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than like earnings by Japan and only little more than like earnings of the Republic of China-countries that have not participated in the Vietnam war.

Senator SYMINGTON. Mr. Ambassador, we also at that time had two divisions in South Korea, did we not?

Mr. PORTER. Yes, sir.

Senator SYMINGTON. We have had troops there since June of 1950, correct?

Mr. PORTER. Yes, and the earlier period of 1945.

Senator SYMINGTON. Early period, 1945.

Mr. PORTER. Originally.

Senator SYMINGTON. You bring the matter up. Were these goods that normally would have come from the United States?

Mr. PORTER. There were some goods that they could produce which were useful in Vietnam and for their own troops, which we would otherwise have had to procure in the United States or Japan or elsewhere, sir. I just cannot

Senator SYMINGTON. Again you mentioned the figure of $546 million. Where would we have bought these goods if we hadn't bought them in Korea?

Mr. PORTER. Possibly Japan, the Republic of China, Thailand, or the United States, or other areas.

Senator SYMINGTON. Thank you.
Mr. PORTER. Shall I proceed?
Senator SYMINGTON. Please do.

ROK CIVILIANS SENT TO VIETNAM

Mr. PORTER. In addition to troops, Korea sent substantial numbers of civilian technicians, contractors, and stevedores to Vietnam and they did excellent work. A modest amount of U.S. procurement was directed to Korea as well in cases where it would not involve extra expense to the United States.

Senator SYMINGTON. One more question there. Did we pay a subsidy to the civilian technicians, contractors, and stevedores to go to Vietnam?

Mr. PORTER. I believe we did not. They were hired at the going rates by the contractors in Vietnam or went as employees of their own contracting firms who bid for jobs in Vietnam.

U.S. SUBSIDIES TO ROK NONCOMBAT TROOPS IN VIETNAM

Senator SYMINGTON. For the record, did we supply subsidies to the noncombat troops, military, that we sent to Vietnam?

Mr. PORTER. I believe all troops were covered.

Senator SYMINGTON. We did to the Philippines. We gave heavy subsidies, based on rank, to the Philippine noncombatants who went to South Vietnam.

My question is did we do the same for the noncombatants who went to South Vietnam from South Korea?

Mr. PORTER. I believe we did. But, sir, the breakdown we will provide will show that.

Senator SYMINGTON. Fine.

(The information referred to follows:)

KOREA NONCOMBATANT MILITARY FORCES

The United States Government provides the ROKG with funds to pay the overseas allowances at agreed rates for all ROK military personnel deployed to South Vietnam. This includes noncombatant military forces, e.g., DOVE Unit and MASH, as well as combat forces, e.g., Army Divisions and Marine Brigade.

COMPENSATION OF ROK CIVILIANS IN VIETNAM

Senator SYMINGTON. Based on the way the paragraph reads on (page 1708), would you also give the facts with respect to what, if anything, was done incident to the civilian technicians, contractors, and stevedores. What we are trying to find out is how much was paid. Perhaps it was a private arrangement made by the contractors. In any case any information along those lines would be appreciated. Mr. PORTER. Yes, sir.

(The information referred to follows:)

KOREAN CIVILIAN TECHNICIANS, CONTRACTORS, AND STEVEDORES IN VIETNAM

As a matter of general policy, local nationals are hired, to the maximum degree feasible, by American contractors in Southeast Asia. In Vietnam, the established US policy requires that Vietnamese workers have first claim on any jobs created in Vietnam by the American presence. No foreign workers will be hired by any US Government Agency or their contractors to fill any job for which a qualified Vietnamese worker is available. Foreign workers, even the necessary ones, can be hired only according to the laws and regulations of the Government of Vietnam (GVN). Contractors cannot hire or keep employed, Third Country Nationals (TCNS) without a valid work permit issued by the GVN, which is issued only when the skill required cannot be provided by available local hires.

In recognition of their support to South Vietnam and to minimize costs, semiskilled and skilled categories, not available locally, were recruited extensively from the Korean labor market. Thus, while a deliberate effort was made to recruit Korean civilian workers who had the necessary experience, background and language capability to meet the job requirements and when local nationals were not available, this effort did not include extra compensation other than the normal fringe benefits related to Vietnam as a post of duty. The compensation of these and other TCNs was set by competitive practices.

ROK EARNINGS FROM VIETNAM

Mr. PORTER. The total Korean earnings from Vietnam have been $546 million from 1965 through 1969, broken down in the following categories: Military commodity procurement, war risk insurance premiums, contracts for services, construction contracts, remittances of military and civilian personnel, and commercial exports.

