"(c) Exportations and Reexportations of Agricultural Commodities and Manufactures Thereof Other Than Wheat or Wheat Flour.

"(1) Destinations.-License applications covering agricultural commodities and manufactures thereof, other than wheat or wheat flour, will be considered for approval in accordance with the provisions of this par. (c) for exportations to any Subgroup A country except Communist China, North Korea, or the Communist-controlled area of Viet-Nam.

"(2) Certification.-The exporter shall enter the following certification on the license application in the space entitled 'additional information' or on an attachment thereto :

'I (We) certify that with respect to the commodities described on this application (1) the terms of sale will be cash or normal commercial credit; (2) the exportation from the United States will not be financed under Public Law 480; (3) the commodities were produced in the United States; and (4) the sale will not involve (me) (us) in any barter arrangement.'

“(3) Terms of sale.-The specific terms of sale, i.e., cash, credit, and credit terms if applicable, shall be entered on the license application in the space entitled 'additional information' or on an attachment thereto.

"(4) Financing Arrangements.-All the details of the financing arrangements, including the names of the financing institutions or facilities participating in the financing, shall be entered on the license application. If the financing arrangements are not completed at the time of application submission, the applicant shall state on the application that the Office of Export Control will be provided this information promptly as soon as the financing arrangements are completed. The notification shall refer to the application case number or if the case number is unknown, the export license number, the applicant's reference number, or the date of submission of the application.

"(5) Completed Form FC-842.-Each application shall be accompanied by a Form FC-842, Single Transaction Statement by Consignee and Purchaser, completed in accordance with the provisions of § 373.65.

"(6) Reexportations.-Requests for authorization to reexport agricultural commodities and manufactures thereof, other than wheat and wheat flour, will be considered for approval in accordance with the provisions of this par. (c)(6) for shipment to any Subgroup A country except Communist China, North Korea, or the Communist-controlled area of Viet-Nam if the exportation from the United States was not financed under the Public Law 480 program, or the Agency for International Development program, and if the terms of sale of the exportation from the United States were cash or normal commercial credit. Such requests shall be submitted by letter to the Office of Export Control by the United States exporter in accordance with the provisions of § 372.12 and shall contain the following certification:

"I (We) certify that with respect to the commodities described herein (1) the exportation from the United States was not financed under the Public Law 480 program, or the Agency for International Development program; and (2) the terms of sale of the exportation from the United States were cash or normal commercial credit.'"

Par. 379.3 (c) (3) is amended to include the following subparagraph (iv): "(iv) Exportations of any agricultural commodity moving under a validated license to a Subgroup A destination."

Reprint pages for the Comprehensive Export Schedule incorporating changes announced in this Bulletin will be furnished in a forthcoming Current Export Bulletin.

FORREST D. HOCKERSMITH, Director, Office of Export Control.

Mr. GILES. It contains in there the provision that at least 50 percent of the wheat and wheat flour will be exported on U.S.-flag vessels if available and if U.S.-flag vessels are not available at reasonable rates, the exporter must obtain prior authorization from the Maritime Administration to ship less than 50 percent.

So the Secretary of Commerce assigned to the Maritime Administration the responsibility for policing this shipping requirement.

I think the next major development in this picture, Mr. Chairman, was the Cargill shipment. As you may recall, the Cargill Co. made a sale of 200,000 tons of wheat to Hungary. This was the first sale

to either one of the Soviet bloc countries. On the first 100,000 tons of their sale to Hungary the Cargill Co. was able to get the required 50-percent American-flag tonnage and did not apply for any waiver of the shipping requirement.

On the second 100,000 tons the Cargill Co. was not able to obtain the 50 percent, that is, 50,000 tons on American-flag vessels, and on November 22 this particular company filed a request with the Maritime Administration for a waiver of that shipping requirement. Mr. HAGEN. May I ask a question, Mr. Chairman?

The CHAIRMAN. Have you finished making your statement in reference to this transaction?

Mr. GILES. Not with reference to Cargill.

The CHAIRMAN. Just let him finish his statement.

Mr. GILES. At that time, Mr. Chairman, we took the matter under consideration. We distributed the information throughout the shipping trade and informed them we had this request for a waiver, and we made every effort to find available shipping at our published rates in accordance with what we had put out, and the shipping simply was not available.

The CHAIRMAN. That is the second 100,000 tons?

Mr. GILES Yes, sir.

The CHAIRMAN. The first 100,000 tons went 50-50?
Mr. GILES. That is right; yes, sir.

The CHAIRMAN. You reviewed the field and you couldn't find an
American-flag vessel that would carry their share of the second?
Mr. GILES. That is right, at the published rates.

The CHAIRMAN. That is, at the same rate that the first 50,000 tons had been carried at?

