-Factfinding and arbitral procedures must be promoted as means for settling investment disputes. The World Bank's International Center for the Settlement of Investment Disputes and other third-party facilities should be employed to settle the important disputes which inevitably arise.

-Laws against restrictive business practices must be developed, better coordinated among countries, and enforced. The United States has long been vigilant against such abuses in domestic trade, mergers, or licensing of technology. We stand by the same principles internationally. We condemn restrictive practices in setting prices or restraining supplies, whether by private or state-owned transnational enterprises or by the collusion of national governments.

-Insurance for foreign private investors should to the extent possible be multilateralized and should include financial participation by developing countries to reflect our mutual stake in encouraging foreign investment in the service of development.

-And there must be more effective bilateral consultation among governments to identify and resolve investment disputes before they become irritants in political relations.

For the full text of Secretary Kissinger's address to the Seventh Special Session of the U.N. General Assembly on Sept. 1, 1975, see Dept. of State Bulletin, Vol. LXXIII, No. 1891, Sept. 22, 1975, pp. 425-441; Report by Congressional Advisers to the Seventh Special Session of the U.N., Joint Committee Print, Oct. 13, 1975, pp. 35-61.

On November 12, 1975, the U.S. Senate by unanimous consent of 93 yeas agreed to S. Res. 265, "to protect the ability of the United States to trade abroad." The resolution stated the sense of the Senate that the Special Representative for Trade Negotiations and other designated government officials should initiate negotiations, within the framework of multilateral trade negotiations in Geneva and in other trade negotiations and international forums, to develop a code of conduct in international trading, with procedures for settlement of disputes.

The text of the resolution follows:

S. Res. 265

To protect the ability of the United States to trade abroad.

Whereas recent statements of American corporations before the Congress and recent disclosures of the Securities and Exchange Commission have revealed that policies and practices in foreign nations necessitate the use of special and unusual payments through middlemen, and the use of direct and indirect payments to foreign government officials, to compete reasonably and effectively in those markets;

Whereas public disclosure by American corporations and by the Securities and Exchange Commission have revealed direct and indirect involvements by the governments of other nations in unreasonably and unjustifiably restricting and limiting trade and commerce with its agencies and offices by requiring or inducing political contributions to compete reasonably and effectively in those markets;

Whereas the practices of bribery, indirect payments, kickbacks, unethical

political contributions, and other such similar disreputable activities have been found to be widespread internationally and are a significant influence on the conduct of trade and commerce, and may otherwise continue on the part of other governments and business enterprises in other nations, which would give rise to unfair, unjust, and unreasonable conditions of competition in world trade and commerce;

Whereas it is the intent of Congress that American companies be able to compete fairly without participating or being required, coerced, or otherwise induced to participate in such improper practices;

Whereas the Trade Act of 1974 stipulates that the overall objective of the United States in negotiating trade agreements is to obtain more open and equitable market access and the harmonization, reduction, or elimination of devices which distort trade or commerce and stipulates as a major purpose of that Act that trade agreements should assure substantially equivalent competitive opportunities for United States commerce, and provides the President with appropriate negotiating powers toward these ends;

Whereas section 301 of the Trade Act of 1974 requires that "Whenever the President determines that a foreign country or instrumentality . . . (2) engages in discriminatory or other acts or policies which are unjustifiable or unreasonable and which burden or restrict United States commerce, President shall take all appropriate and feasible steps within his power to obtain the elimination of such restrictions or subsidies . . . "; and

the

Whereas the Trade Act of 1974 provides that the Committee on Finance shall provide oversight and that the chairman of the Committee on Finance shall appoint congressional delegates to serve as official advisors to conferences, meetings, and negotiating sessions relating to agreements pursuant to the Trade Act of 1974: Now, therefore, be it

