Background materials relating to United States-Romanian trade and the extension of the President's authority to waive se...

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Background materials relating to United States-Romanian trade and the extension of the President's authority to waive section 402 of the Trade act of 1974
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Table of Contents
    Front Cover
        Page i
        Page ii
    Preface
        Page iii
        Page iv
    Table of Contents
        Page v
        Page vi
    Summary and freedom of emigration and the trade act
        Page 1
    Procedures for review of the waiver provisions of section 402 of the trade act
        Page 2
    Key dates under the waiver provisions of title IV and emigration from Romania
        Page 3
        Page 4
    U.S. trade with Romania
        Page 5
        Page 6
    Appendix
        Page 7
        Page 8
    Back Cover
        Page 9
        Page 10
Full Text
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94th Congress COMMITTEE PRINT
2d Session C




Background Materials Relating to

United States-Romanian Trade

and the Extension of the
President's Authority to

Waive Section 402 of the

Trade Act of 1974


COMMITTEE ON FINANCE
UNITED STATES SENATE
RUSSELL B. LONG, Chairman


Prepared by the staff for the use of the
Committee on Finance ,'


-SEP 1976


AUGUST 26, 1976 4E N t*


U.S. GOVERNMENT PRINTING OFFICE
75-572 WASHINGTON : 1976





































COMMITTEE ON FINANCE


RUSSELL B. LONG, Louisiana, Chairman


HER'AN E. TALMADGE, Georgia
VANCE HARTKE, Indiana
ABRAHAM RIBICOFF, Connecticut
HARRY F. BYRD, JR., Virginia
GAYLORD NELSON, Wisconsin
WALTER F. MONDALE, Minnesota
MIKE GRAVEL, Alaska
LLOYD BENTSEN, Texas
WILLIAM D. HATHAWAY, Maine
FLOYD K. HASKELL, Colorado


CARL T. CURTIS, Nebraska
PAUL FANNIN, Arizona
CLIFFORD P. HANSEN, Wyoming
ROBERT DOLE, Kansas
BOB PACK WOD, Oregon
WILLIAM V. ROTH, Ji., Delaware
BILL BROOK, Tennessee


MICHAEL STERN, 8taf Director
DONALD V. MOOREHEAD, Chief Minority Cmunel
(11)













Preface


On July 28, 1975, Congress approved a bilateral commercial agree-
ment with the Socialist Republic of Romania. The agreement, which
granted Romania most favored nation tariff treatment, had been nego-
tiated by the President under the authority of Title IV of the Trade
Act of 1974 (Public Law 93-618). The question whether Congress
should extend for twelve months the President's authority to
waive the freedom of emigration provisions of the Trade Act has
come up for review under the procedures contained in Section 402 of
that law. This pamphlet has been prepared by the staff of the
Committee on Finance to assist the Committee and the Senate in that
review.
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- --- ---- -
















CONTENTS


Page
Preface -------------------------------------------------------III
Summary ------------------------------------------------------- 1
Freedom of emigration and the Trade Act---------------------------- 1
Procedures for review of the waiver provisions of section 402 of the
Trade Act2----------------------------------------------------
Key dates under the waiver provisions of title IV------------------
Emigration from Romania ------------------------------------- 3
U.S. trade with Romania -------------------------------------
Appendix ------------------------------------------------------- 7
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Summary


