Authority: U.S. Constitution, Art. II, Sec. 1 ("executive Power"). A subsequent treaty on the same subject matter, the International Grains Arrangement of 1967, received the advice and consent of the Senate on June 13, 1968. 5. 1967 and 1970 Extensions of the Long-Term Arrangement Regarding International Trade in Cotton Textiles (TIAS 6289 and 6940)

Authority: Section 204 of the Agricultural Act of 1956, as amended (P.L. 84-540, May 28, 1956, 70 Stat. 200; P.L. 87-488, June 19, 1962, 76 Stat. 104)

6. Agreement relating to Trade in Cereals Between the United States and the United Kingdom, 1971 (TIAS 7165)

Authority: U.S. Constitution, Art. II, Sec. 1 ("executive Power")

7. Agreement relating to Trade in Strawberries Between the United States and Mexico, 1972

Authority: Section 204 of the Agricultural Act of 1956, as amended (P.L. 84-540, May 28, 1956, 70 Stat. 200; P.L. 87-488, June 19, 1962, 76 Stat. 104)

8. Several bilateral agreements to provide tariff concessions as compensation for incidental tariff changes resulting from promulgation of the Tariff Schedules of the United States in 1963

Authority: Tariff Classification Act of 1962 (P.L. 87-456, May 24, 1962, 76 Stat. 721); and Title II of the Trade Expansion Act of 1962 (P.L. 87-794, October 11, 1962, 76 Stat. 872)

9. Several Protocols for the accession and provisional accession of various countries to the General Agreement on Tariffs and Trade, including the United Arab Republic, Spain, Argentina, Iceland, Swiss Confederation, Yugoslavia, Tunisia, Korea, Ireland, Poland, Congo-Kinshasa, Romania and Mauritius

Authority: U.S. Constitution, Art. II, Sec. 1 ("executive Power"); Title II of the Trade Expansion Act of 1962 (P.L. 87-794, October 11, 1962, 76 Stat. 872)

Hon. SAM J. ERVIN, JR.,

OVERSEAS PRIVATE INVESTMENT CORPORATION,

OFFICE OF THE PRESIDENT, Washington, D.C., April 6, 1972.

DEAR SENATOR ERVIN: In answer to your request of March 30, OPIC has concluded no executive agreements since our incorporation as a separate government agency on January 19, 1971. It has, however, inherited 161 "investment guaranty agreements" covering our investment incentives programs, which have been concluded by the U.S. Government from the inception of these programs in 1948.

These programs, administered by OPIC since its creation provide incentives to U.S. private investment in countries whose economic growth is important to U.S. national interest. The insurance protects against inconvertibility of currency, expropriation and war, revolution or insurrection, while guaranties apply to all risks on the portion of investment covered.

Although these agreements have changed in form over the 24-year period, they generally provide that the host government agrees to the operation of the U.S. program, limited to investments approved by the host government, and1. in case of payment by the program of a claim, the host government recognizes the subrogation of the U.S. agency (now OPIC) to the rights of the insured investor as well as to any currency or assets;

2. In case of dispute over a subrogated right, to submit the dispute to third party arbitration.

In some early agreements, which provided only for insurance against loss due to inconvertibility, there is no arbitration provision. In some later agreements, the U.S. Government has agreed to exhaust local remedies (in local

courts) prior to the submission of a claim to intergovernmental negotiation and arbitration. However, the agreements specifically preserve the right to the U.S. Government to espouse a claim as a sovereign.

A draft form note typical of these agreements is enclosed, along with a list of the 161 existing investment guaranty agreements which were concluded while the programs were being administered by AID and its predecessor agencies.

The requirement for these agreements may be found in the Foreign Assistance Act of 1961, as amended, Section 237(a) as follows:

Section 237: GENERAL PROVISIONS RELATING TO INSURANCE AND GUARANTY PROGRAMS: (a) Insurance and guaranties issued under this title shall cover investment made in connection with projects in any less developed friendly country or area with the government of which the President of the United States has agreed to institute a program for insurance or guaranties.

