush Source: President Bush Description: Excerpts from remarks before the Greek-American Chamber of Commerce, Athens, Greece Date: Jul 19, 19917/19/91 Category: Speeches, Testimony, Statements Region: Europe Country: Greece, Turkey, Cyprus Subject: Trade/Economics (Introductory remarks deleted) [TEXT] Let me just talk a little bit about improving economic relations between the United States and Greece, and to express my support-- strong support--for the economic path that Prime Minister Mitsotakis has charted for this great country. The prime minister has taken a giant first step toward strengthening the Greek economy by outlining some goals that sound very familiar to this American President. He wants to cut the red tape, privatize the economy, reduce the cost and size of the government sector, and get his economy on a growth path. Prime Minister Mitsotakis deserves enormous credit for working to lift the veil that for too long kept Greece out of the international economic mainstream. He understands that free markets, not state management, can help Greece invigorate its economy, reduce its deficit, pay off its external debt, and remain a member in good standing of the European Community. We shouldn't underestimate, given the state of the world economy, the difficulty of the prime minister's task. We shouldn't underestimate its importance, either. So let me just tell you what he and I talked about, what I told him. First, we believe in the reform efforts. I might ask you to take a rather global look at this point. It isn't simply Greece that is moving on this important path that I have outlined above. Take a look at what is happening in Eastern Europe. Take a look at the aspirations inside the Soviet Union toward privatization and market reform and convertibility and all of the things necessary to improve the lives of the people through trade. Far better to do it that way than through some aid program that screeches to a halt because it has no underpinnings. So we are embarked here on a program that really makes a difference--this reform program. I think his reforms will work. I think they can make a big difference in Greece. You see, we also believe strongly in the benefits of trade. I left that economic summit there in London more determined to press for open markets, free and fair trade around the world, and open investment opportunities everywhere. This isn't to benefit solely the United States--and yes, we would benefit--but it is to benefit every single country that participates in achieving these goals. You see, the litter of communism provides eloquent testimony to what happens when people forget about the virtues of free enterprise and avoid the tough disciplines that competition provides. If we want to make the most of the talent of our people in America, in Greece, in Europe, and all around the world, we must advance the cause of free and fair trade. Our Administration remains totally determined to reach a successful conclusion of the GATT [General Agreement on Tariffs and Trade], of this Uruguay Round. I remain optimistic that we can do so. As I look at the various economies around the world, I am absolutely convinced that Greece would benefit enormously from a successful conclusion of the GATT round. The more Greece opens its markets to foreign investment and the more it works to develop its export industries, the more secure its future will be. I'm happy to say that our trade relationship with Greece is growing stronger every single day. The United States enjoys what I think is a special and strong relationship with Greece. Again, I salute the prime minister for his key role in all of this. That relationship should make a lot of people happy. Consider the bottom line. US exports to Greece increased 10% last year, and Greek imports to the US increased by $30 million. But, you see, if you look at the big picture--and you all understand this--that was only a beginning. Our governments recently have signed a bilateral customs agreement, a new civil aviation agreement, a joint declaration on tourism. And I believe that these initiatives will increase the number of commercial flights between the nations, speed the flow of goods through customs, and generate more tourist business. I couldn't help but stand there--Barbara and I talked about this--standing there just in the wish that many and all Americans could someday share the joys that we felt standing in the midst of that history just a few minutes ago. The Greek and the US Governments are cooperating effectively in this worldwide fight against terrorism, and this effort is obviously going to remain a priority for both countries. We are trying to expand trade and investment opportunities for American companies that want to do business in Greece. And we have worked to protect intellectual property rights, patents, copyrights, trademarks, and the like for American firms doing business in Greece. We have worked with the Government of Greece to ensure the swift and fair repatriation of profits. It has to happen. And we hope to improve the prospects for American firms interested in bidding on Greek Government contracts. This progress--and I'm not saying there is not more that needs to be done; there is. But this progress demonstrates that the Greek Government is ready to do business with American companies and that it welcomes American investment. This is a refreshing change, and it explains why, for the first time in more than a decade, OPIC--the Overseas Private Investment Corporation--can offer insurance and financing for private sector investment projects. The investment climate here seems more hospitable than ever for Americans. And now the United States needs to take advantage of the welcome that the Prime Minister has given us. So, as I announced yesterday in my speech to the legislature, I have asked Commerce Secretary Bob Mosbacher, known to many in this room, to lead a presidential trade and investment mission to Greece this autumn. That mission can persuade even more American businesses to take advantage of the opportunities that are already here and the opportunities that will be here in the future. In the days and months ahead, our governments will continue working to improve economic relations and eliminate these obstacles to growth. But in the end, good business is common sense, and common sense ought to guide us as we work to build a more prosperous future. I am happy to say that I think, as you look at this country and our country, things look good. In the United States, as everyone here knows, we've been facing substantial, tremendous economic problems. Our country has been in recession, albeit by historical standards statistically rather mild. But some of our people have been hurting because of this recession. Most of the indicators now are [saying] that the recession is over and growth is beginning. It's my own view that if that growth pattern continues, and I think it will, this will benefit businesses all around the world. The dynamism and the size of the American economy relates to economies of small countries and medium-sized countries all around the globe... As one firm says, I am bullish on America. I'm not advertising for one firm against some of the others I see around here, but I have reason to be [bullish]. Let me just tell you something very personally. This is a fantastic and challenging time, a rewarding time to be president of the greatest and freest country on the face of the earth. As you look around the world and you see what has happened in Eastern Europe, as you see the changes that are already beginning to take hold in the gigantic Soviet Union, as you see our own hemisphere--the Western Hemisphere--with all but one country moving down democracy's path. As you take a look at Asia and the dynamic trade relationships that we have with Asia and that they're continuing to grow, we remain, in spite of our affinity and affection for the people of Greece and Europe--we are also a Pacific power. And you see those trade relationships strengthening. I can tell you, it is an enormously rewarding time, in spite of the problems we face, to be President of the United States. I happen to believe that the action that we took collectively with allies--and I will always be grateful to Greece for its participation--the action we took against Saddam Hussein gave the United States a new respect and credibility around the world. I am very grateful, obviously, to the men and women who served under our banner. But the other day I had a chance to reward the French general [and] the British general with high honors, expressing our appreciation that this was not a US unilateral move--it was a revitalized United Nations, and it brought together Greece, the United States, and Turkey, and many other countries which stood up for a common purpose, and that purpose is [that] aggression, bullying, one neighbor against another, will not stand. It did not stand. We've set a principle out there for the world. It will not stand in the future. I am very grateful to everybody that participated. And so that achievement of that common purpose of turning back aggression from a bullying and brutal dictator now leads us to what I call a possibility of a new world order. And let me just assure you--this isn't on the subject of commerce; it's on the subject of political rivalries; it's on the subject of world peace-- that we will use every bit of this new-found political power or this worldwide credibility to do our best to bring peace to the historically troubled corners of the world. As you see the changes that are taking place in your sphere, and then you couple those with the changes that are taking place in the political sphere, I think we all conclude that we have a historic opportunity. I must tell you, I felt very strongly about that when I sat down with Mikhail Gorbachev the other day in London. They are trying. They've got enormous economic problems. But we sat there, and we finalized a strategic arms reduction treaty--the first time that we have been able to significantly reduce destabilization of the world through intercontinental ballistic missiles. It is a wonderful achievement--not just for the American people, not just for the people in the Soviet Union--for I think it reflects on everybody in Greece; the feeling that we can curtail the unprofitability that goes into these massive arms and then bring the power of private enterprise to bear, helping the people of the countries around the world. These are exciting times. These are not times to be pessimistic about the world in which we live. And so, things do look good. The President of this great country and the Prime Minister have felt--we're back to bilateral relations now--have helped forge what is a new beginning here--a new beginning to an old friendship. And so my challenge to you all is let's make things even better. (###)
US Department of State Dispatch, Vol 2, No 30, July 29, 1991 Title:

US-Bulgarian Relations

Boucher Source: State Department Deputy Spokesman Richard Boucher Description: Washington, DC Date: Jul 23, 19917/23/91 Category: Speeches, Testimony, Statements Region: E/C Europe Country: Bulgaria Subject: Trade/Economics, Development/Relief Aid, Democratization [TEXT] Acting Secretary of State Lawrence Eagleburger met today with Bulgarian Deputy Prime Minister Dimitur Ludzhev. The meeting focused on bilateral relations, Bulgaria's political and economic development, and regional issues. The United States welcomes the progress that the Republic of Bulgaria has made in establishing a democratic system of government and a free market-oriented economy. Bulgaria has left behind its totalitarian past; it has shown that it is committed to genuine reform, including respect for pluralism, the rule of law, human rights, and fundamental freedoms. This commitment to democratic principles has been the basis on which the United States and Bulgaria have begun to build a new relationship of friendship. This is a difficult transformation and one which will require continued dedication and effort. The United States encourages Bulgaria to continue working to build strong, democratic institutions in order to safeguard the progress it has made and will strongly support those efforts. The elections scheduled for September will represent another major step for democracy and peaceful transition in Bulgaria, a transition in which all political forces are called upon to demonstrate their commitment to a democratic and fair electoral process, tolerance, and respect for civil peace. The United States respects Bulgaria's significant achievements in the area of economic reform. The Bulgarian people have shown that they have the courage and the will to continue this essential process, despite the short-term, severe hardships necessary for long-term success. The United States reaffirms its commitment to support the efforts of the people of Bulgaria to build a market economy fully integrated into international economic structures. During this meeting, the United States and Bulgaria consulted on the situation in the Balkan region. Each side noted its concern about the developments in Yugoslavia, emphasizing the need for the end of all use of force and the settlement of disputes by peaceful means. Both sides stressed the vital importance of respect for democracy, for the human rights of all citizens of Yugoslavia, and for peaceful negotiations among all parties to decide the future of Yugoslavia. Both the United States and Bulgaria reaffirmed the position that nations in the Balkans should not make territorial claims on neighboring states. Bulgaria emphasized that it seeks to play a constructive role in promoting regional cooperation. The United States views Bulgaria as an important regional source of stability and force for democratic change and will continue to consult closely on issues of mutual concern. The United States is pleased, on the occasion of this visit, to announce the establishment of the Bulgarian-American Agriculture/Agribusiness Enterprise Fund, with initial capitalization of $5 million. This fund will promote the development of the Bulgarian private sector through loans and equity investment. On July 22, 1991, the Vice President and Deputy Prime Minister Ludzhev signed a $10 million agricultural sector grant. This grant will be used to help Bulgaria to implement its privatization law. This represents the US contribution to the G-24 [group of 24 developing country members of the International Monetary Fund] balance-of-payments facility. The US has taken these steps to demonstrate its support for the Bulgarian reform program. (###)
US Department of State Dispatch, Vol 2, No 30, July 29, 1991 Title:

New US-Bulgarian Agricultural Fund Established

Fitzwater Source: White House Press Secretary Marlin Fitzwater Description: Washington, DC Date: Jul 22, 19917/22/91 Category: Speeches, Testimony, Statements Region: E/C Europe Country: Bulgaria Subject: Trade/Economics, Resource Management [TEXT] The President today announced his intent to establish a Bulgarian- American Agriculture/Agribusiness Enterprise Fund. Vice President Dan Quayle discussed the fund with the visiting Bulgarian economic delegation led by Deputy Prime Minister Dimitur Ludzhev and Minister of Finance Ivan Kostov at their July 22 meeting. The Vice President welcomed the progress Bulgaria has made in political and economic reform under the leadership of President Zhelev and Prime Minister Popov and noted that the establishment of an enterprise fund was designed to accelerate the process of privatization. Similar to the funds already established for Poland, Hungary, and the Czech and Slovak Federal Republic, the new Bulgarian Fund will invest in the private sector, using its own funds and drawing on other sources of venture capital as well. The Bulgarian Fund, however will differ from the others in two important ways: -- It will focus primarily (but not exclusively) on the agriculture/agri-business sector, including agricultural inputs, food processing and packaging, distribution, and other related areas. -- It will be charged from the beginning to provide technical assistance to complement its investment activities. The funding for this technical assistance will come out of the capital stock of the fund. The Administration intends to make an initial grant of $5 million to the fund from money appropriated this fiscal year for East European assistance in the Foreign Affairs Operations bill. The Bulgarian-American Agriculture/Agribusiness Enterprise Fund may make loans, grants, and equity investments, in addition to sponsoring technical assistance, training, and other measures designed to foster the growth of private business in all sectors of the Bulgarian economy, with a particular emphasis on the agriculture sector The fund will be a private, non-profit organization. The American members of the board of directors will be designated by the President at a later date. The fund will maintain appropriate records of its activities and will file an annual report that includes a statement of an independent auditor. (###)
US Department of State Dispatch, Vol 2, No 30, July 29, 1991 Title:

US-Philippine Joint Statement

Description: Text of joint statement released by the Department of State, Washington, DC Date: Jul 17, 19917/17/91 Category: Speeches, Testimony, Statements Region: East Asia Country: Philippines Subject: Military Affairs [TEXT] Secretary of Foreign Affairs [of the Philippines] Raul S. Manglapus and Presidential Special Negotiator Richard L. Armitage have reached agreement on all major issues involved in the Philippine- American Cooperation Talks (PACT). These include economic, scientific, technological, cultural, educational, health, defense and security matters, and concerns of Filipino war veterans. Regarding the use of Philippine military bases by US forces after September 16, 1991, the Philippine and US technical panels have ironed out the major details of an Agreement on Installations and Military Operating Procedures and a Status of Forces Agreement, which will replace the 1947 Military Bases Agreement. The two panel chairmen will now submit the results of their work to their respective Presidents for review. The panel chairmen have agreed that, in view of the calamitous effects of Mt. Pinatubo, the resources required to restore Subic Naval Base to operational effectiveness justify a tenure of 10 years for US forces beginning on September 17, 1991. At the end of the ninth year, unless in the meantime a unilateral Philippine review leads to discussions with the US on access arrangements in accordance with the Philippine constitution, a joint Philippine-US committee will be established to develop the modalities of an orderly and expeditious US withdrawal which will commence at the end of the tenth year. The panel chairmen have also agreed that although the effects of Mt. Pinatubo have rendered continued US operations at Clark Air Base and the smaller facilities virtually impossible, there still exists a requirement for orderly withdrawal and turnover of all facilities to the Government of the Philippines. Clark Air Base will continue cleanup and withdrawal operations and will be turned over to the armed forces of the Philippines no later than September 16, 1992. The smaller facilities will be turned over to the armed forces of the Philippines by September 16, 1991. Secretary Manglapus and Special Negotiator Armitage have also agreed upon a new and more rational framework for the often controversial issue of bases-related compensation. Both panel chairmen view the disaster wrought by Mt. Pinatubo as having imposed on both governments an obligation to accord a very high priority to the restoration of basic services, economic infrastructure, and growth opportunities to Central Luzon. Accordingly, the panel chairmen have decided to approach the issue of compensation in the following manner. -- Notwithstanding the operational and financial effects of Mt. Pinatubo on the facilities used by the US forces and in view of the impact the volcano has had on the lives of several hundred thousand Filipinos, the US Administration has asked Congress to provide all of the funds requested by President Bush for the Philippines in his budget submission for FY 1992. This request is in excess of $550 million and includes categories of assistance not linked to military bases, such as the US contribution to the Multilateral Assistance Initiative (MAI) and appropriations for food aid. Starting in FY 1993, US appropriations for requests linked to the continued use of Subic Naval Base by US forces will consist of security assistance grants amounting to not less than $203 million per year. These security assistance funds will enable the armed forces of the Philippines to obtain defense equipment, services, and training from the US, and will provide vital economic support to the Government of the Philippines. Other forms of US appropriated assistance, such as food aid, emergency disaster relief, development assistance grants, and so forth, will not be linked to bases and will be subject to discussions by a Program Review Group. -- The Government of the Philippines will receive, at no or minimal cost, fully serviceable defense articles and medical equipment declared excess to the needs of the US armed forces. These deliveries shall be aimed principally at sustaining and modernizing the armed forces of the Philippines. Although the US side will not project a dollar value of articles and equipment to be delivered, the Government of the Philippines will be expecting materiel valued at $150 million per year on average for the armed forces of the Philippines and other agencies. -- The US will reinstitute the "Buy Philippine" Balance of Payments Waiver established under the 1947 Military Bases Agreement. This program--which permits US forces in the Philippines and in the foreign areas under the command of the US Commander-in-Chief, Pacific, to purchase Philippine goods--has added more than $200 million per year to the economy of the Philippines in recent years. The US will maintain this procurement program for the 10-year tenure of US forces in the Philippines. -- In addition to unilateral US relief efforts for Filipinos affected by Mt. Pinatubo, the US will use its good offices to support the Government of the Philippines in raising international contributions to a "Regional Fund for Reconstruction and Development" which will focus on Central Luzon. This vital effort will be independent of the MAI and will focus on prospective contributors not fully involved in MAI. In terms of non-defense initiatives, the Philippines recognizes continuing US efforts in assisting the Philippines in obtaining concessional loans from international financial institutions. As a vital element in the enhancement of economic cooperation between the Philippines and the United States, the United States and the Philippines will work together to expand trade relations, investment opportunities, and general economic relations. Finally, Secretary Manglapus and Special Negotiator Armitage have agreed that their respective governments should move expeditiously to create a joint Program Review Group which will meet annually to discuss modalities of US support to the Philippines in terms of economic reform, economic development, and armed forces modernization. The two panel chairmen anticipate that the Program Review Group will hold its first annual meeting before the end of the year in Washington. The Secretary of Foreign Affairs and the Special Negotiator have expressed the expectation that, provided the two Presidents approve the work of the two panels, technical representatives of the two parties will be able to finish the process of drafting official texts very expeditiously and that Filipino and American legislators will then be able to render their own judgments concerning the results of the Philippine-American Cooperation Talks. The panel chairmen expressed their satisfaction that they were able, in the end, to bring this lengthy process to a close in a manner which befits friends and allies. The Secretary of Foreign Affairs will depart Manila tomorrow for the ASEAN [Association of South East Asian Nations] conference after consulting with President Aquino. Special Negotiator Armitage will return to the US this weekend and consult with Administration officials pending President Bush's return from Europe. (###)
US Department of State Dispatch, Vol 2, No 30, July 29, 1991 Title:

Iraqi Non-Compliance With UN Security Council Resolutions

Bolton Source: John R. Bolton, Assistant Secretary for International Organization Affairs Description: Statement before the Subcommittees on Human Rights and International Organizations and on Europe and the Middle East of the House Foreign Affairs Committee, Washington, DC Date: Jul 18, 19917/18/91 Category: Speeches, Testimony, Statements Region: MidEast/North Africa Country: Iraq Subject: Military Affairs, United Nations, Human Rights, Trade/Economics [TEXT] I have a prepared statement which, with your consent, I will submit for the record. I will confine my present remarks to commenting on pending policy issues and their implications for the UN's future role in bringing lasting peace and security to the Persian Gulf. It is fortuitous that you have called this hearing at the present time, Mr. Chairman. The political declaration that was issued on Tuesday by the G-7 [Group of 7: Canada, France, Germany, Italy, Japan, United Kingdom, and United States] summit contains elements which bear directly on the matters before us. The leaders said, among other things: It is a matter for hope and encouragement that the UN Security Council with the backing of the international community showed during the Gulf crisis that it could fulfill its role of acting to restore international peace and security and to resolve conflict. . . . We commit ourselves to making the United Nations stronger, more efficient and more effective in order to protect human rights, to maintain peace and security for all and to deter aggression. . . . We note that the urgent and overwhelming nature of the humanitarian problem in Iraq caused by violent oppression by the government required exceptional action by the international community, following UNSCR 688. We urge the United Nations and its affiliated agencies to be ready to consider similar action in the future if circumstances require it. Unfortunately, however, the events of the last few weeks have provided further evidence of the fundamental untrustworthiness of the Iraqi regime headed by Saddam Hussein. The Government of Iraq has cynically violated its solemnly given commitment to abide by the requirements of Resolution 687. It has lied to the UN in its declarations on nuclear activities. It has ignored the requirement contained in Resolution 688 to cease harassing and threatening its own civilian population. It has refused to cooperate with the provision of humanitarian relief to elements of that population and has attempted to manipulate distribution of relief to its own political advantage. In short, Saddam Hussein is a liar. The behavior of Saddam Hussein, while no surprise to those who have followed carefully the events which began last August 2, does present a tough challenge to the United Nations and the international coalition which expelled Saddam's forces from Kuwait, and which has been providing relief and assistance to Iraq's hard pressed Kurdish minority and other groups. In a nutshell, this challenge is to effectively implement the complex requirements of Resolution 687 and related Security Council directives. The series of resolutions enacted since last August concerning Iraq do provide the basis for continued pressure on the Government of Iraq, and for the dismantling of its formidable aggressive capabilities, and for seeing that those capabilities are not redeveloped. The key to their success lies in maintaining the pressure.
Ensuring Future Peace and Security in the Gulf
At the London summit, the leaders of the Group of 7 expressed their desire to strengthen the role of the United Nations in fostering international peace and security. In the aftermath of the Gulf war, the United Nations had established new practical security mechanisms that point the way for the international community to maintain the peace in the future. The Special Commission was established by the Security Council as an instrument to oversee the elimination of Iraq's weapons of mass destruction and ballistic missiles. Despite the attempts of the government of Iraq to hide its capabilities and obstruct the UN's work, the Special Commission and the IAEA [International Atomic Energy Agency] have worked well. During a program of intensive inspections, the IAEA and the Special Commission uncovered a huge covert nuclear weapons-related program. This revelation elicited a major international outcry. Today, we expect the IAEA to decide that Iraq is in violation of its obligations under the nuclear Non-Proliferation Treaty and Iraq's Safeguards Agreement. This is the first such decision in IAEA's history, and a potentially major step in the agency's development. The head of the Special Commission and the Director General of the IAEA briefed the Security Council last Monday. They presented clear and incontrovertible evidence that Iraq was, indeed, engaged in a clandestine nuclear weapons program. Indeed, Saddam said only yesterday in a speech commemorating the anniversary of the Baathist revolution that Iraq would one day strike back at its enemies and that its capability to do so would be reconstructed. The Special Commission had been able to react swiftly to Iraqi violations because of the strong response of the Security Council and the international community to its grave, serious revelations about Iraq's nuclear program. The Special Commission is a mechanism that is appropriate to its task, it has been staffed with the caliber of experts who can do the job, and it is effective because it has the full political support of the international community. Iraq's failure to accept the judgment of the international community--if it continues to hinder the work of the Special Commission--can only have the gravest consequences. This is exactly how the Special Commission should be working. As such the Special Commission should serve as a model for the future, when the international community is faced with a clear danger and must assure that another brutal aggressor can no longer threaten international peace and security with weapons of mass destruction. Similarly, the arms embargo which the Security Council has maintained against Iraq will help check future Iraqi aggression. Its success has also inspired world leaders to seek greater UN involvement in helping to curb regional arms races, including the proposal for a UN-monitored arms sales registration program, which leaders at the London economic summit have endorsed. We should understand, however, that Resolution 687's modification of Resolution 661's sanctions regime (and possible future modifications) make it operationally more difficult in preventing evasions of the continuing arms embargo. This is a matter that will require our careful and continuing attention in the months and years ahead.
Sanctions/Humanitarian Assistance
President Bush has made it clear that we will not turn our backs on the suffering of the Iraqi people, largely caused by Saddam Hussein's cynical exploitation of hardship for political purposed. Iraq, under normal circumstances, and under an ethical government, had the full capability to take care of its own needs. We are fully prepared to meet our humanitarian obligations. However, the cost of assisting vulnerable populations should ultimately be born by Iraq itself, as should the costs of implementing Resolution 687. Under no circumstances should Saddam Hussein's regime to regain total control of the considerable resources available if Iraq resumes oil exports, even on a limited basis. The most recent assessment of the needs of the Iraqi people, undertaken by Prince Sadruddin Aga Khan recommends that Iraq be permitted to export oil sufficient to pay for the import of humanitarian necessities. This really brings us to the dilemma that Saddam's conduct so starkly poses because of his manipulation of existing food supplies. On the one hand, you could contemplate simply the unlimited provision of humanitarian assistance with no monitoring and no controls. That would be unacceptable, because the clear record here is that Saddam Hussein would manipulate those supplies for his own political purposes. Another alternate would simply be to not provide any assistance at all, which would lead potentially to grave suffering on the part of the vulnerable groups in Iraq's population. There is, however, a third way, and that is to provide assistance under a regime of tight controls and strict monitoring. There has never been any question about President Bush's willingness to see to the needs of vulnerable groups in Iraq. The President has said that we would help and that humanitarian needs can be met within the existing sanctions regime. But Saddam Hussein has proven that he cannot be trusted. Any mechanism developed to provide essential supplies to the Iraqi people must include strict control and close monitoring by the international community. We are now consulting closely with members of the Security Council and our coalition partners on the appropriate operational ways to do this. We would note that food and other relief supplies from foreign sources have been moving into Iraq at a steady rate for the past 2 months. Since food shipments were permitted by the Sanctions Committee on March 22, very substantial amounts of food have been notified to the committee. Substantial amounts have moved into Iraq as well, physically. Donations from humanitarian organizations and individual governments (including the US) have amounted to hundreds of millions of dollars. Additionally, the Iraqi Government has access to foreign exchange that can be used to buy food from abroad. Recently, the Iraqis notified the Sanctions Committee that they had purchased 100,000 tons of grain from Australia. We would also note that a study by two Tufts University nutritionists, commissioned by UNICEF, indicated that while there are problems with malnutrition, particularly in southern Iraq, these problems are endemic -- due to longstanding Iraqi government policies. Dr. Jean Mayer, President of Tufts, said, "The Iraqi Government appears to be using food as a weapon by cutting off the shipment of food and medical supplies to the southern part of the country. This situation must be monitored closely." In the light of these facts, it is clear that while we are prepared to move quickly to provide food to victims of Saddam Hussein's regime, the international community must also be prepared to ensure that none of this assistance ends up in any way supporting that regime. In this regard, Mr. Chairman, I would like to address the resolution that has been offered by [Congressman] Penny which would have the UN unfreeze Iraqi assets and turn them over to UNICEF for the provision of relief in Iraq. While we are all sympathetic to the needs of the Iraqi people and to the intentions of this amendment, we believe that the first initiative must come from Baghdad. They have shown no such humanitarian indications. There are many legitimate claims against the frozen assets by US citizens, and sorting that out will be a lengthy and difficult process. President Bush has made it clear that he would not lift sanctions against Iraq while Saddam Hussein remains in Power. It is ironic, Mr. Chairman, that as Iraq's pleas to ease sanctions become more high pitched, the Iraqi regime continues to flout and challenge the UN. Iraq's well-documented attempts to evade detection of its nuclear weapons program by the joint IAEA/Special Commission inspection teams, its false declarations, and its harassment of the Inspectors are unacceptable. Two weeks ago, disturbing reports reached Geneva of intense military harassment of a group of Shias thought to be trapped in the marshes of Southern Iraq. The Secretary General's Executive Delegate, Prince Sadruddin, went himself to look into the situation. He was first denied permission by Iraqi authorities, then stalled long enough for Iraq's forces reportedly to be withdrawn. Two days ago, the UN staff, including UN guards, whom Sadruddin left to remain in the vicinity of the marshes were told by the Government of Iraq to leave the area because they were no longer needed. This is a direct contravention of Resolution 688 requirements not to interfere with UN relief efforts in Iraq. It also contravenes Iraq's own memorandum of understanding with Prince Sadruddin. These and other examples provide a clear pattern of Iraq's intransigent refusal to comply with the UN's requirements under Resolutions 687, and 688. The Iraqis are well aware that they are fooling no one, yet their actions continue. Clearly the present Iraqi regime cannot respond in good faith with the requirements of the international community. Therefore, the only course left to us and our allies is to maximize the pressure of the economic sanctions and to maintain the active possibility that there are other options. (###)
US Department of State Dispatch, Vol 2, No 30, July 29, 1991 Title:

