United States vetoed a U.N. Security Council resolution which advocated the use of force against Southern Rhodesia and contained other provisions with which we could not agree.

We continue to oppose the use of force against Southern Rhodesia. It is apparent that the U.N. sanctions program has not yet achieved its goal. The British efforts to date, first in 1966 and again in 1968, to reach an acceptable agreement with the Smith regime on the basis of eventual majority rule were unsuccessful.

The sanctions program, however, has not been without effect. It has resulted in a reduced rate of growth of the Rhodesian economy and most recently in a serious shortage of foreign exchange.

As the President said, again in his February 25 report:

We have reaffirmed and continue to enforce the economic sanctions against Rhodesia, and we have sought ways to ensure a more universal compliance with those sanctions.

We have followed this policy not to punish or visit retribution on the Smith regime, but in an effort to persuade the regime to change its policies and to pave the way for a settlement with Britain. We are still hopeful that this effort will be successful.

At the moment the British Government is again exploring the possibility of reaching an agreement with the Smith regime. We fully support their efforts in this regard and hope that they will lead to an agreement whereby all the people of Southern Rhodesia can exercise their right of self-determination and be welcomed into the community of nations. Sanctions could then be brought to an end.

With this general overview of our policy with regard to Southern Rhodesia, I would now like to turn to the specific proposals before this committee.

Since the Department has been requested to submit written reports on a representative sampling of the resolutions before you and has done so in its letters to Chairman Morgan dated May 14, 1971, and June 17, 1971, I will not attempt to provide a detailed comment on all these proposals.

The Department is opposed to all but one of the resolutions before this subcommittee. The exception is House Resolution 45, a resolution supporting both U.S. participation in the United Nations mandatory sanctions program on Rhodesia and the principle of majority rule by all the people of that territory. This resolution reaffirms present U.S. policy as recently stated by the President and the Secretary of State. We urge its enactment.

The remaining resolutions before the subcommittee all contain proposals which in one manner or another are contrary to U.S. policy. Some are limited to provisions that it be declared the sense of the Congress that the United States either terminate its participation in the United Nations sanctions program, or beyond that, resume "normal trade" with Southern Rhodesia and accord its Government. full recognition and diplomatic and consular rights.

Others resolve that the President be authorized and directed to declare that the United States will no longer abide by the sanctions program. Still others propose an amendment to the United Nations Participation Act which would have the effect of invalidating the existing embargo on chrome imports from Southern Rhodesia so long as such imports are not prohibited from the Soviet Union or other Communist countries.

All of these proposals, as I have indicated, appear contrary to the U.S. policy interests. We view it as a matter of particularly serious concern that these resolutions could call into question our will to fulfill our treaty obligations. The Department of State opposes these proposals and urges that they not be enacted.

Without attempting to discuss all aspects of these proposals, I would like to touch on some of the issues which they have raised.

Most importantly, if the United States were to act as recommended in these resolutions, it would be in violation of international treaty obligations which it freely undertook when the U.N. Charter was ratified. Under article 25 of the Charter the United States is obligated "to accept and carry out the decisions of the Security Council." The Security Council has taken such decisions in the form of the sanctions against Southern Rhodesia which it is empowered to impose under the terms of chapter VII of the Charter, and the United States participated in and supported the resolutions in question in 1966, 1968, and 1970. On a related point, some of the resolutions before the subcommittee state that the Congress is vested with sole authority to regulate foreign commerce under the Constitution, while the only authority delegated by the Congress to the executive branch concerns the control of trading with the enemy.

These resolutions appear to have lost sight of the fact that Congress in the U.N. Participation Act of 1945 empowered the President to take just such actions as those implementing the Rhodesian sanctions.

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Section 5(a) of the act, as amended, authorized the President "to regulate or prohibit ** economic relations" when the United States is called upon to apply mandatory sanctions under article 41 of chapter VII of the Charter. It is worthy of note that the Senate Foreign Relations Committee in its reports on the U.N. Participation Act specifically recognized the extent of the authority which was thereby being granted to the President, and approved these provisions as consistent with our acceptance of the U.N. Charter and in our national interests.

In addition to the specific effects which the proposed amendments to the U.N. Participation Act would have on our existing obligations in the Rhodesian situation, the Department is also concerned that any limitation of the President's authority to carry out mandatory sanctions decided by the Security Council would undermine the authority, prestige and effectiveness of the United Nations.

