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orderly and mutually beneficial trade relationship with the Soviet Union as an important element in the overall improvement of relations."
Article 1 of the 1972 trade agreement called upon each government to accord mutual most-favored-nation treatment for imports of the other country. On the U.S. side this commitment necessitated congressional authorization. Such authorization was granted in the Trade Act of 1974, but subject to the freedom-ofemigration requirements of the Act which were in turn subject to waiver under Section 402. The President is permitted to waive the freedom-of-emigration requirements for any country if he reports to Congress that he has determined that such waiver would promote the objectives of freer emigration, and that he has received assurances that the emigration practices of such country will lead substantially to free emigration.
At the news conference on January 14 Secretary Kissinger read the following “agreed statement" of which he said the Soviet Government was aware:
Since the President signed the Trade Act on January 3, we have been in touch with the Soviet Government concerning the steps necessary to bring the 1972 U.S. Soviet Trade Agreement into force.
Article 9 of that Agreement provides for an exchange of written notices of acceptance, following which the Agreement, including reciprocal extension of nondiscriminatory tariff treatment (MFN) would enter into force. In accordance with the recently enacted Trade Act, prior to this exchange of written notices, the President would transmit to the Congress a number of documents, including the 1972 Agreement, the proposed written notices, a formal proclamation extending MFN to the U.S.S.R. and a statement of reasons for the 1972 agreement. Either House of Congress would then have had ninety legislative days to veto the Agreement.
In addition to these procedures, the President would also take certain steps, pursuant to the Trade Act, to waive the applicability of the Jackson-Vanik amendment. These steps would include a report to the Congress stating that the waiver will substantially promote the objectives of the amendment and that the President has received assurances that the emigration practices of the U.S.S.R. will henceforth lead substantially to the achievement of the objectives of the amendment.
It was our intention to include in the required exchange of written notices with the Soviet Government language, required by the provisions of the Trade Act, that would have made clear that the duration of three years referred to in the 1972 Trade Agreement with the U.S.S.R. was subject to continued legal authority to carry out our obligations. This caveat was necessitated by the fact that the waiver of the Jackson-Vanik amendment would be applicable only for an initial period of 18 months, with provision for renewal thereafter.
The Soviet Government has now informed us that it cannot accept a trading relationship based on the legislation recently enacted in this country. It considers this legislation as contravening both the 1972 Trade Agreement which had called for an unconditional elimination of discriminatory trade restrictions, and the principle of noninterference in domestic affairs. The Soviet Government states that it does not intend to accept a trade status that is discriminatory and subject to political conditions and, accordingly, that it will not put into force the 1972 Trade Agreement.
Finally, the Soviet Government informed us that if statements were made by the United States, in the terms required by the Trade Act, concerning assurances by the Soviet Government regarding matters it considers within its domestic jurisdiction, such statements would be repudiated by the Soviet Government.
In view of these developments, we have concluded that the 1972 Trade Agreement cannot be brought into force at this time and that the President will therefore not take the steps required for this purpose by the Trade Act. The President does not plan at this time to exercise the waiver authority.
The Administration regrets this turn of events. It has regarded and continues to regard an orderly and mutually beneficial trade relationship with the Soviet Union as an important element in the overall improvement of relations. It will, of course, continue to pursue all available avenues for such an improvement, including efforts to obtain legislation that will permit normal trading relationships.
Dependent upon the granting of most-favored-nation treatment to the Soviets were (1) the granting of Export-Import Bank credits in accordance with Sections 409 and 613 of the Act, the latter setting a $300,000,000 limit on such credits to the Soviet Union, and (2) Soviet payments on lend-lease debts under the Agreement between the United States and the Soviet Union regarding Settlement of Lend-Lease, Reciprocal Aid and Claims, signed at Washington on October 18, 1972 (TIAS 7478; 23 UST 2910; entered into force October 18, 1972).
At the White House signing ceremony for the Trade Act of 1974 on January 3, 1975, President Gerald R. Ford had noted:
This is an important part of our commercial and overall relations with Communist countries. Many of the Act's provisions in this area are very complex and may well prove difficult to implement. I will, of course, abide by the terms of the Act, but I must express my reservations about the wisdom of legislative language that can only be seen as objectionable and discriminatory by other sovereign nations.
For the full text of the "agreed statement” and related remarks by Secretary Kissinger, see Dept. of State Bulletin, Vol. LXXII, No. 1858, Feb. 3, 1975, pp. 139– 143. For remarks of President Ford at the Trade Act signing, see White House Press Release, Jan. 3, 1975.
For the text of the 1972 trade agreement, see Dept. of State Bulletin, Vol. LXVII, No. 1743, Nov. 20, 1972, pp. 595-603. Art. 1 of the agreement may also be found in the 1973 Digest, Ch. 3, § 6, pp. 134-135. For a discussion concerning the emigration policy of the Soviet Union, the Kissinger-Jackson assurances on the subject, and the freedom-of-emigration sections of the Trade Act of 1974, see the 1974 Digest, Ch. 3, 8 6, pp. 140–145.
The United States and the Soviet Union, on October 20, 1975, signed a five-year agreement on the supply of U.S. grain to the Soviet Union (TIAS 8206; 26 UST; entered into force October 20, 1975). It provides for purchase by the Soviet Union of six to eight million tons of U.S. grain yearly, commencing October 1, 1976, and running to September 30, 1981. The terms of the Agreement include the following:
(1) A commitment by the Soviet Union to purchase from private commercial sources a minimum quantity of six million metric tons of U.S. wheat and corn, in approximately equal proportions, each year for five years.
(2) An option for the Soviet Union to purchase, without consultations with the U.S. Government, an additional two million metric tons of wheat and corn each year if the U.S. Department of Agriculture estimates the total supply of U.S. wheat and feed grains for the year is 225 million metric tons or more.