Resolved, That the Special Representative for Trade Negotiations, the United States Representative to the United Nations, and appropriate officials of the Departments of State, Commerce, the Treasury, Defense, Agriculture, and Justice, in consultation with the chairman of the Committee on Finance and the congressional delegates for trade agreements initiate at once negotiations within the framework of the current multilateral trade negotiations in Geneva, in other negotiations of trade agreements pursuant to the Trade Act of 1974, and in other appropriate international forums with the intent of developing an appropriate code of conduct and specific trading obligations among governments, together with suitable procedures for the settlement of disputes, which would result in elimination of such practices on an international, multilateral basis, including suitable sanctions to cope with problems posed by nonparticipating nations, such codes and written obligations to become part of the international system of rules and obligations within the framework of the General Agreement on Tariffs and Trade, and other appropriate international trade agreements pursuant to the provisions and intent of the Trade Act of 1974.

SEC. 2. It is the sense of the Senate that the President should include, in the annual reports to the Congress required under section 163 of the Trade Act of 1974, reports on progress made in negotiations with respect to the development and implementation of the international code of conduct referred to in this resolution.

Cong. Rec., Vol. 121, No. 168, Nov. 12, 1975, pp. S19812-19813 (daily ed.).

On December 4, 1975, the United States joined in the consensus approval, by Committee II of the U.N. General Assembly, of a draft resolution on measures against corrupt practices of transnational and other corporations, their intermediaries, and others involved. Ambassador Jacob M. Myerson, U.S. Representative in the Committee, stated that his delegation regarded it as an example of dealing constructively with the issue. He added the following U.S. understanding of the text:

we all agree on the condemnation of corrupt practices,

including bribery. The blame for such acts must be shared equally by all who participate. Thus, we interpret the reference to bribery wherever it appears in the text to cover all aspects— the offering, the payment, the solicitation, the acceptance of illegal payments.

we believe that states have not only the right but also the responsibility to enact legislation against corrupt practices and to enforce such measures through legal action. It is important that such legislation clearly define the offenses and establish specific, measured penalties appropriate to particular offenses-and that offenders should be prosecuted through the courts on the basis of evidence and due process of law. The United States will cooperate with legitimate law enforcement activities of host governments, but we will oppose arbitrary acts of economic reprisal on the basis of uncorroborated charges.

-The question of the appropriate role of home governments in cooperating with host governments to eradicate corrupt practices is a complex one. For example, we have strong reservations about the feasibility or propriety of home countries enacting extraterritorial legislation to deal with this problem. As is suggested in the resolution, we . . . believe that this is an area for cooperative action between governments and pledge our support to such efforts. We also believe that these issues need to be carefully examined in the United Nations Commission on Transnational Corporations. In this forum, as elsewhere, the United States will work for a constructive and effective solution to these problems.

-... my delegation fully supports the concept of information exchange in particular cases within the context of established legal procedures. We do have doubts, however, about the efficacy and appropriateness of a blanket multilateral approach to information exchange.

Press Release USUN-172(75), Dec. 4, 1975. On Dec. 15, 1975, the U.N. General Assembly adopted without vote Res. 3514 (XXX) as recommended by Committee II, the operative paragraphs of which state:

1. Condemns all corrupt practices, including bribery, by transnational and other corporations, their intermediaries and others involved in violation of the laws and regulations of the host countries;

2. Reaffirms the right of any state to adopt legislation and to investigate and take appropriate legal action, in accordance with its national laws and regulations, against transnational and other corporations, their intermediaries and others involved for such corrupt practices;

3. Calls upon both home and host governments to take, within their respective national jurisdictions, all necessary measures which they deem appropriate, including legislative measures, to prevent such corrupt practices and to take consequent measures against the violators;

4. Calls upon governments to collect information on such corrupt practices, as well as on measures taken against such practices, and to exchange information bilaterally and, as appropriate, multilaterally, particularly through the United Nations Center on Transnational Corporations;

5. Calls upon home governments to cooperate with governments of the host countries to prevent such corrupt practices, including bribery, and to prosecute, within their national jurisdictions, those who engage in such acts;

6. Requests the Economic and Social Council to direct the Commission on Transnational Corporations to include in its program of work the question of

corrupt practices of transnational corporations and to make recommendations on ways and means whereby such corrupt practices can be effectively prevented;

7. Requests the Secretary-General to submit a report to the General Assembly at its thirty-first session, through the Economic and Social Council, on the implementation of the present resolution.