US Trade Policy

Date: Jul 29, 19917/29/91 Category: Policy Briefs (Gist) Country: United States Subject: Trade/Economics [TEXT]
Background
International trade presents challenges and opportunities for the United States. Recent US trade policy consistently has focused on opening foreign markets and promoting free and fair trade among countries, which fosters growth internationally and in the United States. The Omnibus Trade and Competitiveness Act of 1988 reinforced these directions in US trade policy. Several features of the act open markets through multilateral efforts, such as extending the President's authority on multilateral trade agreements, implementing the international harmonized tariff system, and reducing export control barriers. The act also mandates Administration action under a revised Section 301 procedure in severe cases of unfair trade and makes it somewhat easier for US firms to receive protection under anti-dumping and safeguard provisions of US trade laws. Trade protection has emerged as an issue commanding national attention in the United States, partly because of concern over large US trade deficits. The trade deficit was a record $159 billion in 1987 but has since declined to $102 billion in 1990, because of a US export growth rate almost double that of imports. Despite the improvement, support continues in Congress for protectionist legislation.
Benefits of Free Trade
US policy favors free trade because it promotes robust economic growth by fostering competition and an efficient allocation of resources. It benefits the importing country by providing cheaper or otherwise unavailable products and by enhancing competition and efficiency. US industry depends in many ways on imported materials, equipment, and components. Exports allow a country to enjoy expanded markets for its most competitive and productive industries. US trade policy emphasizes eliminating or reducing trade barriers in order to increase the opportunities open to US firms and the volume of trade and real incomes worldwide.
GATT
The General Agreement on tariffs and Trade (GATT) has 102 member countries and is the principal multilateral body on international trade. A tenfold growth in the volume of international trade and a lowering of import duties in most industrialized countries since GATT's creation after World War II illustrate its success. The average import duty in the United States, which had been 60% under the Smoot-Hawley Tariff Act of 1930, was 3.4% in 1990 (including the one-third of US imports that entered duty free). Other industrial countries have made similar reductions. The current trade negotiations, the Uruguay Round, began in 1986 and are designed to further liberalize trade. The United States is taking the lead in extending GATT coverage to new areas, such as services, trade in intellectual property, and investment. A key US goal in the Uruguay Round is comprehensive reform of agricultural trade. Other goals are expanded market access for goods, greater discipline over trade-distorting subsidies, and further integration of developing countries into the global trading system.
Bilateral Agreements
The United States plans to negotiate a free trade agreement (FTA) with Mexico and Canada to form a North American Free Trade Area. This will build upon a US-Canada FTA, which went into effect in 1989 and which will eliminate all tariffs by 1998. The US-Canada FTA also liberalized treatment of services and trade-related investment measures. A similar US-Israel FTA went into effect in 1986.
Agricultural Trade
The United States accounts for about 40% of the world's volume of wheat and feedgrains trade. US farm exports were a record $43 billion in 1981. After a decline in the mid-1980s, they climbed to $40 billion in 1989 but fell, for the first time since 1986, to $39 billion in 1990. The surplus in US agricultural trade declined from $18 billion in 1989 to $17 billion in 1990. Importing countries' debt burdens, recession, subsidized agricultural exports from other countries, and increased production overseas have been factors in last year's decline in US agricultural exports. Liberalization of world farm trade is a key US goal in the Uruguay Round.
Trade in Services
The role of banking, insurance, telecommunications, transportation, construction, and other services in the US economy and international trade has expanded dramatically in the last 25 years. Services account for about two-thirds of US GNP and generate about 90% of new US jobs. However, few international agreements cover trade in services. Extending multilateral rules for such trade is a major US goal in the Uruguay Round.
Trade and Developing Countries
Trade with developing countries has grown increasingly important to the United States, comprising about 35% of US exports in the 1980s. US merchandise exports to developing countries were $127 billion in 1990, while US imports totaled $190 billion. The continued openness of US markets enables developing countries to earn the foreign exchange needed to pay for US goods and to fulfill external debt obligations.
GSP
Most of the industrialized countries offer developing countries programs to encourage export diversification. The United States allows specific products from developing countries to enter duty free, with certain limits. In 1990, $11 billion in goods entered the United States under this program. The Trade and Tariff Act of 1984 extended the Generalized System of Preferences (GSP) until July 1993 and redirected the program toward poorer developing countries. In 1988, Hong Kong, Singapore, South Korea, and Taiwan were graduated from the program because they were judged to be able to compete in the US market without preferences.
Trade Protection
Protectionist policies remain a major impediment to trade. Tariffs are high in many developing countries. As developed country tariffs have declined, non-tariff measures have become the main barriers to trade. These include quotas; orderly marketing and export restraint agreements; unreasonable or unnecessary quality, environmental, or health standards; "buy domestic" requirements for government entities; government subsidies to protect domestic industry; and government tolerance of private sector collusion to resist imports. President Bush has declared that the United States remains opposed to protectionist policies. He has also warned that protection is expensive and hurts US exporting industries because of higher input prices and retaliation by our trading partners.
Relief From Unfair Trade Practices
US law and the GATT permit the Administration to take remedial action when unfair import competition harms US producers. Anti- dumping duties can be imposed if foreign companies sell goods at prices lower than production cost or home market prices. Countervailing duties may be used to offset foreign government subsidies. If US producers are being injured by increased imports, even if the imports are not the result of unfair practices, US law and the GATT also permit action to restrain those imports temporarily while US industry adjusts. Under a revised Title II of the 1974 Trade Act, the US Government also can provide assistance for people and industries affected during the adjustment period. Under Section 301 of the 1988 Trade Act, the US Trade Representative can take action whenever it is determined that a foreign trade practice is unjustifiable, unreasonable, or discriminatory and burdens US commerce or denies US producers the benefits of a trade agreement. The United States can suspend or withdraw trade concessions and impose duties or other import restrictions. "Special 301" provisions deal explicitly with the problems of the protection of intellectual property rights.
Composition of US Merchandise Trade With the World, 1990
US EXPORTS: $393.6 billion
Manufactured goods 80% Machinery 30% Transport Equipment 16% Chemicals 10% Other Manufactures 24% Agricultural Products 10% Crude Materials 10%
US IMPORTS: $495.3 billion
Manufactured goods 79% Machinery 26% Transport Equipment 16% Chemicals 5% Other Manufactures 32% Agricultural Products 5% Crude Materials 16% Source: Department of Commerce [TEXT]
US Merchandise Trade With the World, 1990
US Imports: $495.3 billion
European Community 25% Canada 21% Latin America 14% Japan 12% East Asia NIEs* 10% Other Countries 18%
US Exports: $393.6 billion
European Community 19% Canada 18% Latin America 13% Japan 18% East Asia NIEs* 12% Other Countries 20% Source: Department of Commerce *Newly Industrialized Economies--Hong Kong, Singapore, South Korea, and Taiwan(###)
US Department of State Dispatch, Vol 2, No 30, July 29, 1991 Title:

US Exports: Foreign Policy Controls

Date: Jul 29, 19917/29/91 Category: Policy Briefs (Gist) Country: South Africa Subject: Terrorism, Security Assistance and Sales, Arms Control, Human Rights, Nuclear Nonproliferation, Trade/Economics [TEXT]
Background
Exports are a vital part of the US economy. They provide jobs and enable the US to import goods to meet domestic demand. The US imposes certain controls, however, to ensure that exports are consistent with US foreign policy. Most controls apply to equipment and technology of importance to the economy of the importing country. They affect less than 5% of the value of current US exports. These foreign policy controls are applied worldwide and/or to specific countries under the authority of the 1979 Export Administration Act (EAA).
Controls
Terrorism Equipment. Using the authority of EAA Section 6(j), the Secretary of State has designated Cuba, Iran, Iraq, North Korea, Libya, and Syria as countries that repeatedly have provided support for international terrorism. Broad, country-specific export controls are in place for these countries.
Crime Control Equipment
. These controls regulate the export worldwide of crime control and detection instruments and equipment and related technology, except to NATO member countries and to Japan, Australia, and New Zealand. Generally, licenses are issued unless the United States has human rights concerns about the government of the importing country.
Regional Stability.
Exports of equipment used to manufacture military arms and equipment and some military transportation equipment are reviewed to ensure that such exports would not contribute to the destabilization of the region or country of destination.
Anti-Apartheid.
The United States prohibits the export to South Africa of all military and police equipment, computers to apartheid-enforcing government agencies, facilities for nuclear production and utilization, and all items covered by the UN mandatory arms embargo. (The Department of the Treasury prohibits US importation of 13 product categories from South Africa, including all agricultural produce and products, iron, steel, uranium, and gold in all forms.)
Missile Technology
. The United States assists other countries in the peaceful uses and exploration of space but seeks to halt the development of weapons-delivery systems. On a worldwide basis, the US controls the export of dual-use equipment and materials that are commercial in nature but also useful in the development of missile systems.
Chemical/Biological Weapons
. Licenses are required worldwide (except for the NATO members, plus Australia, Austria, Ireland, Japan, New Zealand, and Switzerland) for the export of 50 chemical precursors useful in the production of chemical weapons and the export of a broad range of bacteria, fungi, protozoa, toxins, viruses, and viroids. All are prohibited to Iran, Iraq, Libya, and Syria. Licenses are required to specified regions and states for certain dual-use equipment that might be relevant to chemical or biological weapons programs.
Nuclear Controls
. The United States assists other countries to use atomic energy for peaceful purposes but also seeks to halt the spread of nuclear weapons. Thus, the US controls exports of goods or technology that, if misused by the recipient country, could contribute to the production of nuclear explosive devices. The Atomic Energy Act of 1954, as amended by the 1978 Nuclear Non-Proliferation Act, establishes the controls. Before permitting an export, the US Government reviews the item's proposed use, whether the government of the purchasing country has signed the nuclear Non-Proliferation Treaty, and whether the US has acceptable assurances that the item or nuclear material produced from it will not be diverted to develop nuclear weapons.
Short Supply
. Controls occasionally are necessary to protect the domestic economy from an excessive drain on scarce materials. Congress has legislated restrictions on the export of crude oil and natural gas, refined petroleum and gas products, helium, ammonia, unprocessed Western red cedar logs, and horses for export by sea (to prevent unauthorized slaughter abroad).
Supercomputers
. For foreign policy reasons, the US requires the individual licensing of supercomputer exports worldwide.
Treasury Department Controls
The Treasury Department embargoes most trade and financial transactions with Cambodia, Cuba, Iraq, North Korea, Libya, and Vietnam. It also controls some financial transactions with South Africa and regulates certain imports from Iran and South Africa.
Guidance for Exporters
Exporters should consult the US Export Administration regulations (copies are available from the US Government Printing Office, 202- 783-3238--stock no. 903-014-00000-8) and the Commerce Department's Office of Export Licensing, Exporter Counseling Division, 202-377-4811. For information on the Treasury Department's trade and financial controls on Cambodia, Cuba, Iran, North Korea, Libya, South Africa, and Vietnam, exporters should call the Office of Foreign Assets Control, US Department of the Treasury, 202-566- 2701.(###)
US Department of State Dispatch, Vol 2, No 30, July 29, 1991 Title:

US Exports: Stragetic Technology Controls

Date: Jul 29, 19917/29/91 Category: Policy Briefs (Gist) Subject: Military Affairs, Trade/Economics
Background
The export of strategically significant technology to former Warsaw Pact and certain other countries is controlled in order to deny them access to technology that would increase their military effectiveness. Because modern weapons depend on many advanced supporting technologies that have both civilian and military ("dual- use") applications, some commercial technology transfers could undermine US national security. Consequently, under the Export Administration Act, the Commerce Department must issue a license before any such dual-use technology or equipment can be exported from the United States to a potential adversary. US officials must ensure that transfers of dual-use technology do not occur under the guise of civilian projects. The US, acting alone, cannot effectively control strategic technology because it is not the sole source of many of these products. International cooperation, therefore, is required.
COCOM
The Coordinating Committee for Multilateral Export Controls (COCOM), established in 1949, is important in facilitating multilateral cooperation to control strategic goods and technology. Its 17 members are Australia, Belgium, Canada, Denmark, France, Germany, Greece, Italy, Japan, Luxembourg, Netherlands, Norway, Portugal, Spain, Turkey, UK, and the United States. COCOM is not based on a treaty or executive agreement. It operates by informal agreement and according to the rule of unanimity. COCOM agreements are implemented by each member on a national basis. COCOM has no formal relationship to NATO. A permanent COCOM secretariat is located in Paris. All 17 member countries are represented by permanent delegates. These representatives are joined routinely by teams of technical experts and policy-level personnel from their countries during substantive meetings and negotiations on new or revised export controls.
Major Functions of COCOM
Member countries cooperate in three major areas: -- Publishing national control lists of embargoed equipment (the lists are grouped into three categories--dual-use, atomic energy use, and direct military use) and enacting effective export control systems; -- Considering proposed exports of specific embargoed items from member countries to proscribed countries; and -- Harmonizing national licensing practices for strategic exports and coordinating export control enforcement activities.
Developments at May 1991 Meeting
Since 1981, a series of high-level COCOM meetings has set policy guidelines to ensure COCOM's effectiveness. At the meeting on May 23, 1991, COCOM members adopted a completely new list of controls on dual-use goods and technologies. This International Industrial List (IIL) is designed to cover only the most strategic goods and technologies. The agreement concluded an intensive year- long negotiation initiated in response to President Bush's May 1990 call for a comprehensive modernization of COCOM to reflect the changing strategic environment brought about by the dramatic developments in Eastern Europe and the Soviet Union. The new IIL will go into effect on September 1, 1991. It is more than 50% shorter than the dual-use Industrial List that it replaces. The new computer controls, for example, should cut US export license requests for such goods by about 70%. The IIL will ensure that COCOM does not block legitimate civil trade. At the same time, it will continue to protect truly strategic technologies that, if acquired by the proscribed countries, would qualitatively undermine the West's strategic technological edge that is crucial to our security. General features of the IIL include: limiting of coverage to the specific items cited in the list; alignment of control parameters with current industry technical standards; decontrol of readily available "off-the-shelf " items in everyday commerce; and improved harmonization with the standard international customs nomenclature system. To ensure that COCOM's new controls truly constitute a "higher fence around fewer items," all member governments agreed to implement equal and effective control enforcement provisions, the so-called Common Standard, by January 1, 1992. The IIL also provides wide-ranging favorable export licensing treatment for East European countries that represent a lesser strategic threat--Poland, Czechoslovakia, and Hungary. This preferential access was agreed to at the June 1990 high-level meeting and enacted early in 1991. These countries have established Western-style export control systems and agreed not to transfer COCOM-controlled technology to prohibited destinations. They now receive a presumption of approval for all but a few controlled dual-use items. In addition, the May 1991 high-level meeting expanded this preferential treatment by allowing all telecommunications equipment (except encryption gear) to go to these countries at national discretion, without prior COCOM review.
Relations With Non-COCOM Countries
COCOM tries to inhibit the export or re-export of embargoed commodities from non-COCOM countries to the countries of concern. The US deals with this problem in part by requiring licenses to re- export US-origin embargoed products. COCOM members discuss cooperation on export controls formally and informally with a number of non-COCOM countries. Some non-member countries have adopted export control systems similar to those of COCOM; in return, they receive certain licensing benefits.
Munitions Controls
Commercial export of arms and other defense articles and services is controlled in the US by the Arms Export Control Act and the International Traffic in Arms Regulations (ITAR). Export licenses must be obtained from the State Department's Office of Defense Trade Control (formerly the Office of Munitions Control), 703-875- 6644. Licensing decisions for munitions exports are based on compliance with the ITAR and US arms control, national security, and foreign policy considerations. (###)
US Department of State Dispatch, Vol 2, No 30, July 29, 1991 Title:

Gist: International Investment

Date: Jul 29, 19917/29/91 Category: Policy Briefs (Gist) Country: United States Subject: Trade/Economics, International Organizations [TEXT]
US Policy
Direct investment flows promote economic growth and development and benefit the investing and host country alike. Because freely functioning markets ensure the most efficient and productive allocation of capital, the US Government promotes market-oriented international investment free of discriminatory treatment and opposes measures by other governments that impede or distort investment and related trade flows. US policy continues to be guided by the September 1983 "Statement of International Investment Policy" by President Reagan. The United States welcomes foreign investment and extends to it the same non-discriminatory treatment that it seeks for US investors abroad. An indication of the favorable US environment for investment is the fact that foreign direct investment grew from $68 billion at the end of 1980 to more than $400 billion at the end of 1989. (For official US accounts, foreign direct investment in the United States is defined as ownership by an organization or person of 10% or more of the voting stock of a US-incorporated firm.) In 1976, the Organization for Economic Cooperation and Development (OECD) issued a declaration and several related documents on investment. This benchmark consists of understandings on national treatment, incentives and disincentives, and guidelines for multinational enterprises. In 1984, OECD members strengthened another agreement liberalizing capital flows and the right of establishment of foreign firms. The United States seeks to strengthen the understanding on national treatment and to encourage broader support for these principles by other countries. The United States aims to place discipline on the use of trade-related investment measures in the current Uruguay Round of multilateral trade negotiations under the General Agreement on Tariffs and Trade (GATT). These government-imposed measures include local content, export performance, technology transfer, and similar requirements that distort trade and investment flows to the detriment of the United States and the global economy. The US objective, both bilaterally and multilaterally, is to ensure high international standards of protection for intellectual property. For example, the US Government is seeking to bring the trade-related aspects of intellectual property under GATT discipline and to promote international standards for the protection of biotechnology, computer software, and semi-conductor chips.
US Programs
The United States has a bilateral treaty program to facilitate investment by establishing a framework of standards in key areas such as treatment of investment, expropriation and compensation, transfer of funds, and dispute settlement. It has negotiated and signed such treaties with 13 countries in Africa, Latin America, Eastern Europe, and Asia; eight are in force. Negotiations continue with other countries. The United States has a number of treaties of friendship, commerce, and navigation that contain investment provisions on national and most-favored-nation (MFN) treatment, expropriation, and transfers. US embassies provide services and assistance to American investors and help ensure that their investments are treated in accordance with bilateral treaty obligations and international law.
Principles of International Investment
The best way to foster a liberal market-oriented international investment system is by widespread adherence to the following four principles.
National Treatment
. Foreign investors should be treated no less favorably in like situations than domestic enterprises. Exceptions should be limited to those required to protect national security and related interests.
Most-Favored-Nation Treatment
. Foreign investors from one country should be accorded treatment no less favorable than the most favorable treatment granted to foreign investors from any other country.
Protection of Investors' Property.
This is necessary to maintain a proper international investment system. Under international law, expropriation of investment is considered appropriate only if it is done for a public purpose; is accomplished under due process of law; is non-discriminatory; respects previous contractual arrangements; and is accompanied by prompt, adequate, and effective compensation.
Protection of Intellectual Property.
International recognition of patents, trademarks, copyrights, and other proprietary rights to technology is needed to reward innovation and foster investment flows. (###)
US Department of State Dispatch, Vol 2, No 30, July 29, 1991 Title:

Agriculture in US Foreign Policy

Date: Jul 29, 19917/29/91 Category: Policy Briefs (Gist) Country: United States Subject: Cultural Exchange, Trade/Economics [TEXT]
Background
Expansion of agricultural exports is an important component of US trade policy. The two major goals of US international agricultural policy are: -- A more open, equitable international trading environment to improve export opportunities for US agricultural products, as well as those of emerging democracies and developing countries; and -- Greater cooperation on food aid, security, and agricultural development in developing countries. The United States participates in global efforts to address food issues and is a member of the UN Food and Agricultural Organization, the World Food Program, and the International Fund for Agricultural Development. It also belongs to these commodity organizations: International Coffee Organization, International Sugar Organization, International Wheat Council, International Cotton Advisory Committee, International Institute for Cotton, and International Jute Organization.
US Agricultural Trade
The United States is the leading exporter of coarse grains and soybeans and is a large supplier of wheat, cotton, meat, and horticultural products. Major competitors are the European Community and several other developed and developing countries. In 1989 (the latest year for which world data are available), the US world market share was 15%, compared with 12% in 1987. The combination of relatively strong agricultural exports and relatively weak agricultural imports has resulted in more than three decades of positive US agricultural trade balances. In FY 1990, agricultural products accounted for 11% of US exports and earned $40 billion, one of the highest levels in history but still below the FY 1981 peak of almost $44 billion. The value of FY 1990 exports dropped from previous year levels for key commodities such as grains and oilseeds but rose significantly for fruit and poultry. The United States imports agricultural products from countries throughout the world. US imports in FY 1990 totaled $22.5 billion. Coffee was the largest single import in terms of value.
Challenges to International Agricultural Policy
The volume of world trade in agriculture rose in the 1980s, but the unit value (price per ton) of traded commodities declined slightly. World food trade totaled $300 billion in 1989. Worldwide government policies and support programs cushioned agricultural producers from the need to adjust to market changes caused by improved technology and slower growth in demand. The results were chronic surpluses and huge government expenditures to support agriculture. However, the increased market orientation of US agricultural production resulted in reduced US spending on farm programs from the 1989 level of $10.5 billion to $6.5 billion in 1990. The 1990 farm act aims to further increase market orientation, to maintain farm income growth by expanding exports, and to protect the environment. However, without a change in agricultural policies by all major producers, the problems caused by oversupply, low prices, and competition between the United States and other governments that subsidize exports have begun to re-emerge.
Agricultural Trade Policy
The Bush Administration places a high priority on resolving agricultural problems at the multilateral and bilateral levels. The United States has promoted the need for agricultural reform through the Organization for Economic Cooperation and Development and, more importantly, through the Uruguay Round multilateral trade negotiations under the General Agreement on Tariffs and Trade. The United States was instrumental in putting agriculture on the agenda for the round and has worked to achieve agreement on substantial, comprehensive reform of agriculture as a key to the negotiations. In April 1989, the Uruguay Round trading partners successfully concluded a mid-term agreement on agriculture specifying the objectives and timetable for multilateral agricultural negotiations. In October 1990, the United States presented a comprehensive proposal for substantial cuts in the three key areas of internal supports, border protection, and export subsidies. The Uruguay Round negotiations were suspended in December 1990 after failure to agree on reform of agricultural policies in those three areas. The negotiations resumed in February 1991 when all participants agreed to negotiate "specific binding commitments" on domestic supports, market access, and export competition, and to reach an agreement on sanitary and phytosanitary (plant health) issues. Bilaterally, the United States aims to improve market access for US products. Bilateral negotiations or other dispute settlement procedures often are in progress on a variety of agricultural commodities at any given time. For wheat and certain other commodities, the United States selectively provides export subsidies through the Export Enhancement Program to compete with subsidized agricultural exports from other countries and to put pressure on those countries to negotiate toward a freer and fairer agricultural trade system.
US Export Programs
The Department of State supports US Department of Agriculture (USDA) trade promotion programs, particularly through US embassies, as important means of increasing agricultural exports. Commodity Credit Corporation (CCC) credit guarantees are the largest US agricultural export program. In FY 1990, US agricultural exports registered under CCC credit guarantees were $4.3 billion. Algeria, Egypt, Iraq, Mexico, Pakistan, South Korea, and Turkey accounted for almost 85% of the total. PL 480 (Food for Peace) aid is a long-term market development, food assistance, and humanitarian relief tool and a means of meeting economic development and other foreign policy goals. Several countries, including Brazil, South Korea, Turkey, and Yugoslavia, have "graduated" from the PL 480 program to become large commercial customers for agricultural products formerly provided on concessional credit. Cooperator Market Development Program joins more than 29 non-profit agricultural commodity associations with the USDA's Foreign Agricultural Service in market development activities throughout the world. The program enables the US Government and private industry to pool resources so that each gets more mileage out of these activities. Market Promotion Program, authorized in the 1990 farm act at a level of $200 million annually, helps US producers increase US exports through consumer and trade promotions, media advertising, educational programs, and technical services. More than 45 non- profit organizations, producers cooperatives, and other private firms have been allocated funds in FY 1991. Export Enhancement Program (EEP) is primarily a trade policy tool and helps US exporters compete with subsidized competition in selected countries, particularly the European Community. Exporters who have completed sales to targeted countries are awarded bonuses in the form of surplus CCC commodities. EEP bonuses totaled $312 million in FY 1990 and were more than $410 million in FY 1991 through April 15, 1991.
US and Foreign Direct Investment, 1989 ($ billion)
Total US Direct Investment Abroad: $373.4 billion
Canada: 66.9 United Kingdom: 60.8 Germany: 23.1 Switzerland: 20 Netherlands: 17.2 Japan: 19.3 Other: 166.2 Source: US Department of Commerce
Total Foreign Direct Investment In the United States: $400.8 billion
United Kingdom: 119.1 Japan: 69.7 Netherlands: 60.5 Canada: 31.5 Germany: 28.2 Other: 91.7 Source: US Department of Commerce (###)
US Department of State Dispatch, Vol 2, No 30, July 29, 1991 Title:

Developing Country Debt

Date: Jul 29, 19917/29/91 Category: Policy Briefs (Gist) Subject: Trade/Economics, Development/Relief Aid [TEXT]
Background
The ability of many developing countries to pay their foreign debt deteriorated in the 1980s. The United States and other creditors responded by developing a flexible, case-by-case approach. The United States has encouraged debtors to undertake economic reform and has persuaded banks, governments, and international financial institutions to support such efforts. In 1985, the United States introduced a debt strategy designed to improve and sustain growth in debtor countries (the Baker Plan). In March 1989, US Treasury Secretary Nicholas Brady outlined proposals for strengthening the strategy. In 1990, the United States complemented the Brady Plan with efforts to reduce official (government-to-government) debt and to encourage other creditor governments to do the same.
Origins of the Crisis
Several factors contributed to the debt crisis of the early 1980s. Inappropriate domestic policies in many debtor countries resulted in overvalued exchange rates, large budget deficits, heavy investment in inefficient public enterprises, and excessive restrictions on trade and investment. Many countries borrowed to promote consumption rather than build infrastructure or productive enterprises. Commercial banks often were lax in their oversight as they lent large amounts of "petrodollars."1 External shocks such as the 1979 oil price jump, an increase in international interest rates, a drop in commodity prices, and recession in developed countries also hurt developing countries. Many borrowers relied on short- term, variable-rate loans that made them vulnerable to rising interest rates.
Baker Plan
In 1982, the United States and other creditors developed packages to deal with the immediate cash-flow problems of major debtors arising from commercial debt. This approach succeeded in averting default by major debtor countries and in keeping the international financial system intact. By mid-1985, however, commercial lending to developing countries had declined sharply. Debtor governments were concerned about poor economic growth. In October 1985, the United States proposed the Program for Sustained Growth (Baker Plan), a broad, long-term strategy to restore creditworthiness of debtor countries by promoting sustainable economic growth. The program's main element, structural reform, was the pursuit of comprehensive economic policy changes leading to growth. A second element involved new commercial bank lending. The program also relied on new credits from international financial institutions that were linked more to economic reforms. These reforms permit market forces and private enterprises to play a larger role in the economy, encourage greater domestic savings and investment, reduce budget deficits, and liberalize trade and financial systems. The Baker Plan helped developing countries recognize that long-term growth requires a commitment to market-oriented policies. Despite progress made under the Baker Plan, low investment and capital flight continued, and commercial banks declined to provide new loans in a timely fashion. US banks reduced their developing country debt risk by adding to bank capital and selling or swapping some debt. An array of voluntary debt reduction mechanisms sprang up. Many debtor countries applied economic reforms inconsistently and failed to achieve adequate growth on a sustained, non-inflationary basis.
Brady Plan
In March 1989, Secretary Brady outlined a series of proposals to strengthen the US debt strategy. His proposals, while building on the Baker strategy, recognize the role of voluntary debt and debt service reduction as well as new commercial bank lending to provide financial support for economic reforms. The Brady approach also places more emphasis on new domestic and foreign investment and the repatriation of domestic capital. Dramatic progress has been made under the Brady Plan. Seven countries (Chile, Costa Rica, Mexico, Morocco, Philippines, Uruguay, and Venezuela) have reached agreements that have debt-reduction options. Nigeria has a preliminary agreement, and bank negotiations are continuing with Argentina, Bolivia, Brazil, Ecuador, and Poland. Some countries, notably Mexico and Chile, are making progress toward attracting private foreign capital by their ability to regain access to international capital markets. The International Monetary Fund and the World Bank play a central role in this strategy by encouraging debtor policy reforms and catalyzing financial support.
Official Debt
The success of the enhanced debt strategy in gaining voluntary, market-based reduction of commercial debt has shifted some emphasis from commercial to official debt. Creditor governments have supported country reform efforts by rescheduling official bilateral debt, both interest and principal, through the Paris Club, an informal affiliation of creditor governments. In 1989, the United States announced a program to forgive up to $1 billion in economic assistance loans to Sub-Saharan African countries and other heavily indebted, low-income countries that are pursuing economic reform. The United States has forgiven more than $650 million owed by 15 African countries and is expected in 1991 to forgive $292 million owed by Bangladesh. The US Congress has provided authority for similar action on food assistance debt owed to the United States by relatively least developed countries. In fall 1988, the Paris Club implemented the Toronto economic summit mandate to provide debt relief to Sub-Saharan African countries. The Toronto terms offer three options for providing debt relief: debt reduction, extended maturities, or concessional interest rates. In 1990, these terms were extended to certain other poor countries on a case-by-case basis. In response to a mandate agreed at the Houston economic summit in July 1990, the Paris Club devised more generous terms for lower middle-income countries--those severely indebted (i.e., debt more than 50% of GNP) but not poor enough to qualify for the Toronto terms. Congo, El Salvador, Honduras, Morocco, and Nigeria have received debt reschedulings on such terms, which extend the repayment period to 20 years with a 10-year grace period for official development assistance (ODA) and 15 years with an 8-year grace period for non-ODA loans. In April 1991, the Paris Club agreed to a special rescheduling designed to reduce Poland's debt by 50% in the context of a multi- year economic restructuring agreement. The United States, citing the need to provide extraordinary assistance to Poland in its transition from a centrally planned to a free market economy, approved a 70% reduction. Creditor countries also have committed to a generous reduction of Egypt's official debt. The United States forgave Egypt's military debt of $6.7 billion at the end of 1990.
Enterprise for the Americas Initiative
In June 1990, President Bush proposed the Enterprise for the Americas Initiative (EAI), an integrated program to increase free and fair trade, promote capital flows, ease debt burdens, and improve the environment. The EAI supports the process of democratic change and growing economic reform in the Western Hemisphere. To reinforce incentives for economic reform, the United States proposed to reduce existing non-military debts to the United States of Latin American and Caribbean countries that: -- Undertake macroeconomic and structural reforms; -- Liberalize their investment regimes; and -- Have negotiated agreements with commercial creditors (if commercial debt is a sufficiently large part of total external debt). Interest payments on new, reduced development assistance and food aid debt would be made in local currency into an environmental fund in each country and used to support environmental projects identified by public/private local committees. A portion of non-concessional debt to the US Export- Import Bank and the Commodity Credit Corporation would be sold to facilitate investment and environmental or development projects.
Developing Country Debt, 1990 ($ billion)
Brazil: 115 Mexico: 88 India: 60 Argentina: 60 Indonesia: 53 Poland: 42 Nigeria: 35 Egypt: 32 Philippines: 29 Subtotal: 514 Others: 836 Total 1,350 Source: World Bank
Developing Country Debt by Region, 1990
Western Hemisphere: 31% Asia: 28% Africa: 17% Middle East: 14% Europe: 10% Source: World Bank (###)
US Department of State Dispatch, Vol 2, No 30, July 29, 1991 Title:

Oil and Energy

Date: Jul 29, 19917/29/91 Category: Policy Briefs (Gist) Subject: Science/Technology, Resource Management, Environment [TEXT] US international energy policy seeks to ensure adequate supplies at reasonable prices for America and its friends and allies. It emphasizes reliance on free market mechanisms, international cooperation, and strategic oil stocks for use in time of severe supply disruptions. US energy policy also is concerned with the impact of energy use on environmental objectives, including greenhouse gas emission reductions. The United States has taken the lead in adopting prudent energy strategies, such as the Clean Air Act and the National Energy Strategy, which benefit the economy and the environment.
Background
Saddam Hussein's brutal invasion of Kuwait in August 1990 reduced free world oil production by about 9%. Because world supply and demand sets the price of oil, prices rose dramatically for all consumers. To handle the shortage, the United States urged other major oil-producing countries to increase output and worked within the International Energy Agency (IEA) to coordinate planning among industrial countries. When war began in January, the IEA's member countries made available 2.5 million barrels per day of oil from strategic stocks to the international market, restoring market confidence that supplies would remain ample. Although the oil price shocks of the 1970s contributed to high inflation and unemployment, the United States is less vulnerable to oil shocks today for several reasons. First, energy accounts for a smaller share of GNP, so the economy is less sensitive to energy price changes. Second, consumers use energy more flexibly, and oil substitutes are more readily available. Third, more consistent macroeconomic policies allow oil price shocks to pass through the economy with only minor impact on long-run economic growth. In the 1970s, price controls and rationing schemes magnified the negative impact of oil price shocks. In the 1980s, by contrast, oil and gas prices have been largely decontrolled. Free market policies have prompted US consumers to use less energy and in more flexible ways. Market-driven developments in conservation and energy technology have reduced energy use. And unshackled markets have increased energy investment and the diversity of energy supplies, further adding to the flexibility of energy use. Flexible, market-based pricing makes adjustment to oil shocks much easier. US and world dependence on insecure sources of oil supplies from the Persian Gulf, however, is expected to grow from about 28% today to more than 40% by 2010. Moreover, 65% of all oil reserves are in this volatile region. So despite improvement, energy security is a major concern. "Energy independence" is no solution for America. Price shocks would affect the United States even if it and its Western Hemisphere neighbors produced all the energy they consumed. In the short term, the major challenge is reducing vulnerability to shocks. Over the long term, energy security is best enhanced by expanding and diversifying US sources of oil and energy supplies and finding solutions to the sources of instability in key producing regions. The Bush Administration is pursuing domestic and foreign policy initiatives to address those issues.
US Energy Policy Initiatives
The National Energy Strategy (NES), announced in February 1991, will further open and deregulate US energy markets, improve efficiency and flexibility in energy use, and support diversification of world energy supplies. Specifically, it will: -- Reduce domestic oil demand and increase domestic oil production; -- Maximize the diversity of global conventional energy resources; -- Foster use of alternative transportation fuels; -- Increase electricity produced from renewable sources such as solar, hydropower, and geothermal; reduce growth in electricity demand; and increase the use of nuclear power. The NES, building on major environmental laws such as the Clean Air Act, the Clean Water Act, the Resource Conservation and Recovery Act, and other measures, will help reduce air and water pollution from energy-use and minimize the growth in energy- related pollution. The keys are development of new, advanced energy efficient technology and improved energy use practices, including the use of clean coal technology, natural gas, and nuclear energy. In improving environmental quality, the NES will: -- Hold US emissions of greenhouse gases at or below 1990 levels after the year 2000; -- Improve air quality; and -- Mitigate solid waste problems from burning coal. Internationally, US energy policy stresses a collective approach to energy security issues centered on the 21-member IEA and discussions with a wide range of producing countries. Just as at home, the cornerstone of US international energy policy is the extension of market mechanisms. The United States works toward more increased trade in energy, deregulation of foreign energy markets, and the removal of barriers to international energy investment. The US Government engages in vigorous and extensive discussions with energy producing countries and all other oil sector participants to improve understanding and technical cooperation. These efforts, plus America's strong ties with Saudi Arabia, the United Arab Emirates, and Venezuela, were instrumental in promoting their quick increase in oil production during the Gulf crisis. The United States seeks to further expand the scope and frequency of such energy discussions, with the aim of encouraging increased investment for energy development. (###)