Mr. GLENN. That is all. Thank you, Mr. Chairman.

The CHAIRMAN. Mr. Hagen?

Mr. HAGEN. Mr. Johnson, actually the initial determination or policy on movement of cargo on U.S. versus foreign ships was for 100 percent U.S. ships, wasn't it?

Mr. JOHNSON. The initial discussion didn't really specify any percentage. It was simply a statement by the Soviet representatives that they would be prepared to accept delivery in American ships.

Now, we didn't say 100 percent or 50 percent. It was just the simple statement that they would be prepared to accept delivery in American ships. Beyond that the question of the U.S. policy in this regard was not a matter of discussion with the Soviet representatives. It was worked out within the U.S. Government.

Mr. HAGEN. Well, but in putting this consideration into policy at all you must have had some motive. I mean at least a substantial portion of these cargoes would be carried in U.S. ships. You must have had some motive in even bringing it into the discussion.

Mr. JOHNSON. Obviously from our standpoint it seemed desirable, since the Russians had indicated this willingness, that this policy be pursued as far as feasible, and the final decision as to whether or not one of the ground rules should be the use of American ships where available was a decision that was made by the President at the time. Mr. HAGEN. And you weren't making policy in a vacuum. You must have understood that U.S. shipping rates were generally higher than foreign shipping rates.

Mr. JOHNSON. Yes, sir.

Mr. HAGEN. Didn't you make any attempt to resolve that issue with the Russians at that time?

Mr. JOHNSON. The question of the rates on the U.S. ships did not come into the discussions with the Russians prior to the determination of the general policy by the President. It was felt that the Russians, like everybody else who is acquainted with maritime matters, and the Russians are very well acquainted with maritime matters, would know that the rates on U.S. ships were in most cases higher than the world rates at the present time.

Mr. HAGEN. In another aspect of this, in these Canadian sales did the Canadian traders get any equivalent of Export-Import Bank guarantees for their sales?

Mr. JOHNSON. Yes. They would have had available the guarantees that Canada makes available just like we do on commercial exports, but, as I say, they didn't have to use them because we understand that the payment was all in cash.

Mr. HAGEN. I think the problem was when this was initially brought up the administration wanted to make the sales as palatable as possible to the American people and this involved this emphasis on this being a commercial cash transaction, the fact that the U.S. merchant marine would be given the right to haul the wheat, and of course there has been a constant retreat from these positions.

I mean it is kind of will-o'-the-wisp. The Soviets got tougher as they got closer to consummating it. The simple fact of the matter is you want to make it as palatable to the American people as possible, and I am sure Mr. Bonner's interest is in salvaging something out of the policy for the American merchant marine.

Mr. JOHNSON. I think, Mr. Congressman, that, going back to the President's original statement, the policy was put in terms of availability.

Mr. HAGEN. It is an economic matter to some large degree and if you set the prices low enough there are not going to be any ships available, so in making policy you must have considered that fact.

I am sure you didn't willingly agree to the situation that, in effect, is a fraud on the American merchant marine and the American public. That is all I have, Mr. Chairman.

The CHAIRMAN. Mr. Rogers?

Mr. ROGERS. Mr. Secretary, when did you say this basic decision to proceed with this arrangement was made? What was the time element?

Mr. JOHNSON. The President's statement was made on October 9 and I believe that the decision was made very shortly before he made that statement.

Mr. ROGERS. When was the State Department's decision to modify the eligibility of ships engaged in the Cuban traffic to come into American ports if they would offer proof or make a statement that they would take these ships out of the Cuban traffic hereafter?

When was that decision made?

Mr. JOHNSON. That was made approximately the middle of December, as I recall.

Mr. ROGERS. Do you know if any of these ships have been involved in this trade to Russia?

Mr. JOHNSON. No, sir; there have been no ships on the blacklist or that were on the blacklist involved in the trade to date.

Mr. ROGERS. I noticed that a report from the Department of Commerce has come out where two more British ships which have been engaged in the Cuban trade, London Confidence and London Independence, now are able to come in and take Government-generated cargoes, and I wonder what you are doing to check to see, for instance, whether the other vessels under the control of these companies that own these particular ships which are covered by contractual obligations, including charters, entered into prior to December 16, 1963, requiring their employment in the Cuban trade, shall be withdrawn from such trade at the earliest opportunity, consistent with such contractual obligations.

What I am concerned with is how is the State Department being assured that such contractual obligations ever existed? What proof is offered to you and how are you following up on this to make sure that these ships are not coming in and benefiting from taking this Government-generated cargo, such as this wheat to Russia?

Mr. JOHNSON. The eligibility of a shipowner whose ships are involved in getting off the blacklist, shall we say, is determined in direct conference with the shipowner in which he has to present evidence to justify his position.

Mr. ROGERS. Does he have to show his contracts?

Mr. JOHNSON. I cannot determine that aspect of it for you. I frankly don't know myself, since I am not directly involved in the negotiations with the shipowners involved.

Mr. ROGERS. Mr. Chairman, I think it would be helpful to the committee to have this information.

The CHAIRMAN. Will you get that information and put it in the record?

Mr. JOHNSON. Yes, sir.

(The following material was subsequently supplied for the record:)

PURPOSE OF CERTIFICATION AND ASSURANCE

1. This Certification and Assurance is made to the United States Government for use in determining the eligibility of vessels listed in Annex 1 hereto to carry United States Government-sponsored cargoes.