NEGOTIATIONS AND AGREEMENT CONCERNING MAJOR ROK FORCES FOR

VIETNAM

The negotiations with respect to major Korean forces for Vietnam began in June 1965 after the receipt by the Republic of Korea Government of a request for troops by the Republic of Vietnam, although the question of a possible Korean contribution had been discussed by President Johnson and President Park during the latter's state visit to Washington in May 1965. Negotiations were completed in July 1965. It was agreed: that there would be no United States or Korean force reductions in Korea without prior consultation, that the military assistance program level for fiscal year 1966 would include a $7 million addon to provide active division equipment status for the three ready

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reserve divisions, that the military assistance program transfer program would be suspended for fiscal year 1966 and that transfer items in the program would be procured in Korea, that Korean forces in Korea would be modernized in firepower, communications and mobility, that the United States would provide equipment, logistical support, construction, training, transportation, subsistence, overseas allowances, funds for any legitimate noncombatant claim which might be brought against the Korean forces in Vietnam, and restitution of cash losses by the Korean forces in Vietnam which did not result from negligence. Copies of pertinent correspondence are already in the hands of the subcommittee.

Senator SYMINGTON. You say it was agreed there would be no United States or Korean force reduction in Korea without prior consulation. Is that the first time this was agreed to or was that a reaffirmation?

Mr. PORTER. That is a reaffirmation of a previous understanding. Senator SYMINGTON. Thank you.

PROCUREMENT OF MAP TRANSFER ITEMS IN KOREA

Then you say that the transfer items in the program would be procured in Korea. Would that be regardless of whether the price was competitive or not?

Mr. PORTER. I would assume that prices of course, would have to be competitive within the Korea economy and that in line with the previous statement I made, that they would not cost the United States

more.

Senator SYMINGTON. Than what?

Mr. PORTER. Than if procured in the United States.
Senator SYMINGTON. How about in Japan?

Mr. PORTER. I don't know of any reference to Japan.

Senator SYMINGTON. Will you make the record as to whether this was on a competitive basis, or a noncompetitive basis?

(The information referred to follows:)

PROCUREMENT OF MAP TRANSFER ITEMS IN KOREA

MAP transfer items are authorized for procurement in Korea only after determination that the price is competitive with the cost of procurement and shipment from U.S. sources.

RESTITUTION OF CASH LOSSES BY ROK FORCES IN VIETNAM

Senator SYMINGTON. Now you say: "and restitution of cash losses by the Korean forces in Vietnam which did not result from negligence." I don't understand what that means.

Mr. PORTER. I would have to look at the terms, the specific terms, of that part of the arrangements, Mr. Chairman, and insert an explanatory note.

Senator SYMINGTON. Is there anybody here who does know what that means?

General MICHAELIS. General Taylor.

General TAYLOR. I am checking to see if I have got that.

Senator SYMINGTON. If you don't know, please supply it for the record.

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The cash loss agreement referred to concerns the reimbursement of COMROKFV for overseas allowances funds held in either U.S. currency, MPCs or piasters which are lost in Vietnam by COMROKFV as a result of combat operations or other unavoidable causes, provided that in the judgment of COMUSMACV, the responsible officers of COMROKFV are not negligible and took all reasonable precautions, commensurate with the amounts of money involved and the particular facts surrounding the loss, to avoid the loss and to recover the funds lost. A check of the records indicates that no such restitutions have been paid to date.

NEGOTIATIONS FOR DISPATCH OF ROK NINTH DIVISION ΤΟ VIETNAM

Mr. PORTER. Negotiations for the dispatch of the ROK 9th (White Horse) Division to Vietnam began formally in February 1966, with the receipt by the Korean Government of a Vietnamese request for additional troops. Our negotiations regarding support which we would give these troops and related arrangements were completed in early March and on March 4, 1966, Ambassador Brown sent to the Korean Government a letter spelling out our commitments. The subcommittee also has a copy of this letter.

Senator SYMINGTON. Would you supply the letter of Mr. Brown at this point in the record? Secondly, would you explain what that paragraph means, letters of credit to compensate the Korean Government? (The information referred to follows:)

His Excellency LEE TONG WON,

SEOUL, KOREA, March 4, 1966.

Minister of Foreign Affairs, Republic of Korea, Seoul.