All agreements which are still in full force and effect have been published by the U.S. Government and are available by number in the TIAS series from the U.S. Government Printing Office.

I hope this information meets the needs of your Subcommittee.
Sincerely yours,

BRADFORD MILLS.

DRAFT NOTE INVESTMENT GUARANTY AGREEMENT

EXCHANGE OF NOTES

EXCELLENCY: I have the honor to refer to conversations which have recently taken place between representatives of our two governments relating to investments in (Country) which further the development of the economic resources and productive capacities of (Country) and to guaranties of such investments by the Government of the United States of America. I also have the honor to confirm the following understandings reached as a result of those conversations:

1. When nationals of the Government of the United States of America [the Guaranteeing Government] propose to invest with the assistance of guaranties issued pursuant to this Agreement in a project or activity within the territorial jurisdiction of the Government of (Country) [the Host Government], the two Governments shall, upon the request of either, consult respecting the nature of the project or activity and its contribution to economic and social development in (Country).

2. The procedures set forth in this Agreement shall apply only with respect to guaranteed investments in projects or activities approved by the Host Government.

3. If the Guaranteeing Government makes payment to any investor under a guaranty issued pursuant to the present Agreement, the Host Government shall, subject to the provisions of the following paragraph, recognize the transfer to the Guaranteeing Government of any currency, credits, assets, or investment on account of which payment under such guaranty is made as well as the succession of the Guaranteeing Government to any right, title, claim, privilege, or cause of action existing, or which may arise, in connection therewith. 4. To the extent that the laws of the Host Government partially or wholly invalidate the acquisition of any interests in any property within its national territory by the Guaranteeing Government, the Host Government shall permit such investor and the Guaranteeing Government to make appropriate arrangements pursuant to which such interests are transferred to an entity permitted to own such interests under the laws of the Host Government. The Guaranteeing Government shall assert no greater rights than those of the transferring investor under the laws of the Host Government with respect to any interests

transferred or succeeded to as contemplated in paragraph 3. The Guaranteeing Government does, however, reserve its rights to assert a claim in its sovereign capacity in the eventuality of a denial of justice or other question of state responsibility as defined in international law.

5. Amounts in the lawful currency of the Host Government and credits thereof acquired by the Guaranteeing Government under such guaranties shall be accorded treatment neither less nor more favorable than that accorded to funds of nationals of the Guaranteeing Government deriving from investment activities like those in which the investor has been engaged, and such amounts and credits shall be freely available to the Guaranteeing Government to meet its expenditures in the national territory of the Host Government.

6. (a) Differences between the two Governments concerning the interpretation of the provisions of this Agreement shall be settled, insofar as possible. through negotiations between the two Governments. If such a difference cannot be resolved within a period of three months following the request for such negotiations, it shall be submitted, at the request of either Government, to an ad hoc arbitral tribunal for settlement in accordance with the applicable principles and rules of public international law. The arbitral tribunal shall be established as follows: Each Government shall appoint one arbitrator; these two arbitrators shall designate a President by common agreement who shall be a citizen of a third State and be appointed by the two Governments. The arbitrators shall be appointed within two months and the President within three months of the date of receipt of either Government's request for arbitration. If the foregoing time limits are not met, either Government may, in the absence of any other agreement, request the President of the International Court of Justice to make the necessary appointment or appointments, and both Governments agree to accept such appointment or appointments. The arbitral tribunal shall decide by majority vote. Its decision shall be binding. Each of the Governments shall pay the expense of its member and its representation in the proceedings before the arbitral tribunal; the expenses of the President and the other costs shall be paid in equal parts by the two Governments. The arbitral tribunal may adopt other regulations concerning the costs. In all other matters, the arbitral tribunal shall regulate its own procedures.