Mr. GILES. Yes, sir; the minus 20 percent rate.

Mr. HAGEN. Mr. Chairman, that was what I wanted to ask. What was the rate that Cargill paid for that shipping and what was the rate they paid on this first 50,000 tons.

Mr. GILES. What was the actual rate they paid on the American shipping?

Mr. HAGEN. Yes.

Mr. GILES. I can't answer that, sir. I am assuming that it was certainly at the top of the guideline.

Mr. HAGEN. The top?

Mr. GILES. At the minus 20 percent rate for the larger vessels.
Mr. HAGEN. Did they get larger vessels? Did they use larger ones?
Mr. GILES. Some of it was shipped on berth liners on the first ship-

ment.

Mr. HAGEN. You say it was the top of your guideline rate?

Mr. GILES. I am saying the rate for the Soviet bloc commercial shipments in the so-called minus 20 percent, that is, the rate applicable to vessels over 15,600 deadweight tons.

Mr. HAGEN. The larger vessels, but for the smaller ones you have the larger rate plus 20 percent; is that correct?

Mr. GILES. We have not changed the rate on the smaller vessels.

That has remained the same as it had been the previous year.

Mr. HAGEN. Do you have any idea what the rate was?

Mr. GILES. On the Cargill shipments?

Mr. HAGEN. Yes.

Captain GOODMAN. Some of the actual shipments were made at lower than our minus 20 percent guideline rate because they were made on berth line vessels, as partial lots along with the rest of their cargo. The Hungary cargo went through Hamburg principally, and I am just quoting from memory to give you an illustration. Let's say that about $13 or $13.25 was the rate and some of the cargo actually moved, at $12.75 and $13, in that range.

Mr. MURPHY. Mr. Chairman, may I ask a question? When you say available American-flag ships, what do you mean by available? Mr. GILES. I mean by available, willing and desirous of taking the business at the published guideline rate and in accordance with the various terms and conditions we have now had to get into. So it has to be available, that is, physically available, the owner wants the business, and on reasonable terms and conditions.

We have gone through all of those and I think they are very well known now so far as the terms and conditions that the Maritime Administration has made a judgment on.

Mr. MURPHY. Available from point of time. Suppose they make this sale all in a specific month. The availability at that specific month then would be different from the availability over, say, a 3-month period?

Mr. GILES. Well, that is true, but your shipping time, your schedules of shipping, loading and delivery, ordinarily it has to be up to the buyer and the seller to work that out. That is the way it generally is in your shipping practice. It so happens that on the Continental sale they had made their sale on the basis of delivery over the 3-month period-January, February, and March.

Mr. MURPHY. It is possible then for these people to push all of their sales into a short period of time so as to take advantage of foreignflag vessels because there is a limited availability of American ships at that time?

Mr. GILES. You say possible. You mean for the grain exporters? Mr. MURPHY. Yes.

Mr. GILES. The grain exporter is going to have to make his contract on the basis of what the buyer can handle. The buyer has to make arrangements for unloading, the discharge, at the other end. Ordinarily the exporter has to work that out with the purchaser, and if he is going to make his sale he is going to try to do what the purchaser wants in terms of the time of delivery, so to answer your question, sir, I wouldn't regard that factor as solely within the control of the exporter.

Mr. MURPHY. The buyer could request shipment in a limited period of time to take advantage of lower rate vessels.

Mr. GILES. From the standpoint of the buyer I don't think it makes any difference in this case. These sales are made on a flat per ton rate and the Soviet Union will tell the exporter,"We don't care what ships you use."

In fact they made it plain we can use all American vessels, but they are not going to pay a higher per ton price for the wheat, if they can detect it, which would reflect what they would call higher American shipping prices, so from the standpoint of the Soviet Union I think they would say to the exporter, once they have agreed on a contract, and

that means a specific amount per ton for the wheat delivered to the Soviet ports, "We don't care what ships you use."

Mr. HAGEN. Does the Soviet Union get any shipments that would have an equivalent cost to these Hungary shipments that move in these American vessels, or do they always insist on a lower price than the Hungarians?

Mr. GILES. There again, even on the Hungarian shipment, that was a total net price for the wheat delivered, and what amount of that the exporter had to compute for shipping costs or allow for shipping I don't know.

You see, there is a element of risk in here for the exporter when he cites a total net price for the wheat delivered, and then it is up to him to go out and arrange for his shipping. If he can get lower prices on foreign shipping than he anticipated, then he is going to have a better

margin.

If he has to pay more for foreign shipping, for example, than he counted on, then his margin is cut down.

Mr. HAGEN. I am not knowledgeable enough about the subject of shipping to really pursue this, but the possibility exists that maybe we didn't bargain as hard with the Russians as we did with the Hungarians, or that the grain trader didn't.