EXCELLENCY: Your Excellency has advised me that the Government of the Republic of Korea has received a request from the Government of the Republic of Vietnam for deployment to the Republic of Vietnam of additional Korean combat troops. Your Excellency has further stated that your Government has decided to provide the requested assistance to the Government of the Republic of Vietnam in the form of a regimental combat team to arrive in April and a division force to begin to arrive in July, subject to approval of the National Assembly in fulfillment of the constitutional processes of the Republic of Korea. I have noted your explanation that the decision of the Republic of Korea was taken because the Government of the Republic of Korea regards the front in Vietnam as a second front for the Republic of Korea, directly linked to Korea's security.

My Government warmly welcomes this decision by your Government to augment its already highly effective contribution to the Free World forces fighting in Vietnam. I am authorized to say that in view of our common interest in the security and progress of the Republic of Korea, the United States is prepared to take the following measures to see to it that the integrity of Korea's defense is maintained and strengthened and that Korea's economic progress is further promoted.

A. MILITARY ASSISTANCE

1. To provide over the next few years substantial items of equipment for the modernization of Republic of Korea forces in Korea.

2. To equip as necessary, and finance all additional won costs of, the additional forces deployed to the Republic of Vietnam.

3. To equip, provide for the training and finance complete replacement of the additional forces deployed to the Republic of Vietnam.

4. To contribute to filling the requirements determined by our two Governments to be necessary, following completion of a joint United States-Republic of Korea study, for the improvement of the Republic of Korea anti-infiltration capability.

5. To provide equipment to expand the Republic of Korea arsenal for increased ammunition production in Korea.

6. To provide communications facilities for exclusive Republic of Korea use, the character of which is to be agreed between United States and Republic of Korea officials in Seoul and Saigon. These facilities will meet requirements for communication with your forces in the Republic of Vietnam.

7. To provide four C-54 aircraft to the Republic of Korea Air Force for support of Republic of Korea forces in the Republic of Vietnam.

8. To provide for the improvement of military barracks and bachelor officers quarters and related facilities for troop welfare such as cooking, messing, sanitation and recreational facilities from proceeds of the Military Assistance Program (MAP) excess sales.

9. To assume the costs of overseas allowances to these forces at the scale agreed between General Beach and Minister of National Defense Kim Sung Eun on March 4, 1966.

10. To provide death and disability gratuities resulting from casualties in Vietnam at double the rates recently agreed to by the Joint United StatesRepublic of Korea Military Committee.

B. ECONOMIC ASSISTANCE

1. To release additional won to the Korean budget equal to all of the net additional costs of the deployment of these extra forces and of mobilizing and maintaining in Korea the activated reserve division and brigade and support elements.

2. To suspend the MAP transfer program for as long as there are substantial Republic of Korea forces, i.e., at least two divisions, in the Republic of Vietnam, with offshore procurement in Korea in United States fiscal year 1967 of items suspended in fiscal year 1966 plus those on the fiscal year 1967 list.

3. (a) to procure in Korea insofar as practicable requirements for supplies, services and equipment for Republic of Korea forces in the Republic of Vietnam and to direct to Korea selected types of procurement for United States and Republic of Vietnam forces in the Republic of Vietnam in cases in which: i. Korea has the production capability,

ii. Korea can meet specifications and delivery schedules,

iii. It may be reasonably determined that Korean prices are fully competitive with other possible sources in the Far East, and

iv. The procurement conforms in other respects to the regulations and procedures of the United States Department of Defense.

Supplies, services and equipment which meet this definition will be listed on a "natural source" list from which procurement will be made exclusively from Korean sources without soliciting bids from non-Korean producers.

(b) To procure in Korea, in competition only with United States suppliers, as much as Korea can provide in time and at a reasonable price of a substantial amount of goods being purchased by the Agency for International Development (AID) for use in its project programs for rural construction, pacification, relief, logistics, and so forth, in the Republic of Vietnam.

(c) To the extent permitted by the Republic of Vietnam, to provide Korean contractors expanded opportunities to participate in construction projects undertaken by the United States Government and by American contractors in the Republic of Vietnam and to provide other services, including employment of skilled Korean civilians in the Republic of Vietnam.

4. To increase its technical assistance to the Republic of Korea in the general field of export promotion.

5. To provide, in addition to the $150 million AID loans already committed to the Republic of Korea in May, 1965, additional AID loans to support the economic development of the Republic of Korea as suitable projects are developed under the same spirit and considerations which apply to the $150 million commitment. 6. If justified by performance under the 1966 Stabilization Program, to provide $15 million of Program Loans in 1966, which can be used for the support of exports to the Republic of Vietnam and for other development needs. Accept, Excellency, the assurances of my highest consideration. WINTHROP G. BROWN.

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