On June 2, 1976, the President asked Congress to renew for twelve
months his authority to waive the freedom of emigration requirements
of the Trade Act of 1974. Section 402 of the Trade Act of 1974 pro-
hibits the granting of most favored nation (MFN) treatment, govern-
ment credits or investment guarantees, or the negotiation of a com-
merical agreement with any communist country if that country does
not allow its citizens the freedom to emigrate. Section 402 permits the
President to waive this prohibition for limited periods of time if
he determines that doing so will promote freedom of emigration. Spe-
cifically at issue is whether MFN treatment should be continued in the
case of the Socialist Republic of Romania, the only communist country
to have been designated for such treatment under the Trade Act. The
President is not expected to exercise the authority with respect to any
other country during the next twelve months.
The President's request set in motion an elaborate timetable
of procedures by which Congress may terminate, affirmatively
vote to extend, or permit by inaction the extension of the authority
under which the President may waive the requirement of freedom of
emigration. The deadline for Congressional action is October 15, 1976.
After that date, if Congress takes no action, the waiver authority is
automatically extended until July 3, 1977. Tables presenting available
information on Romanian emigration appear on pages 4 and 5 of this
pamphlet.
U.S. trade with Romania has grown steadily in recent years, with
the exception of 1975 when economic recession caused a temporary
decline. (See table, page 6.) The U.S. has traditionally enjoyed a
substantial trade surplus with Romania, though there are signs the
U.S. advantage may be narrowing. Romania has been designated a
beneficiary developing country under the Generalized System of
Preferences, entitling certain of its exports to the U.S. to duty free
treatment.
Freedom of Emigration and the Trade Act
Subsections 402(a) and (b) of the Trade Act prohibit the granting
of MFN treatment, the extension of government credits, or the negotia-
tion of a commercial agreement with any non-market economy coun-
try not now receiving MFN, if such country:
(1) denies its citizens the right or opportunity to emigrate;
(2) imposes more than a nominal tax on emigration; or
(3) imposes more than a nominal charge on any citizen who
wants to emigrate to the country of his choice.
Section 402(c) (1) of the Trade Act authorizes the President to
waive the requirements of section 402 (a) and (b) until July 3, 1976,
for any communist country if he reports to the Congress that:
(1) he has determined that the waiver for that country would
substantially promote the objectives of freedom of emigration;
and
(1)









(2) he has received assurances that the emigration pract
of that country would henceforth lead substantially to the a
ment of the objectives of freedom of emigration.
The first period forrcon iaI review of the President's wai
authority has now begun. In recommending the extension for anol
12 months of MN treatment to Romania, the Presidenth &
mined that the continuation of his waiver authority pro
jective of freedom of emigration. (See appendix, page 7.) The Tr
Act establishes an elaborate timetable under which the en
the President's waiver authority can be reviewed. The Co
an opportunity between June 3 and July 3, 1976, to approved
sion of the waiver authority for one year by a concurrent uti
if that concurrent resolution had been defeated by bothIH
waiver authority and Romanian MFN treatment would have
on July 3. Such a concurrent resolution was not introduced ineil
House of Congress. During the period beginning July 3 and end
August 31, Congress may extend for one year the waiver autho
and MFN treatment for Romania by concurrent resolution. If b
Houses vote to defeat the concurrent resolution, IFN treatment
the waiver authority would be discontinued. If there has been neit
a positive nor a negative vote by both Houses on the concurrent r
lution by August 31, the Conress may veto the extension of
waiver authority by a one-House vote from September 1 until 0
ber 15, 1976. If neither House vetoes the extension of the waiver
MFN treatment for Romania during this period, the waiver wil
automatically extended through July 3, 1977.
Further extensions of the waiver authority may be recommend
by the President for successive 12-month periods. In such event, eil
House of Congress will have a 60-day period following the end of
previous extension (July 3) in which to veto the extension. If neit
House has vetoed the extension by the end of that period, it
be extended automatically until the following July 3.

Procedures for Review of the Waiver Provisions of Section
of the Trade Act
Beginning with the date of enactment of the Trade Act,.Januar
1975, the President was given authority to waive the requirement
section 402 until July 3, 1976, 18 months, for any country after rec
ing assurances that the emigration practices of that country will I
substantially to the achievement of the objectives of section 402.
Eighteen months after the date of enactment of the Act, the wai
authority may be renewed upon the adoption of a concurrent rest
tion extending the authority for one year. If an extension is desi:
a request shall be made by the President no later than 30 days pi
to expiration of the 18-month period, or June 3,1976.
In the event that the Congress has not voted on a resolution of
proval by the end of the 18-month period, the waiver authority
be extended for up to 60 days after the end of the 18-month per
September 1, 1976, to permit the Congress additional time to act on
concurrent resolution. If the vote on the resolution of approval f
in both Houses, the waiver authority expires.








