and isotopes in entomology. U.S. participation in these activities was extensive. Especially to be noted, however, is a U.S. initiative which culminated in the adoption by the Board of Governors in June 1963 of a resolution reserving IAEA fellowships for students from less developed countries.

Financial problems, particularly with respect to technical assistance activities, continued during 1963 to hamper IAEA operations. The U.S. Representative in his speech to the General Conference in September said: "The problem of financing the Agency's activities

is in many respects the most important matter before this Conference and one on which our decision will be the most far-reaching in its effect. The Board of Governors in June approved a United States resolution which recommends to the Conference the adoption of a Statutory amendment to place the budget on an assessed basis. Adopting an assessed budget is the only way to achieve the results of long-term planning and to fulfill the Agency's responsibilities in the fields of technical assistance and training. By now we all recognize that appeals for voluntary contributions have not produced the necessary revenues." Comments on financial problems in other speeches and in general discussion revealed that there was general recognition of the many difficulties and handicaps resulting from the use of voluntary contributions as a source of financing, but that there were still many doubts and questions concerning the precise methods of placing the IAEA budget on a fully assessed basis. Accordingly, the United States introduced and the General Conference approved a resolution whereby action to amend the financial provisions of the IAEA Statute was deferred until after the matter could be further studied by member states and the IAEA Board of Governors.

For the year 1964, the General Conference appropriated $7,444,500 for the administrative expenses of the IAEA; allocated $2,340,000 for the operational program; and decided that, for the financing of the operational program, the target for voluntary contributions to the General Fund should be $2 million. The U.S. scale of assessment for administrative expenses was fixed at 31.93 percent. In response to the appeal for contributions to the General Fund to finance the operational program, the United States pledged up to $750,000 of which amount $500,000 would be an outright gift and the remaining $250,000 would be used to match unrestricted dollar contributions by others after the $1 million mark had been reached.

On January 31, 1963, there entered into force an IAEA statutory amendment increasing the Board of Governors from 23 to 25 members. Practical effect could not be given to this amendment until after the designation of certain states for membership by the Board of Governors at its June 1963 meeting and the election of certain other members by the General Conference in September. Consequently, the first meeting of the new and enlarged Board was held on October 2, 1963. Its members were Afghanistan, Argentina, Australia, Brazil, Canada, China, Congo (Léopoldville), Czechoslovakia, France, India,

Indonesia, Iran, Italy, Japan, Mexico, Morocco, Norway, Portugal, Rumania, South Africa, Switzerland, Ú.S.S.R., the United Kingdom, the United States, and Uruguay.

Part XI

FOREIGN ECONOMIC POLICY-TRADE AND

TARIFFS

XI-1

REVIEW OF THE ECONOMIC POSITION OF THE UNITED STATES: Economic Report of the President (Kennedy) to the Congress, Transmitted January 21, 1963 1

1

A. Measures Taken To Redress the United States Unfavorable International Balance of Payments Situation

XI-2

EXTENSION OF THE ONE HUNDRED DOLLAR DUTY-FREE ALLOWANCE CEILING FOR RETURNING UNITED STATES RESIDENTS UNTIL JULY 1, 1965: Public Law 88-53, Approved June 29, 1963 2

XI-3

PROPOSAL FOR UNITED STATES GOVERNMENT USE OF CERTAIN ADMINISTRATIVELY RESTRICTED FOREIGN CURRENCIES TO IMPROVE THE BALANCE OF PAYMENTS: Announcement Issued by the White House, July 8, 1963 3

1H. Doc. 28, 88th Cong.

'H.R. 6791, 88th Cong.; 77 Stat. 73. See H. Rept. 371, 88th Cong., June 7, 1963; S. Rept. 305, 88th Cong., June 25, 1963; and H. Rept. 472, 88th Cong., June 26, 1963 (the conference report). For the establishment of the one hundred dollar dutyfree allowance ceiling, see American Foreign Policy: Current Documents, 1961, p. 1232.

'White House press release dated July 8, 1963; the Department of State Bul letin, Aug. 5, 1963, p. 204. This proposal for legislation was transmitted by a communication of July 8, 1963, from President Kennedy to the Speaker of the House of Representatives (McCormack) (H. Doc. 134, 88th Cong.). See footnote 23 to doc. XI-4, infra.