(3) A commitment by the United States to facilitate Soviet purchases and not to exercise any discretionary authority available under U.S. law (50 U.S.C. app. 2403(b)) to control exports of wheat and corn purchased under the Agreement.
(4) A consultative procedure whereby the Soviet Union can purchase more than the eight million tons of U.S. wheat and corn a year after consultations and agreement between the two governments.
(5) A commitment by the Soviet Union to endeavor to space purchases and shipments of U.S. wheat and corn evenly throughout the year, and to assure, except as may be otherwise agreed, that the grains are supplied for consumption in the Soviet Union.
(6) A U.S. right to reduce Soviet purchases of U.S. wheat and corn below six million tons in a year when the United States has a total supply of wheat and feed grains of less than 225 million metric tons.
(7) Purchases of U.S. wheat and corn to be made at prevailing market prices and on normal commercial terms.
(8) Semiannual consultations between the two governments on matters related to the Agreement.
(9) Shipments of wheat and corn under the Agreement to be in accord with the provisions of the U.S.-Soviet Agreement on Maritime Matters in force during the period of the shipment.
Under Annex III of the U.S.-U.S.S.R. Agreement Regarding Certain Maritime Matters, dated Oct. 14, 1972 (TIAS 7513; 23 UST 3573; entered into force Nov. 22, 1972), representatives of the two governments on Sept. 17, 1975, signed a memorandum concerning bulk cargo rates and charter party terms. The terms of the memorandum included:
-A minimum U.S. Gulf/Soviet Black Sea grain freight rate of $16.00 through December 31, 1976, a rate in excess of the then current market price.
-An index system for determining monthly grain freight rates with a Black Sea freight rate in relation to the index trade (Gulf/Belgium-Holland).
-A credit/debit system which in a low market provides for the payment by the Soviets of a freight rate which is higher than the market rate and sufficient to allow a significant number of U.S.-flag vessels to participate in the trade; and in a strong market provides for an offset. When the credit is eliminated, the rates received by U.S.-flag carriers were to be determined under the new index system.
-A higher minimum demurrage rate for U.S.-flag vessels,
Dept. of State File L/T. See also Fact Sheet issued by the White House Oct. 20, 1975. Dept. of State Bulletin, Vol. LXXIII, No. 1898, Nov. 10, 1975, pp. 662-664.
A new U.S.-U.S.S.R. Maritime agreement was signed on Dec. 29, 1975 (TIAS 8195; 26 UST). See post, Ch. 10,8 9, p. 678.
On October 28, 1975, Monroe Leigh, Legal Adviser of the Department of State, sent a memorandum on the legal status and effect of the U.S.-Soviet grain agreement to the House of Representatives Committee on International Relations. Excerpts from his memorandum follow:
. . No congressional action is required to bring the agreement into force, and no legislation is necessary to implement its provisions.
The agreement does not modify any laws of the United States, and it does not commit the Congress to enact or to refrain from enacting any law. While the agreement does create internationally binding legal obligations, it does not establish any obligation enforceable against any person under the domestic law of the United States. Thus, the executive branch would not be authorized on the basis of the agreement to take any legal action relating to the grain trade.
Moreover, the agreement does not require that the United States Government take any action-by legal process or otherwise—to restrict the export of grain. The agreement does not purport to establish any ceiling on U.S. grain exports to the Soviet Union and does not require the United States Government to interfere with the grain trade, even in times of short supply. If the Soviet Union should need more than eight million metric tons of United States wheat and corn, the United States Government has the same options it had before the agreement. What the agreement provides is assurance that the Soviet Union will not make massive purchases without the knowledge and consent of the United States Government. It does establish between the U.S.S.R. and the United States specific agreement that the United States has a right in international law to restrain the export of grain from the United States to the Soviet Union, if those exports exceed the stated tonnage and if the President should desire to exercise existing statutory authority to restrict exports. Legal Authority to Negotiate and Conclude the Agreement
The President's authority to negotiate and conclude the grain agreement is based upon Article II of the Constitution. However, the agreement is consistent with the statutes of the United States, including the Export Administration Act of 1969, as amended, and it carries out the policy of the Agricultural Marketing Act of 1946 to develop markets for American agricultural products abroad "with a view to making it possible for the full production of American farms to be disposed of usefully, economically, profitably, and in an orderly manner.” (7 U.S.C. 1621).
There is no question that the President has the authority to negotiate with foreign governments and to conclude appropriate agreements with them. This authority is derived from the stated and implied powers of the President to conduct the foreign relations of the United States. As the Supreme Court has stated, under our constitutional system the power to negotiate with foreign governments is entrusted solely to the President. He is the "sole organ of the Federal Government in the field of international relations." United States v. Curtiss-Wright Export Corp., 299 U.S. 304, 319 (1936). The Courts have consistently upheld the validity of international agreements other than treaties based on the President's constitutional responsibility for the conduct of foreign relations.
In negotiating the grain agreement with the Soviet Union, the President was acting in exercise of his constitutional responsibilities for the conduct of the foreign relations of the United States, consistent with the statutes of the United States. While the Congress has the constitutional responsibility for the regulation of foreign commerce (Article 1, Section 8, Clause 3), the Supreme Court has recognized that the President “possesses in his own right, certain powers" bearing upon foreign commerce "conferred by the Constitution on him as Commander in Chief and as the Nation's organ in foreign affairs.” Chicago and Southern Airlines, Inc, v. Waterman Steamship Corp., 333 U.S. 103, at 109 (1948). In the absence of congressional preemption, the President may properly conclude international agreements affecting foreign commerce on the basis of his constitutional powers. See Consumers Union of U.S., Inc. v. Kissinger, 506 F.21 136 (D.C.