In the event that Congress within 60 days after the expiration of
the 18-month period does not adopt or disapprove a concurrent reso-
lution on the issue of extending the authority, the authority will never-
theless continue in force unless either House of Congress (within 45
calendar days of the expiration of the 60-day period, October 15, 1976)
passes a simple resolution of disapproval of the continuation of the
waiver authority.
The waiver may be further extended by Executive Order at one-
year intervals upon a Presidential determination and report to Con-
gress that such extension will substantially promote the objectives of
Section 402, provided that neither House of Congress (within 60 cal-
endar days of the issuance of the Executive Order) adopts a resolution
of disapproval of the extension.
The statutory language permits the concurrent resolution or the
simple resolution of disapproval to exclude one or more countries
from the extensions of the waiver authority. Resolutions may be
amended to include or exclude any particular country.
Any extension of waiver authority will not apply to any country
which has been excluded in a concurrent resolution or in a resolution
of either House.
Key Dates Under the Waiver Provisions of Title IV
(Enactment of Trade Act on January 3, 1975)
January 3, 1975-July 3, 1976.-President may waive requirements
of section 402 (denying MFN and credits to any nonmarket country
which denies free emigration) upon a determination and a report to
Congress of assurances that the emigration practices of such country
will lead substantially to the achievement of the objectives of free
emigration.
June 3, 197.-President may request a 1-year extension of the
waiver by June 3 (30 days before expiration) if the Congress has not
defeated a resolution extending the waiver.
July 3-Sept. 1, 1976.-Waiver extended for 60 days if President
has so requested. Congress may extend waiver by concurrent resolution
(majority of both Houses). Waiver expires if concurrent resolution
vote fails.
Sept. 1-Oct. 15, 1976.-If there is no vote, President mav extend
waiver another 45 days. Congress may cut off MFN and credits to any
country by a simple majority of either House.
Thereafter, July 3-Sept. 1 of each year.-President may extend
waiver for one more year by Executive Order, provided he submits a
report on the progress of free emigration. Congress may rescind waiver
by majority vote of either House (resolution of disapproval). If Con-
gress does not vote resolution of disapproval in July or August, waiver
extends through the following June.

Emigration from Romania
The tables below present available information on emigration from
Romania:







.4


TABZ I Romaiian iimi a n to the United State8-Mo


1975:isudbi

February - - - - - - - - - - - - -
M arch . ....... ........................
A p ril __-. ....... .......................... ... . ...
May ----------------------------------------------------- -----




u n e --------------------------- -----------------------------
A ugust - - - - - - - - - - - - - -
September - - - - -- - - - - --- -- -- -- -
Otctob.er--------
November ---------


Dua ontal&7 -----------------------------------------

Grand ta ~
1976:
January -- - - - - - - - - - - - - -
February
Mayeeeeeeeeeeeeeeeeeeeeeeeeeeeeeeeeeeeeee ....-------

Apuneeeeeeeeeeeeeeeeeee----------------------------
JUIy ------------------------------------
July


Total for first 7 months of 1976.. ..---------------------------

Dual nationals-----------------------------------

Grand total for first 7 monts-............. .
*The Congress approved most-favored-nation treatment for Romania on July 28
NOTE.-Starting with December 1975, figures include immigrants handled und
Country Processing" arrangements, which were initiated during that month. 11
persons not eligible to receive U.S. immigration visas from Embassy
lack of immediate relatives in the United States) who travel to Rome for z
of their applications for admission to the United States as conditional entrants.
reason monthly statistics in this table do not correspond exactly with those in
Source: Department of State.

TABLE IT.-Statistcs on Rom anian emiqration to the United
since 1966-Immigration visas issued by Embassy ucka
fiscal year
IV's issued fiscal year 1965.. ..----------------------------------
IV's issued fiscal year 1966--------------------------------------
IV's issued fiscal year 1967 -------------------------------
IV's issued fiscal year 1968--.... ---------------......................
IV's issued fiscal year 1969 ......................
IV's issued fiscal year 197... ... .. .
IV's issued fiscal year 1971--------------------------------
IV's issued fiscal year 1972 ..................................
IV's issued fiscal year 1973.---------------------------------
IV's issuedfiscalyear1974 .-------------------------------..
IV's issued fiscal year 1975 -------------------------------
IV's issued calendar year 1975.. ..--------------------------------
Source: Department of State.







5

TABLE III.-Romarnian Jewish immigration to Israel--Monthly totas
Number of
1975: inmigrants
January2------------------------------------------------------6
February ------------------------------------------------------41
March --------------------------------------------------------102
April ------------------------------------------------------ 60
May-------------------------------------------------------
June -------------------------------------------------------
July*--------------------------------------------------------403
August ---------------------------------------------238
September2----------------------------------------------------62
October------------------------------------------------------350
November----------------------------------------------------130
December-----------------------------------------------------115

Total------------------------------------------------------2008

1976:
January--------------------------------------------328
February-------------------------------------------232
March -----------------------------------------------------
April-----------------------------------------------51
May---------------------------------------------------------143
June---------------------------------------------------------211
July7---------------------------------------------------------23

Total first 7 months of 1976----------------------------------1301

Annual totals for Romanian Jewish immigration to Israel
Number of
immigrants
1971 ------------------------------------------------------------1900
1972 ------------------------------------------------------------3000
1973 ------------------------------------------------------------4000
1974 ------------------------------------------------------------3700
1975* -----------------------------------------------------------2008
1976 (first 7 months)----------------------------------------------1301
*The Congress approved most-favored-nation treatment for Romania on July 28, 1975.
NoTL-Total first 7 months of 1975 equals 913.
Source: Department of State.

