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there may or may not be any way of tracing that directly, as to the offset on the shipping cost, but, in any event, there may well have been

too.

Now, in future cases from what I hear about Durum the likelihood is there will not be so much Durum sold in future cases. Would not there have to be a bidding there, or will you immediately start asking for waivers with no possibility of shipping in American ships?

Mr. ESKILDSEN. I think anything I said in this respect would be pure conjecture, except I think it is a logical deduction to say what you have said with respect to the possibilities of selling additional large quantities of Durum to Russia because of the fact that obviously is not the kind of commodity that they would like to have in very much larger quantities. Beyond that the question of how this would work out in additional sales I think probably revolves around, to a very considerable extent, the actual availability at given times of U.S. shipping. Of course the other question, which I think I earlier described as the $64 question, is how badly the customer needs the product and how much he is willing to pay for it.

Mr. DREWRY. It is still the fact, and is going to continue, that the American shipping is going to be more costly. There is no reference in President Kennedy's statement as to what "when available" means. I do not believe that is stated in terms of a reasonable price; I mean availability being determined on that. Of course it is a factor to be taken into account. The one guideline there is in terms of the Cargo Preference Act itself. I am wondering how it will be handled in future cases for the equalizing of the difference between the foreignflag shipping and American-flag shipping, if it is not done on a bid

basis.

Mr. ESKILDSEN. I really couldn't tell you, Mr. Drewry. I really don't know. These negotiations between the private exporters in the United States and buyers, I suppose, may develop enough genius to come up with a transaction that would cause wheat to move, but at the moment I wouldn't know just how. This is one that I am afraid I don't have the competence to answer. Certainly with respect to the guideline rates, it is an area that is really not within our competence. Insofar as that would affect it I think the Maritime Administration would be much more useful to you in answering that question.

Mr. DREWRY. Would not you have to have some knowledge about the rate picture in order to determine whether a bid was a reasonable bid or not?

Mr. ESKILDSEN. Now, coming back to that, the only connection in which this would be a matter for us, as I see it, would be in case there were additional amounts of Durum sold because, as we pointed out before, the subsidy rates on other kinds of wheat are established on an announced basis, so it is only with respect to Durum that this bid subsidy problem comes up.

As I said, I suppose it is a fair conjecture that additional quantities of Durum of this magnitude probably would be difficult to sell in Russia. I wouldn't say that as a matter of certainty because I don't know what their flexibility is on the use of Durum, and if they were willing to buy more of it, then, of course it could come up again.

Mr. DREWRY. But you can peg a subsidy on other types of wheat on the same basis if the situation warrants it?

Mr. ESKILDSEN. Theoretically, Bob [Mr. Robert G. Lewis, Deputy Administrator], I guess I would have to say that you could. There

are a number of other factors involved in other cases of wheat that are not in the case of Durum, particularly Durum to a destination which is not normally being sold to by free world traders. You might want to comment further on this, Bob.

Mr. LEWIS. We would have authority, yes, to establish a bid subsidy technique for sales of other wheat-for determining the subsidy-but this would be a substantially different kind of problem than it is with Durum wheat. The one major reason is that Durum wheat is exempted from the pricing provisions of the International Wheat Agreement, but with all other types of wheat we are obligated by our participation in that agreement to sell not below the minimum price nor in excess of the maximum price, and the bid subsidy technique would give up less adequate control over the prices at which our wheat might be sold. This would be a particularly difficult technical problem to overcome in using a bid subsidy device for other wheat. There are some others.

Mr. DREWRY. I was trying to think of an example. You said there are other areas of the world that are active in the production of wheat and the export of it. Suppose many of the foreign-flag ships were busily engaged in transporting Australian or African, or some other kind of wheat and we wanted to get rid of ours and the foreign-flag ships just weren't available. How would you meet the problem here? Mr. LEWIS. What would happen in that situation, I would expect, is that our exporters would bid up the price they are willing to offer foreign flag to the point where they would take the shipping away from other exporters, unless the world shipping rate became uniform, that is, the foreign-flag rate got up to the U.S. rate. I can't conceive of a circumstance in which a commercial exporter would use U.S. shipping if he could use foreign ships at a lower cost.