(b) Any claim, arising out of investments guaranteed in accordance with this Agreement, against either of the two Governments, which, in the opinion of the other, presents a question of public international law shall, at the request of the Government presenting the claim, be submitted to negotiations. If at the end of three months following the request for negotiations the two Governments have not resolved the claim by mutual agreement, the claim, including the question of whether it presents a question of public international law shall be submitted for settlement to an arbitral tribunal selected in accordanc with paragraph (a) above. The arbitral tribunal shall base its decision exclusively on the applicable principles and rules of public international law. Only the respective Governments may request the arbitral procedure and participate in it.

7. This Agreement shall continue in force until six months from the date receipt of a note by which one Government informs the other of an intent n longer to be a party to the Agreement. In such event, the provisions of the Agreement with respect to guaranties issued while the Agreement was in foreshall remain in force for the duration of those guaranties, in no case longe than twenty years, after the denunciation of the agreement.

8. This Agreement shall enter into force on the date of the note by whic the Host Government communicates to the Guaranteeing Government that t!Agreement has been approved in conformity with the Host Government's ecstitutional procedures.

Upon receipt of a note from Your Excellency indicating that the foregoin provisions are acceptable to the Government of (Country), the Government the United States of America will consider that this note and your reply ther constitute an Agreement between our two Governments on this subject, A Agreement to enter into force in accordance with paragraph 8 above. Accept, Excellency, the renewed assurances of my highest consideration. /S/-----

OVERSEAS PRIVATE INVESTMENT CORPORATION

[An Agency of the U.S. Government, Washington, D.C.]

CHRONOLOGICAL LIST OF INVESTMENT GUARANTY AGREEMENTS AND AMENDMENTS, 1948 TO 1972

1948

1949

1950

1951

1952

Type of investment guaranties covered

The Foreign Assistance Act of 1948 (Public Law 472-80th Cong.) initiated the investment guaranty program and authorized the issuance of investment guaranties of convertibility of receipts from investments in countries participating in the Marshall Plan which had agreed with the U.S.A. to institute the program. Convertibility agreements were concluded as article III of the standard Economic Cooperation Agreements with countries participating in the Marshall Plan.

No new agreements concluded. The Economic Cooperation Act of 1950 (Public Law 535, title 1, 81st Cong.) expanded the guaranty authority by authorizing guaranties against loss by reason of expropriation or confiscation by action of the government of a participating country. Convertibility understandings in effect (see above) had to be amended to cover expropriation guaranties.

The Mutual Security Act of 1951 (Public Law 165-82d Cong.) extended the investment guaranty program to any area in which assistance was authorized by the Mutual Security Act; thus to the Middle East, Africa, the Far East, and Latin America.

1953

1954

1955

*

Do.

Do.

The Mutual Security Act of 1953 (Public Law 118-83rd Cong.) expanded the guaranty authority by providing that guaranties shall be available for investments "'* * in any country with which the United States has agreed to institute the guaranty program.'

"

Convertibility and expropriation.
Amendment. Expropriation.
Convertibility and expropriation.

The Mutual Security Act of 1954 (Public Law 665-83rd Cong.), to be amended, was the legislative authority for the investment guaranty program from 1954 until September 1961.

See footnotes at end of table.

OVERSEAS PRIVATE INVESTMENT CORPORATION-Continued

[An Agency of the U.S. Government, Washington, D.C.]

CHRONOLOGICAL LIST OF INVESTMENT GUARANTY AGREEMENTS AND AMENDMENTS, 1 1948 TO 1972-Con.

Year

1956

The Mutual Security Act of 1956 (Public Law 726-84th Cong.), amending the Mutual Security Act of 1954. added guaranty coverage for losses incurred by reason of war ("war risk"). Convertibility and or expropriation agreements in effect (see above) had to be amended to cover war risk guaranties.

On September 4, 1961, the Foreign Assistance Act of 1961 was enacted (Public Law 87-195). The spec.fc risk guaranties authorized by part 1, ch. 2, title III, were expanded to include guaranties against loss due to revolution or insurrection as well as war. Extended risk guaranties were also authorized. The investment guaranty authority was administered by the Agency for International Development after November 4, 1961.