United States Trade With Romania

Trade between the United States and Romania increased substan-
tially during the past decade. Total trade between the countries was
valued at $8 million in 1965 and $80 million in 1970. Growth continued
during the seventies. In 1 974 U.S. exports to Romania were more than
double their 1973 level because of unusual, nonrecurring purchases
of new aircraft and grain. U.S. imports from Romania in 1975 were
more than 4 times their value in 1972. The balance of trade has been
in favor of the United States for each year of the past 10.
The following tables illustrate the level and content of United
States-Romanian trade in recent years:











UNITED STATES-ROMANIAN TRADE, 1972 TO MARCH 1976
IMillons of dollars)



1972 1973 1974 1975 1975

U.S. exports:
Manufctureddods. 18.5 31.7 108.6 56.9 18.70
Other 50.6 84.8 168.5 132.4 55.24
Ttl69.1 11&.5 277.1 189.3 739
U.S. general imports 34.7 61.4 143.8 146.5 19.9
Trade turnover--------------------103.8 177.9 420.9 335.8 9.8
U.S. trade at.n................ -34.4 55.1 133.3 42.850

Schedule B-5 through 8.
2 Imports arec.i.f. values.
Source: Department of Commerce.

U.S. IMPORTS FOR CONSUMPTION FROM ROMANIA, 1973 TO MARCH 1976
[In millions of dollars I]

Schedule 6 mo
A Commodity 1973 1974 1975 pre-MFN 2 p

0 Food and live animals. ..------------------ 7.70 11.15 9.64 4.63
1 Beverages and tobacco------------------.04 .19 .02 .01
2 Crude materials, inedible except fuels ...... .99 1.02 3. 58 1.15
3 Mineral fuels, lubricants and related
products. ..------------------------- 15.76 76.41 85.65 22.63
4 Animal and vegetable oils and fats
5 Chemicals. ..-------------------------- .54 3.64 2.00 1.61
6 Manufactured goods by chief materials .....- 7. 17 5.82 7.65 3. 3b
7 Machinery and transport equipment--------6.26 8.55 9.62 4. 13
8 Miscellaneous manufactured articles not
elsewhere classified.. ..----------------- 16.87 18.69 15.34 6.66
9 Items and trans N/class.----------------- .25 .35 1.55 .45


Total -----------------------------


55.58 125.82 135.06


44.61


I Imports are customs value.
2 4th quarter 1974 and 1st quarter 1975.
3 4th quarter 1975 and 1st quarter 1976.
Source: Department of Commerce.

UNITED STATES EXPORTS TO ROMANIA, 1973-75
[in millions of dollars|

Total Quarters I
Schedule
B Commodity 1973 1974 1975 1974

0 Food and live animals-----------------------38.20 93.35 75.60 45.63 -
1 Beverages and tobacco-----------------------------.13
2 Crude materials, inedible except fuels-------------. 59 69.16 37.90 6.94
3 Mineral fuels, lubricants, and related products.------5.89 5. 54 17.56 1.90
4 Animal and vegetable oils and fats---------------------------------------
5 Chemicals-----------------------------5.69 7.94 4.90 2.34
6 Manufactured goods by chief materials.------------ 4.95 10.72 58 3.64
7 MacHnery and transport equipment- -20.41 88.24 42.37 15.61
8 Miscellaneous manufactured articles, not elsewhere
classified. ......-----------------.------------ .63 1.65 3.76 .36
9 Items and trans N/class.........------------------ .14 .38 .60 .05
Total-----. -_ --------------------116.51 277. 14 189.28 76.47

Source: Department of Commerce.














Appendix


(From the Weekly Compilation of PresidentlDl Poc-nents,
June 7, 1976, Volume 12, No. 23, page 991.)