II

VESSELS UNDER CONTROL OF CONTROLLING PARTY

1. Annex 1 hereto contains a true, correct and complete list of vessels currently under control of the Controlling Party, together with, in the case of vessels currently under charter or other contractual obligations requiring that such vessels call at Cuban ports or depriving the Controlling Party of the right to direct their movements, a true, correct and complete description of any contractual obligation with respect to each vessel listed, including the name and type of the vessel, owner, charterer, type of charter and trading limits, date of charter, and date of commencement and expiration of charter. As used herein, "control" shall include any means by which the movement or employment of vessels may be directed, including but not limited to ownership, charter, agency, management or operating agreement, or otherwise, either directly or indirectly.

2. None of the charterers listed in Annex 1 hereto are parties through which the vessels listed are or may be under control of the Controlling Party.

3. So long as it remains the policy of the United States Government to discourage trade with Cuba.

(a) none of the vessels listed in Annex 1 hereto will henceforth be employed in the Cuba trade, except as provided in paragraph (b); and

(b) vessels listed in Annex 1 hereto which are covered by contractual obligations, including charters, entered into prior to December 16, 1963, under which their employment in the Cuba trade may be required, shall be withdrawn from such trade at the earliest opportunity consistent with such contractual obligations.

4. The Controlling Party will exercise all rights it may have under charters or other contractual agreements, including the right to terminate or give notice of nonrenewal and the right to direct movement of vessels, to the end that such vessels cease calling at Cuba at the earliest possible time.

III

VESSELS CALLING AT CUBA

1. Annex 2 hereto contains a true, correct, and complete list of those vessels shown in Annex 1 that have called at a Cuban port on or after January 1, 1963, and the date and circumstances of each such call.

2. The United States Government will be notified of any vessels under the control of the Controlling Party which may hereafter call at a Cuban port by immediate communication to the United States Maritime Administration, including the date and circumstances of each such call.

IV

VESSELS COMING UNDER CONTROL OF THE CONTROLLING PARTY

1. So long as it remains the policy of the United States Government to discourage trade with Cuba, no vessel which may hereafter come under control of the Controlling Party or the other parties hereto will call at Cuban ports.

2. Annex 1 hereto shall be kept current by immediate communication to the United States Maritime Administration concerning the acquisition of control by the Controlling Party of any vessel not listed therein, or concerning the disposition by the Controlling Party of any vessel listed in Annex 1 or any amendment thereto.

(Shipowner or Company Official)

Consul of the duly commissioned

Embassy or Consulate of the United States of America:
Subscribed and sworn to before me
United States of America at

Consul of the United States of America.

The undersigned parties hereby authorize and approve the foregoing Certification and Assurance and agree to be parties thereto.

By

(Title:

Embassy or Consulate of the United States of America: Subscribed and sworn to before me the United States of America at

--)

Consul of

duly commissioned

Mr. ROGERS. It would be most helpful. Is this done by State, or by Commerce?

Mr. JOHNSON. It is done primarily by the State Department. I can't say that others don't participate in the decision.

Mr. ROGERS. Thank you, Mr. Chairman.

The CHAIRMAN. Mr. Murphy?

Mr. MURPHY. On that blacklist, Mr. Secretary, how do these ships get on and off it?

Mr. JOHNSON. Well, our general objective, of course, has been to prevent or eliminate free-world shipping from the Cuban trade. In this effort, one of the principal handicaps, as you know, has been the fact that many of the free-world shipowners have ships under long-term charter and, therefore, these ships are outside their control.

The move in December to open up the possibility of ships getting off the blacklist was made in an effort to reduce still further the number of free-world ships that were engaged in the Cuban trade by making it possible for shipowners who had been caught in this long-term contract situation to get off the blacklist as soon as it became contractually possible for them to do so.

I believe that, up to the present time, there have been somewhere between 25 and 30 ships that have been pulled out of the Cuban trade under this provision, and we feel that this is a step in the direction of our overall objective.

Mr. ROGERS. Would the gentleman yield there?

Mr. MURPHY. Surely.

Mr. ROGERS. Just a question or two on that.

It is strange to me that, after our proclamations saying that we would not allow those ships to come into our American ports to get cargo if they have been in the Cuban trade, the excuse has been, in allowing these ships to continue and yet still come in with other ships, that they were under long-term contract, but every month we get different named ships, so there seems to be no cutoff date as to when you would allow these long-term contracts to be in existence, and so they could carry on this trade and now with your new regulation all they have to do, when they are running out of cargo to bring from Cuba, or back from the Soviet Union, wherever it may be, is simply say, "Well, this particular ship we will take out of the Cuban trade and we will come over and pick up Government-generated cargo," and perhaps there is no reason why these same ships can't qualify for this Russian shipment and all the other ships can still continue, by the same line, to Cuba, whereas, before, your regulation was that the ship could not have come in unless all of those ships stopped.

Isn't that true?

Mr. JOHNSON. My understanding is that before this regulation there was really no way in which the ship could get off the blacklist. Mr. ROGERS. That is right.

Mr. JOHNSON. I am sorry I don't have the regulation with me, but I believe that you will find that the regulation does have a cutoff. In other words, the date of the regulation was approximately December 16 or 17, something like that.

Mr. ROGERS. 1963.

Mr. JOHNSON. 1963. I don't think it would be possible for a shipowner to make a long-term contract now at this stage and subsequently be eligible to pull that ship off the blacklist.

Mr. ROGERS. Thank you.

Mr. MURPHY. When did you establish the blacklist?

Mr. JOHNSON. I believe about a year ago, but that can be easily checked.

Mr. MURPHY. Was it before the threatened quarantine, or after it? That was in October of 1962.