Some of the resolutions refer to the positive achievements of the Smith regime. As stated earlier, however, our policy with regard to Southern Rhodesia is based primarily on that regime's action to deny an effective voice to its African majority in the determination of Rhodesia's future.

The actions of the regime in 1965, and subsequently, were expanded in 1970 with the introduction of a new constitution explicitly institutionalizing white minority control and racial discrimination.

In late 1970, the regime announced plans to introduce legislation on racial restriction on residential areas and on race classifications patterned on the South African model. Such acts will bring Southern Rhodesia even closer to South African style apartheid. As this administration has made clear, this is abhorrent to this country.

Some of the resolutions refer to Rhodesia as a sovereign power and also charge that the United Nations and United States actions constitute interference in internal affairs of a state.

The international community is of the view, which we share, that the United Kingdom is the sovereign power in Southern Rhodesia. Of the 21 countries which maintained some form of consular representation in Rhodesia in 1965, only South Africa and Portugal continue to do so.

No country, not even South Africa and Portugal, has formally recognized the Smith regime or Rhodesian independence. The actions of the United Nations, which actions the United States supported and continues to support, were taken in response to the request of the sovereign power, the United Kingdom, and cannot be regarded as constituting interference in the internal affairs of any state.

These actions were also based on the Council's conclusion that a threat to the international peace and security existed as the result of the situation in Rhodesia.

Mr. Chairman, we are aware that the policy which we have followed with regard to Southern Rhodesia has not been conducted without some cost to the United States and to individual U.S. citizens and firms. With regard to the latter, we have sought to minimize these costs in the application of the sanctions.

However, we continue to believe that our policy, our continued advocacy of the right of self-determination and eventual majority rule for the 96 percent of the people of Rhodesia who are black, is both morally and practically in the interests of the United States.

We believe that our policy is a valid one and that the economic sanctions imposed by the United States on Rhodesia_must be supported by the United States as an essential part of the effort to achieve an acceptable solution to the the Rhodesian problem.

Thank you, Mr. Chairman.

Mr. FRASER. Thank you very much.

Perhaps we should next hear from Mr. Joseph B. Kyle, Director, Office of International Commodities, Bureau of Economic Affairs, and then following that, we will hear from Mr. Lawrence.

STATEMENT OF JOSEPH B. KYLE, DIRECTOR, OFFICE OF INTERNATIONAL COMMODITIES, BUREAU OF ECONOMIC AFFAIRS, DEPARTMENT OF STATE

Mr. KYLE. Thank you, Mr. Chairman.

Mr. Chairman, members of the subcommittee, my name is Joseph B. Kyle. I am Director of the Office of International Commodities in the Department of State.

I will comment this afternoon on several aspects of the U.S. market for chrome as these relate to the Rhodesian sanctions program. My remarks will be directed toward a discussion of the supply and demand for chrome ore, the question of U.S. dependency on imports of chrome ore, and, lastly, the effect which a continuation of the sanctions prcgram will have on supplies of chrome for our domestic metallurgical industry.

Chrome is one of the 12 Rhodesian products covered by the U.N. Security Council's decision of December 16, 1966, to impose selective mandatory economic sanctions against the British Colony of Southern Rhodesia.

There are three basic grades of chrome ore: metallurgical, refractory, and chemical grade. Of these, metallurgical grade ore accounts for two-thirds of U.S. consumption of chrome; it is an essential ingredient in the production of stainless steels.

Rhodesia possesses major reserves of metallurgical grade chromite as dees the Soviet Union and Turkey. In the year 1965, prior to the imposition of sanctions, the United States imported 36 percent of its chromite for metallurgical uses from Southern Rhodesia and 35 percent from the Soviet Union.

Reserves of commercial exploitable chromite in the United States are insignificant and the process of beneficiation, or raising our lowgrade deposits to a level of chrome concentration suitable for use in the metallurgical industry, would be inordinately expensive.

Thus, for all practical purposes, the United States is dependent upon imports to meet the domestic demand for metallurgical grade chrome

ore.

I will now turn to a review of the world supply position in chrome. The major sources of supply traditionally have been the Soviet Union, South Africa, Turkey, and Southern Rhodesia. The Philippines supply much of our refractory grade chromite, and Iran, Pakistan, and India are residual suppliers of chrome ores.