TRADE WITH ROMANA-THE PRESIDENT'S MESSAGE TO THE CONGnaESS
TRANSmITTING His RECOMMENDATION To EXTEND WAIVER AUThOR-
rrr GRANrT BY SECTION 402(c) (1) OF TIL TRADE ACT OF 1974;
JUNE 2, 1976
To the Congress of the United States:
In accordance with section 402(d) (1) of the Trade Act of 1974, I
transmit herewith my recommendation that the authority to waive
subsections (a) and (b) of section 402 be extended for a period of 12
months.
This recommendation sets forth the reasons for extending waiver
authority, and for my determination relating to continuation of the
waiver applicable to the Socialist Republic of Romania, as called for
by subsections (d) (1) (B) and (d) (1) (C) of section 402 of the Trade
Act. I include, as part of this recommendation, my determination that
extension of the waiver authority, and continuation of the waiver ap-
plicable to the Socialist Republic of Romania, will substantially pro-
mote the objectives of section 402.
GERALD R. FORD.
THE W TE HousE, June 2,1976.


RECOMMENDATIONS FOR EXTENSION OF WAIVER AUTHORITY
Pursuant to section 40(d) (1) of the Trade Act of 1974, I have today deter-
mined that extension of the waiver authority granted by section 402 (c)(1) of
the Trade Act of 1974, and continuation of the waiver extended by Executive
Order 11854 of April 24, 1975 currently applicable to the Socialist Republic of
Romania pursuant to section 402(c) (1) of the Trade Act of 1974, will substan-
tially promote the objectives of section 402 of the Trade Act of 1974.
Extension of the waiver authority conferred by section 402 (c) (1) of the Trade
Act of 1974 is desirable because it would permit the continuation in effect of the
US-Romanian Trade Agreement, which I believe to be in the national interest.
I am convinced that the continuation of the US-Romanian Trade Agreement
will serve to promote mutually beneficial growth in two-way trade between the
United States and Romania. This agreement has marked a major step forward
in our economic relations with Romania. It places our bilateral trade on a basis
beneficial to economic growth in both countries. Further, it brings our commer-
cial relations into accord with our very satisfactory political ties.
Continued good US-Romanian relations, both political and commercial, serve
the foreign policy interests of both countries. The dominant theme of Romania's
foreign policy is the desire to maintain a high degree of independence. More than
any other Warsaw Pact country, Romania has pursued friendly relations with
countries of differing political and economic systems-with the United States,
the People's Republic of China, the developing world, and with Israel a well as
Arab countries. Romania participates actively in a number of international or-
ganizations. It is the only COMECON country which is a member of the IMF
and the World Bank. Romania has acceded to the GA'IT. It leads the COMECON
countries in the proportion of its trade with the West.
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8

We desire to encourage Romanla's independent policy orientation thi
expansion and improvement of bilateral relations. I am convinced that
tion of the Trade Agreement with Romania is essential to this end.
I believe that continuation of the waiver applicable to the
of Romania will substantially promote the objectives of section 40 of t
Act of 1974. Since the implementation of the Trade Agreement with
the flow of emigration from that country to the United States and Israi
creased markedly. Nearly twice as many persons left Romania with R
approval for the United States in the ten-month period between July 1,
April 30, 1976 than left in any preceding twelve-month period in the
decades.
Emigration from Romania to Israel also increased following the imp
tion of the Trade Agreement with Romania. While emigration
United States and Israel are subject to fluctuation on a monthly I
fident that the generally positive and encouraging overall trend in en
from Romania will continue.
I therefore recommend to the Congress pursuant to subsection 402(
the Trade Act of 1974 that the waiver authority granted by subsection (
section 402 of the Trade Act of 1974 be extended for a period of twelve
TRADE WITH ROM'AIA-PRFDTNTIAL DETERMINATION No.
JUNE 2, 1976

MEMORANDUM FOR THE SECRETARY OPSTATE

Subject: Determination under section 402(d) (1) of the Tra
of 1974.
Pursuant to the authority vested in me by the Trade Act
(Public Law 93-618, January 3,1975; 88 Stat. 1978; hereinaftei
the Act), I hereby determine, pursuant to section 402(d) (1)
Act, that the extension of the waiver authority panted by
tion (c) (1) of section 402 of the Act will substantially prom
objectives of section 402 of the Act. I further determine, p
subsection (d) (1) (C) of section 402 of the Act, that continua
the waiver applicable to the Socialist Republic of Romania w
stantially promote the objectives of section 402.
This determination shall be published in the Federal
GERLDR. I







UNIVERSITY OF FLORIDA


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