Mr. GILES. That may be, sir. That was a private sale. The private exporters in both cases handled that. That was not a Government transaction, as you know.

Mr. HAGEN. None of them is.

Mr. GILES. Mr. Chairman, just to hurry on, and I will try to expedite this, on the Cargill shipment we did have to announce December 4 that we were not able to find the American-flag shipping and we would have to issue a waiver, and we did issue the waiver for approximately 40,000 tons of American shipping and we tried to get our explanation over on that.

There was, frankly, some difficulty. One of the unions thereafter persuaded the longshoremen up there in Albany, N.Y., to start picketing one of the vessels which was going to be loaded.

Cargill promptly went into court, in the New York State court, and obtained an injunction against that interference, and I am informed that loading proceeded thereafter on all of the ships without any particular difficulty.

I have talked very frankly to our shipping friends. I have asked them very specifically where are the American ships. At first I thought some of them rather facetiously sent us forward the names of several Liberty vessels, all of which were quoting the very top price, the price that the smaller vessels have to have, and we had plainly put out and said the minus-20-percent rate must govern, so there could not have been any misunderstanding.

If the exporter does not get the American-flag shipping at the minus-20-percent rate, then he does not have it at the reasonable terms that have been set by the Government and therefore he can apply for a waiver. I think some of the shipowners simply refused to face up to that at that time, or else they were just having a little fun with us. I don't know, but, anyway, we got through the Cargill thing.

The wheat was loaded and I am informed it has all been delivered, or at least it has been loaded and is on the way. Following the Cargill matter-and we did learn something from it-we put out our notice of waiver procedure.

If I can put my finger on that, that should be in the package there before you, Mr. Chairman. It is dated January 7. It is in the package before you entitled "Maritime Issues Notice on Shipment of Wheat," and our procedure is on the back of that page, "Notice to Exporters and American Shipowners." Before making this notice final we circulated it for about 10 days among the grain exporters and among the shipowners and received their comments, and we received from both exporters and shipowners some very helpful comments in making up this final waiver procedure, which we will have for the record.

(The waiver procedure notice mentioned above follows:)

NOTICE TO EXPORTERS AND AMERICAN SHIPOWNERS ON SHIPMENT OF WHEAT AND WHEAT FLOUR TO SOVIET BLOC COUNTRIES

Current Export Bulletin No. 883 issued by the Office of Export Control, Department of Commerce, on November 13, 1963, requires that at least 50 percent of the wheat and wheat flour to subgroup A countries will be exported on U.S.-flag carriers and that if such carriers are not available at reasonable rates, the exporters must obtain prior authorization from the Maritime Administration to ship less than 50 percent on U.S.-flag carriers.

Any application by an exporter to the Maritime Administration for waiver of the foregoing requirement must be accomplished by a certification that solicitation of all owners and/or operators in all segments of the American steamship trade for necessary shipping space has been made including posting at the New York Maritime Exchange, 80 Broad Street, New York, N.Y., for the required U.S.-flag shipping. Application may be made at any time subsequent to the date of prompt solicitation after a sales contract has been signed and after allowing 5 days for response thereto. The results of such solicitation must be clearly and fully itemized, including the dates of all tenders, shipping dates, rates, terms and conditions, loading and discharge ports, cargo tonnage offered, and full response to such tenders. Exporters are advised that waivers will not be considered unless U.S.-flag ships have been given a reasonable period to meet the shipping schedules, and in any event the shipping schedules (laydays) for U.S.-flag ships shall extend over the same period applicable for other shipping but should be not less than 30 calendar days after the date of solicitation unless compelling circumstances require a shorter period.

Upon receipt of an application for a waiver of the U.S.-flag shipping requirement, the Maritime Administration will promptly issue a public notice including posting of a notice at the New York Maritime Exchange, 80 Broad Street, New York, N.Y., giving full details of the waiver application, stating that a request for waiver has been received and unless evidence within 5 days from date of such notice is received showing the U.S.-flag shipping is offered, capable of meeting the reasonable shipping schedules of the exporters at applicable guideline rates, the waiver will be granted.

Exporters and American shipowners are advised that on these commercial transactions the supplemental guideline rates for wheat in bulk published by the Maritime Administration, Department of Commerce, in the Federal Register issue of November 16, 1963, and any other supplemental guideline rates published for other port areas applicable to ships of 15,600 to 30,000 deadweight tons will govern. If wheat flour in bags is to be shipped under Current Export Bulletin No. 883, supplemental guideline rates will be published.

JANUARY 7, 1964.

Mr. GILES. As you will note, we specify that the exporter must solicit for American shipping during the same time period, for the same delivery schedules, that he asked for foreign-flag shipping.