XI-4

PROGRAM FOR IMPROVING THE UNITED STATES BALANCE OF PAYMENTS SITUATION: Message From the President (Kennedy) to the Congress, July 18, 1963 *

To the Congress of the United States:

Soon after my inauguration, I reported to the Congress on the problems presented to this Nation by 3 successive years, beginning in the late 1950's, of mounting balance of payments deficits accompanied by large gold outflows; and I announced a program designed to restore both confidence in the dollar and eventual equilibrium in our international accounts. The challenge posed by those pressures was heightened at that time by the need to halt and reverse the spread of unemployment and revive our faltering economy. Rejecting a choice between two equally unpalatable alternatives-improved employment at home at the cost of a weaker dollar abroad or a stronger dollar at the cost of a weaker economy and Nation-we sought a new course that would simultaneously increase our growth at home, reduce unemployment, and strengthen the dollar by eliminating the deficit in our international payments. It is appropriate now-nearly 21⁄2 years later—to look back on the problems faced, to review the progress made and to chart the course ahead.

There is much from which to take heart. Our economy has resumed its growth and unemployment has been reduced. The dollar remains strong, bulwarked by nearly 40 percent of the free world's monetary gold stock as well as by a newly constructed network of bilateral and multilateral financial arrangements. Our gold outflow has been halved. There are signs of longer run improvement in our world competitive position, as our prices and costs hold steady while others are rising. The deficit in our balance of payments has been reduced-from $3.9 billion in 1960 to $2.4 billion in 1961 and $2.2 billion in 1962.

6

Our basic strength, moreover, is vast, real, and enduring. Our payments deficits, measured in terms of our loss of gold and the increase in our short-term liquid liabilities to foreigners, have consistently been equaled or exceeded by the growth of our long-term, high-yielding foreign assets-assets which have been and will continue to be an increasing source of strength to our balance of payments. Today, Americans hold more than $60 billion of private investments abroad, and dollar loans repayable to the U.S. Government total over $11 billion. At the end of 1962, all of these assets exceeded our liabilities to foreigners by an estimated $27 billion. And they have shown an

'H. Doc. 141, 88th Cong. (text as printed in the Department of State Bulletin, Aug. 12, 1963, pp. 250-259).

See American Foreign Policy: Current Documents, 1961, pp. 1220–1230. 0 See ibid., p. 1233.

'See post, doc. XI-15.

increasing strength over the years: our total income from these sources in 1959 was $3 billion; in 1962 it had risen to $4.3 billion; and we expect further substantial increases in the coming years.

These are all signs of progress. But unemployment is still too high; our growth rate is still too low; and it is now clear that, despite the favorable forces at work over the long run, more remains to be done today to eliminate the continuing payments deficit.

A significant portion of our progress so far has been due to special agreements with friendly foreign countries-for debt prepayments, advance payments for military equipment, and U.S. borrowings abroad. While similar arrangements may once again prove capable of covering a substantial amount of the gross deficit in 1963, such special transactions cannot be relied upon for the indefinite future. Moreover, while our commercial trade balance and Government expenditures overseas have shown modest improvement, capital outflows, both short term and long term, have increased.

Although there is urgent need for further effort I want to make it clear that, in solving its international payments problem, this Nation will continue to adhere to its historic advocacy of freer trade and capital movements, and that it will continue to honor its obligation to carry a fair share of the defense and development of the free world. At the same time, we shall continue policies designed to reduce unemployment and stimulate growth here at home for the well-being of all free peoples is inextricably entwined with the progress achieved by our own people. I want to make it equally clear that this Nation will maintain the dollar as good as gold, freely interchangeable with gold at $35 an ounce, the foundation stone of the free world's trade and payments system.

But continued confidence at home and cooperation abroad require further administrative and legislative inroads into the hard core of our continuing payments deficit, augmenting our long-range efforts to improve our economic performance over a period of years in order to achieve both external balance and internal expansion, stepping up our shorter run efforts to reduce our balance of payments deficits while the long-range forces are at work and adding to our stockpile of arrangements designed to finance our deficits during our return to equilibrium in a way that assures the continued smooth functioning of the world's monetary and trade systems.

Before turning to the specific measures required in the latter two categories, I must emphasize once again the necessity of improving this Nation's overall long-range economic performance-including increased investment and modernization for greater productivity and profits, continued cost and price stability, and full employment and faster growth. This is the key to improving our international competitiveness, increasing our trade surpluses, and reducing our capital outflows.

See American Foreign Policy: Current Documents, 1961, pp. 472-475 and p. 1319.