supporting with a stabilized economy as rapidly as possible. There was an extensive exchange of information and a fruitful joint appraisal of those aspects of the Korean economy which affect its future stability. As an outgrowth of these discussions between the two governments, the Republic of Korea announced its intention to establish the rate of exchange between the Korean hwan and the U.S. dollar at 500 hwan to one U.S. dollar. This rate will be applicable to the foreign exchange transactions of the Government of the Republic of Korea, to purchases of hwan by the U.S. Forces in Korea, and with certain limited exceptions to U.S. aid furnished in the form of imports into Korea. The Government of the United States will cooperate with the Government of Korea in its efforts to prevent further inflation and to develop a stabilized economic situation within the limits of resources made available for this purpose.

As with other questions related to the United States aid program to Korea, further consideration will be given in Seoul to those matters that have been discussed here which have continuing interest.

The two Governments have welcomed this opportunity to exchange views and reach understandings in a spirit of friendly cooperation on a wide range of topics important to the achievement of mutual objectives.

118. MONETARY STABILIZATION: Amendment to Appendix A of Agreed Minute of November 14, 1954, Between the United States and the Republic of Korea, August 15, 1955 1

Effective August 15, 1955, paragraph 1 of Appendix A of the Agreed Minute between the Governments of the United States of America and the Republic of Korea signed November 17, 1954,2 is amended as follows:

The official exchange rate of 500 hwan to 1 United States dollar which is to be established by the Republic of Korea on August 15, 1955 as the rate for all foreign exchange transactions of the Government of the Republic of Korea and its agencies, will be applicable to United States aid furnished for the importation of goods and services into Korea except the following: (a) coal of United States origin which will be priced during the fiscal year ending June 30, 1956 at a rate not less than 40 percent of the official rate; (b) fertilizer which will be priced immediately at a rate not less than 50 percent of the official rate, to be increased to the official rate not later than January 1, 1956; (c) investment type commodities for non-revenue producing projects; and (d) relief supplies. Investment type commodities for revenue producing projects will be priced at the official rate unless the Combined Economic Board recommends a reduction either through differential exchange rates or subsidies.

The official rate will apply to purchases of hwan by the United States Forces in Korea.

1 Department of State Bulletin, Aug. 29, 1955, pp. 356–357. • Supra.

415900-57-vol. 2- -69

The Government of the United States of America will cooperate with the Government of the Republic of Korea in its efforts to develop a stabilized economic situation in Korea within the limits of resources made available for this purpose. In this regard both Governments will pay particular attention to the objectives of expeditious action leading to the speedy implementation of the aid program.

Arrangements existing prior to the effective date of this amendment to Appendix A of the Agreed Minute of November 17, 1954 with respect to acquisition of hwan by the United States including those arrangements authorized by the original paragraph 1 of Appendix A of the said Agreed Minute will be suspended as long as the foregoing arrangements work out in practice to the mutual satisfaction of both Governments.

Part XVI

DISARMAMENT AND THE CONTROL OF ATOMIC ENERGY

A. THE PROBLEM OF CONVENTIONAL ARMAMENTS, 1950

1. BASIC PRINCIPLES OF INTERNATIONAL SAFEGUARDS: Paper Submitted by the United States Delegation to the Working Committee of the United Nations Commission for Conventional Armaments, May 13, 1950'

Item 3 of the Plan of Work2 of the Commission for Conventional Armaments provides for: "Consideration of practical and effective safeguards by means of an international system of control operating through special organs (and by other means) to protect complying States against the hazards of violations and evasions." The following is a general outline of the views of the United States which will be elaborated as the Working Committee proceeds with its consideration of this subject.

I. The Objective of Safeguards

A. To ensure that nations fulfil their responsibilities and obligations as prescribed in the treaty for the regulation and reduction of conventional armaments and armed forces, and so to protect complying States against the hazards of violations and evasions;

II. The Nature of Safeguards

A. The system of safeguards should be so devised that its operations will be effective, technically feasible and practicable, and will:

(a) give warning of the likelihood of violations,

1 U.N. doc. S/C.3/SC.3/23, May 13, 1950. The Commission for Conventional Armaments, responsible to the Security Council, was established by Security Council resolution of Feb. 13, 1947. For text of this resolution and earlier documents on the reduction of conventional armaments, see A Decade of American Foreign Policy, pp. 1136-1143.

2 U.N. doc. S/387/Annex A.

(b) detect promptly the occurrence of violations,

(c) minimize interference with and impose minimum burdens on the economic and industrial life of the signatory States.

III. The Basic Elements Constituting Safeguards

A. Accurate and regular reports by all signatory States of such information related to conventional armaments and armed forces as may be required by the treaty,

B. Verification of the above-mentioned reports by thorough international inspection procedures,

C. Remedial action in the case of violation of the treaty; IV. The International Agency Responsible for Safeguards A. An international agency should be established within the framework of the United Nations, deriving its powers and status from the treaty under which it is established, to supervise and administer the agreed system of safeguards in connection with the regulation and reduction of conventional armaments,

B. The international agency should consist of a governing board, an inspection corps and secretariat,

C. The governing board should be composed of representatives from each of the States which are members of the Security Council, the nonpermanent membership changing in conformity with elections to and retirement from the Security Council,

D. The inspection corps should be composed of members drawn from panels nominated by each participating State. The size and composition of the inspecting teams drawn from this corps and utilized in particular instances should be determined by the governing board,

E. Such secretariat as may be needed should be selected by the governing board,

F. The decisions made by the international agency should not require unanimity;

V. Rights and Duties of the Agency

A. Receiving from each signatory State the reports specified in the treaty,

B. Verification of this information through direct inspections, C. Review and interpretation of data derived from reports and inspections,

D. Preparation and publication of periodic and special reports to organs of the United Nations and to the signatory States, E. The inspection and verification process as applied to each State should be made by nationals of States other than the State being inspected. However, the State being inspected should be obliged to appoint a liaison officer to assist and accompany the inspection group representing the international agency,

F. Individual members and national composition of the inspection teams should be varied periodically,

G. The international agency and its representatives should have no authority to issue directions to signatory States except as may be provided in the treaty under which it is established, H. Inspection and verification should be conducted on a regular basis with reasonable advance notice which should be set forth in the treaty. However, special inspections may take place under such circumstances as may be specified in the treaty,

I. Certification to the Security Council and to signatory States of violations or evasions;

VI. Rights and Duties of Signatory States

A. Each signatory State should afford duly accredited representatives of the agency unimpeded rights of ingress to and egress from, and movement within its territories necessary to the performance of their duties; should aid and assist them in the performance of their duties, should provide access to the activities subject to inspection, and should arrange for the full co-operation of national or local authorities or private individuals,

B. The treaty should set forth the nature and scope of the inspection and verification processes to be followed by the international agency in order that all participating States may be aware of their rights and obligations;

VII. Action to be Taken upon the Determination of a Violation A. The international agency should be responsible for the rompt referral with certification of facts to the Security Council and to the signatory States of the agency's findings in respect to violations or evasions of the treaty,

B. Such certification may be accompanied by such recommendations in respect of any violations or evasions cited as the international agency may deem appropriate,

C. Action in respect of any violation or evasion should be primarily the responsibility of the Security Council. The treaty should provide that, since the purpose of the system of safeguards is to protect complying States against the hazards of violations, failure by the Security Council to correct violations or otherwise enforce the treaty should relieve participating States from their obligations thereunder and permit them such freedom of unilateral or collective action as is consistent with the Charter of the United Nations.