Mr. DREWRY. Of course that brings us back again to the question of how much it is commercial if there is a specific requirement with regard to the use of American-flag ships.

The CHAIRMAN. I have not been here and did not hear your full statement, but notwithstanding the President's statement that a portion of this export of wheat would go in American-flag ships, you are no going to pay any attention to that? You are just going to ship it if they can sell it in any available bottoms?

I do not want to go over anything that has been gone over because I am going to read this, but I want to ascertain from you whether or not you are going to pay any attention to the President's statement that this wheat would go in American-flag ships. Is this rate business going to nullify that?

Mr. ESKILDSEN. Mr. Chairman, I did go over this partly, but I would be very happy to go over it briefly again.

The CHAIRMAN. I just want a yes or no.

Mr. ESKILDSEN. Yes, sir; we are paying attention to that.

The CHAIRMAN. And you are going to see that at least a portion, 50 percent we might say, goes in American bottoms?

Mr. ESKILDSEN. We are going to do the best we can to maximize the use of American ships.

The CHAIRMAN. You know it cannot be sold without your approval. You have the wheat. You are going to sell it. It can be easily answered.

Mr. ESKILDSEN. Mr. Chairman, we don't have all of the wheat. Some of this wheat comes out of the Commodity Credit Corporation stocks.

The CHAIRMAN. I understand it does, but you just about control Commodity Credit, you know. You could not dodge that question. Mr. ESKILDSEN. That is quite right, sir.

The CHAIRMAN. Of course, you have the money invested in it. Practically, the Government owns and controls it. We have made this deal. The President said in announcing this, as I understand, that it would go in American vessels. Since then that has not held true, and I can understand it and I knew that American vessels could not take it all at that time if they sold that much wheat, but I am asking you if you are going to get the transportation, 50 percent, we will say, in American ships, notwitstanding all these other things you have been talking about.

Mr. ESKILDSEN. Subject to decisions that are made by the competent authority here, which is the Maritime Administration in the Department of Commerce with respect to waivers, we certainly are going to do the very best we can to carry out the President's directive. Obviously we would not withhold a sale of wheat out of Commodity Credit Corporation stock if in the wisdom of the Maritime Administration or the Department of Commerce in granting a waiver they had decided that it would be possible to move more or less than 50 percent of this as a commercial transaction.

The CHAIRMAN. I understand they set a rate that is fair and reasonable for American-flag vessels. If American-flag vessels will take it at that rate, even though it is higher than the foreign-flag vessel, are you going to require that the wheat go in an American-flag vessel? That is all I am here for. There is other business about this and I am sorry I did not hear your full statement and the discussion, but that is the part I am interested in.

Mr. ESKILDSEN. I can only repeat, Mr. Chairman, that within the applicable regulations and applications of those regulations by Maritime we are going to do the very best we can in our shipping business, which is related to this, to make it possible to move the maximum amount of wheat in U.S.-flag vessels. We are doing that now. The CHAIRMAN. Are there any further questions?

Thank you, gentlemen. Of course, from time to time we are going to have you back here to see what is going on with this transactionMr. ESKILDSEN. It would be a pleasure, Mr. Chairman.

The CHAIRMAN (continuing). If we find out anything that we think we should have you back here about, because we want to see that the President's statement is carried out, and I do not think that you would violate the President's statement.

Mr. ESKILDSEN. No, sir.

The CHAIRMAN. I certainly do not think the Maritime Administration or the Department of Commerce would violate it, so I want to see if it is going to be carried out. I am not concerned about the cost of this proposition.

Mr. ESKILDSEN. Yes, sir.

The CHAIRMAN. The committee will recess subject to the call of the Chair.

(Whereupon, at 1:05 p.m. the committee adjourned subject to the call of the Chair.)

APPENDIX

HEARING HELD BY THE MARITIME ADMINISTRATION, DEPARTMENT OF COMMERCE, THURSDAY, FEBRUARY 6, 1964, ROBERT E. GILES, ACTING MARITIME ADMINISTRATOR, PRESIDING

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