discussions with Government officials on matters of commercial importance to their companies. The Department of Justice attempts to dispel our concern by committing itself to be reasonable in applying the statute.

Without wishing in any way to impugn the sincerity of Mr. Yeagley's position, we think it is fair to point out that the statute will be subject to interpretation by successive administrators in the years ahead; and Mr. Yeagley cannot, of course, bind those who follow him. Future administrators could quite readily read the language of the pending legislation and its legislative history quite otherwise than does Mr. Yeagley. In this regard, we believe that highly pertinent testimony appears on page 292 of the transcript, where Mr. Tenzer asked Mr. Yeagley the following question, and received the following answer:

"Mr. TENZER. The statute will be on the books for many years, of course. How can we tell the future administrators will not look to the Senate hearings for their guidance and require thousands of businessmen engaged in purely financial, private or mercantile transactions to register?"

"Mr. YEAGLEY. Because I don't think that is the intent of the Senate hearings. Although I must confess I don't know who the future administrators are going to be and I can't speak for them.”

We submit that the business community should not be asked to rely on the Justice Department's willingness to use its discretion in granting exemptions under a criminal statute. If the intent of Congress is not to require bona fide American companies engaged in international business to register as foreign agents in order to consult with their government, this should be clarified in the statute itself.

Mr. Yeagley's second comment with respect to my testimony is to the effect that the chamber's proposal is framed as an exclusion from the definition of "foreign principal" rather than an exemption from registration and the Department of Justice opposes the elimination of a "class of persons" from the purview of the definition of "foreign principal." But the definition of "foreign principal" in the pending bill is already limited to a "class of persons," and already makes an arbitrary distinction between those persons who are covered and those who are exempt. So far as corporations are concerned, the "class of persons" covered by the present definition of "foreign principal" includes any company which is incorporated abroad or which has its principal place of business abroad. The "class" aspects of this definition are illustrated by the fact that a foreign subsidiary of a U.S. corporation would be considered a foreign principal, but a branch operation in a foreign country would be exempt. Thus, in the same industry, if one company operates overseas through subsidiaries, it would run the risk of registration, but a competitor which operates through branches would be exempt.

Any definition of foreign principal is certain to include and exclude certain "classes of people." The question is simply where the dividing line should be. We feel that the definition in the pending bill is too all-inclusive since it would have the effect of classifying as "foreign principals" the foreign affiliates of all U.S. corporations. Thus, hundreds of U.S. corporations with international operations would be subjected to the risk of being branded as "foreign agents" when they conduct discussions with Government officials on important matters affecting their foreign affiliates. The chamber's proposal would have the effect of narrowing the class of persons covered by the definition, thereby providing a clear exemption for those whose registration would not further the purposes of the act.

Mr. Yeagley's specific objection to the chamber's proposal appears at page 262 of the transcript of his testimony and is directed to use of the word "substatial" in the following portion of the chamber's proposal, the purpose of which is to deprive an agent of a foreign government of the benefit of the proposed exclusion:

**** and no substantial portion of the activities of such person are directly or indirectly supervised, directed, controlled, financed or subsidized in whole or in major part by a government of a foreign country or a foreign political party, ***"

Mr. Yeagley suggests that an activity might not be a substantial part of a corporation's activities but might be very political from the standpoint of the United States. If the principle of excluding bona fide business corporations

from the definition of "foreign principal" is accepted, we believe that the precise wording of the exclusion can be amended.

As I indicated in my testimony, the chamber recognizes that there are other possible amendments which would accomplish the purpose which would be served by the chamber's proposal. If, for example, the subcommittee prefers the approach embodied in annex B of Mr. Maw's statement, proposing an exclusion from registration for the open representation of the private interests of a foreign principal before any agency or official of the Government of the United States, the chamber's objectives could be met in this alternative manner. Mr. Maw's suggestion would meet the basic and proper objective of the Congress-to make certain that business representatives fully disclose their foreign interests-but would not force such representatives to be labeled as “foreign agents" under an antisubversive statute. In accordance with the undertaking which was included in my prepared statement, we would be pleased to work with the members of the subcommittee and its staff to develop alternative approaches to a solution of the basic problem which concerns the chamber, should this be deemed desirable. In summary, we believe that it is important to have an effective statute in the areas where registration is required, but also to provide a clear exemption for American business representatives whose registration would not further the purposes of the Foreign Agents Registration Act.

Very truly yours,

о

JOHN F. SONNETT.