World production of chrome from all sources is currently estimated to be between 5 and 5%1⁄2 million short tons per year. U.S. consumption of all grades in 1970 was just under 1.4 million tons. Of this figure, consumption of metallurgical grade chrome was 900,000 tons, of which imports accounted for 98 percent, or 885,000 tons. Industry stocks of all grades of chrome ore at the end of 1970 were approximately 730,000 tons and at the end of the first quarter in 1971 stood higher at 800,000 tons. Thus, an increase in stocks of 70,000 tons has occurred since the end of the year, but in metallurgical grade chrome there has been an increase of 104,000 tons in stocks. The current chrome supply situation, therefore, suggests an approximate balance with U.S. demand requirements for 1971.

I might add parenthetically, the reason it went up 70,000 tons, yet metallurgical went up 104,000 tons, is because there has been a larger drawdown in the chemical grade.

With respect to U.S. imports of Soviet chrome ore, I would note that these purchases did not result solely from the imposition of Rhodesian sanctions nor, as I already have mentioned, does the Soviet Union enjoy a monopoly position in this market.

In the years immediately prior to sanctions, Rhodesia and the Soviet Union each accounted for about one-third of U.S. imports of metallurgical grade chromite. In the period since sanctions were imposed the United States has imported approximately 51 percent of its supplies from the U.S.S.R., while increasing its purchases from other producers such as Turkey and South Africa.

Soviet ore has traditionally brought premium prices because it is generally superior to ores from other sources, although problems frequently occur with these physical properties. It contains an average chromic oxide content of 54-56 percent and has to 4-to-1 chrome/iron ratio, whereas Rhodesian, Turkish, and Iranian chromes average 46-48 percent chromic oxide and have a 3-to-1 chrome-to-iron ratio.

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Prices quoted for 1971 deliveries of metallurgical grade chrome by the principal producers reveal increases over 1970 quotations. However, there are difficulties in ascribing these price increases to any one factor or set of factors.

To begin with, significant price increases throughout the metallurgical industry have occured in other raw materials during the past 4 years, most notably antimony, fluorspar, nickel, and tungsten. These increases have occurred because of strong demand for these important ores and inflationary trends in world prices.

Further, price differences between Soviet and Rhodesian chrome ore and between embargo and preembargo levels are not susceptible to close comparison. No current Rhodesian price is ascertainable, since Rhodesian chrome is not freely traded.

To compare 1971 Soviet ore prices with 1966 Rhodesian ore prices would be similarly misleading. While prices for Soviet chrome have doubled since 1966, lower quality chrome ores from other sources have also increased in price more or less proportionately to that for Soviet ore.

If I may return to a point made earlier, not only have purchases from the Soviet Union increased since sanctions were imposed, but our purchases from other sources have also risen. Higher prices for chrome ore have apparently stimulated greater production in chrome producing countries such as Turkey.

Since 1967, our imports of Turkish ore have more than doubled and in 1970 totaled 257,000 tons. In the period January-March 1971, chrome ore imports from Turkey amounted to over 108,000 tons, 67,000 tons of which was for metallurgical uses.

Should shipments from Turkey continue at this rate for the balance of 1971, Turkish chrome imports would be more than 400,000 tons for the year.

The rise in chrome ore prices has been a matter we have followed very closely. It is obvious that recent price increases reflect, in part, supply factors stemming from Rhodesian sanctions. However, I have attempted here to place these factors in the wider, and we think more accurate, perspective of a dynamic world market for raw materials in which many forces have been at work in recent years to

increase costs.

With respect to continued supplies of chrome ore under the Rhodesian sanctions program, I would point out that chrome purchases in the United States are in the hands of private American firms and reflect private commercial decisions.

Within the metallurgical industry, there is wide variance in the position of companies due both to long-term purchase contracts and differing capability to utilize a wider mix of ores.

The matter of chrome ore supply in this country is kept under constant review by my office and other interested agencies within the executive branch. I would like to reiterate my earlier statement that in our opinion adequate supplies of chrome ore are available to American industry at the present time. While the supply condition could be characterized as tight, it is premature at this time to suggest that there is a shortage.

Thank you, Mr. Chairman.

Mr. FRASER. Thank you very much, Mr. Kyle.