On November 28, 1975, Secretary of State Kissinger, in a letter to Attorney General Edward H. Levi, requested that the Attorney General exercise his authority under Section 516 of Title 28 of the United States Code to file a suggestion of interest of the United States in the case of Securities and Exchange Commission v. Lockheed Aircraft Corporation et al., Misc. No. 75-0189. The case, which was pending before Judge John H. Pratt, U.S. District Court for the District of Columbia, concerned the effort of the Securities and Exchange Commission (SEC) to enforce a subpoena and subpoena duces tecum of June 19, 1975, against the Lockheed Corporation. The subpoenas were for testimony and the production of documents in connection with an investigation of allegedly improper activities by Lockheed, including unreported payments to foreign officials. Lockheed had filed a cross-motion and proposed an order which would require the company to comply with the subpoenas, with provision, however, for protection from public disclosure of the names and nationalities of certain foreign persons identified in the documents or in future depositions. Secretary Kissinger's letter stated, in part:

the making of any such payments and their disclosure can have grave consequences for significant foreign relations interests of the United States abroad. We reiterate our strong condemnation of any such payments, but we must note that premature disclosure to third parties of certain of the names and nationalities of foreign officials at this preliminary stage of the proceedings in the present case would cause damage to United States foreign relations. We wish to emphasize that our expression of interest pertains only to a very small number of documents. We would be pleased, should Judge Pratt so desire, to have representatives of the Department meet with him and counsel for the parties in camera, and discuss the precise limits of the Department's area of concern.

The Department has stated and reaffirms its resolve not to shield American firms which have made such payments from legitimate law enforcement actions by responsible authorities of either the host country or the United States. Our interest in having certain documents in this case protected grows simply out of our desire that documents which contain uncorroborated, sensational and potentially damaging information not be made public as long as that is not necessary for purposes of effective law enforcement. The Department of State wishes to make clear

that it requests protection for the foreign policy interests of the United States only to the extent that this can be accomplished without impeding investigation and enforcement actions by authorized agencies of the United States. In this case, the Department of State respectfully defers to the judgment of the Court as to whether a protective order can be fashioned which will prevent premature disclosure to third parties of the names and nationalities of certain foreign officials without impeding access to the information in question by appropriate law enforcement bodies.

On December 11, 1975, the Department of Justice, pursuant to 28 U.S.C. 517, filed the suggestion of interest. Judge Pratt issued a memorandum and order on December 17, 1975, requiring Lockheed to appear, testify and produce records concerning the matter under investigation. He noted the suggestion of interest and ordered that (1) the documents produced remain subject to the continuing jurisdiction of the Court, and (2) the SEC not produce any documents or information provided by Lockheed to any third party except a grand jury until it had given 10 days' notice to Lockheed and any interested Government agencies to apply to the Court for the relief to which they might be entitled. The order contained a proviso protecting the ability of the SEC to utilize the documents or information in investigative proceedings, to refer them to law enforcement agencies subject to the Court's jurisdiction and order, and to initiate, prosecute, or respond to a Justice Department request in certain civil actions or proceedings arising out of the investigation, as the SEC deemed appropriate. The order also provided for the SEC to take such additional steps as it deemed appropriate to maintain the confidentiality of the documents.

Foreign Investment

Reporting Requirements

The reporting requirements of Part 803, Chapter VIII, Title 15 of the Code of Federal Regulations were amended by notice dated May 16, 1975, to include certain foreign business enterprises owned by U.S. persons and U.S. business enterprises owned by foreign persons where the parent's investment is less than $2,000,000 on January 1 of any calendar year, but subsequently exceeds that amount. The regulations as amended also changed the level of ownership at which a U.S. company is considered foreign-owned, and therefore required to report, from 25 percent to 10 percent. The changes, which were made at the instance of the