The Consul at Shanghai (Meyer) to the Secretary of State
[Received August 13—2:05 a.m.]
1956. Par 6. Following draft proposed for text of relief agreement with China excluding preamble and articles IV through VIII and X which it is assumed will be same as in agreement with other countries. (See Deptel 776, June 25 to Nanking,62 repeated Shanghai as 1061.)
[“]Article I. Furnishing of supplies.
- The program of assistance to be furnished shall consist of such types and quantities of supplies, and procurement, storage, transportation and shipping services related thereto, as may be determined from time to time by the U. S. Government after consultation with the Chinese Government in accordance with Public Law 84, 80th Congress, May 31, 1947, and any acts amendatory or supplementary thereto. Such supplies shall be confined to certain basic essentials [Page 1335] of life, namely, food, medical supplies, processed and unprocessed material for clothing, fertilizers, pesticides, fuel, and seeds.
- Subject to the provisions of article III the United States Government will make no request, and will have no claim, for payment for United States relief supplies and services furnished under this agreement.
- The United States Government agencies will provide for the procurement, storage, transportation, shipment (unloading and warehousing at ports of reception in China of United States relief supplies) except to the extent that the United States Government may authorize other means for the performance of these services in accordance with the procedures stipulated by the United States Government. All United States relief supplies shall be procured in the United States except when specific approval for procurement outside the United States is given by the U. S. Government.
- The Chinese Government will from time to time submit in advance to the U. S. Government its proposed programs for relief import requirements. These programs shall be subject to screening and approval by the U. S. Government and procurement will be authorized only for items contained in the approved programs.
- Transfers of U. S. relief supplies shall be made under arrangements to be determined by the U. S. Government in consultation with the Chinese Government. The U. S. Government, whenever it deems it desirable, may retain possession of any U. S. relief supplies, or may recover possession of such supplies transferred, up to the city or local community where such supplies are made available to the ultimate consumers.
Article II. Distribution of supplies in China.
- All U. S. relief supplies shall be distributed by the Chinese Govt, [or] established voluntary agencies in China, under the direct supervision and control of the U. S. representatives and in accordance with the terms of this agreement. The distribution shall be through commercial channels to the extent feasible and desirable.
- All U. S. relief supply imports shall be free of fiscal charges including customs duties up to the point where they are sold for local currency as provided by article III of this agreement unless when because of price practices, it is advisable to include customs charges or Govt taxes in prices fixed, in which case the amount thus collected on U. S. relief supply imports will accrue to the special account referred to in article III. All U. S. relief supply imports given freely to indigents, institutions, and others, and those turned over to voluntary agencies for distribution shall be free of fiscal charges including customs duties.
- The Chinese Govt will designate a high-ranking official who shall have the responsibility of liaison, between the Chinese Govt and the U. S. representatives responsible for the relief program.
- U. S. relief supplies and similar supplies produced locally or imported from outside sources shall be so conducted [distributed] as to assure a fair share of the supplies to all classes of the people to the greatest extent possible.
- A control system shall be inaugurated in the major urban centers of China (including Amoy, Canton, Nanking, Peiping, Shanghai, Swatow, Tientsin and Tsingtao) to provide for the distribution of relief supplies being so conducted that all classes of the population, irrespective of their purchasing power, shall receive their fair share of supplies covered in this agreement. This controlled distribution and rationing plan for the major cities in China will be developed in full consultation with U. S. Govt representatives. It is understood and agreed between both Governments, however, that in permitting the use of U. S. relief supplies to be utilized in support of this Chinese effort to improve consumption and price controls, the U. S. Government undertakes no responsibility for the success of these urban programs and reserves the right unilaterally to withdraw from any or all of them, or to postpone even nominal supply participation in them, if the limitations on the extent of the U. S. relief contribution to China or adverse developments of any kind make such withdrawal prudent.
Article III. Utilization of funds accruing from sales of U. S. supplies.
- The prices at which U. S. relief supplies will be sold in China shall be agreed upon between the Chinese Govt and the U. S. Govt.
- When U. S. relief supplies are sold for local currency, the amount of such local currency shall be deposited by the Chinese Govt in a special account in the name of the Chinese Govt.
- Until June 30, 1948, such funds shall be disposed of only upon approval of the duly authorized representative of the U. S. Government for relief and allied or special purposes within China, including local currency expenses of the U. S. incident to the furnishing of relief. Any unencumbered balance remaining in such account on June 30, 1948, shall be disposed of within China for such purposes as the U. S. Govt, pursuant to act or joint resolution of Congress, may determine.
- The Chinese Govt [will upon request] advance funds to the U. S. representatives to meet local currency expenses incident to the furnishing of relief, including the operation of the U. S. relief mission in China and certain urgent relief projects being undertaken by Chinese Govt organs and voluntary agencies.
- While it is not intended that the funds accruing from sales of [Page 1337] the U. S. relief supplies normally shall be used to defray the local expenses of the Chinese in handling, transporting internally, and distributing the U. S. relief supplies, including local currency cost of discharging cargo and other port charges, the U. S. representatives will consider with the Chinese Govt the use of the funds to cover the unusual costs which would place an undue burden on the Chinese Govt.
- The Chinese Govt will each month make available to the U. S. representatives reports on collections, balances and expenditures from the fund.
- The Chinese Govt will assign officials to confer and plan with the U. S. representatives regarding the disposition of funds accruing from sales to assure a prompt and proper use of such funds.
Article IX. Termination of relief assistance.
The U. S. Govt will terminate any or all of its relief assistance at any time whenever it determines (1) by reason of changed conditions, the provision of relief assistance of the character authorized by Public Law 84, 80th Congress, May 31, 1947, is no longer necessary; (2) any provisions of this agreement are not being carried out; (3) U. S. relief supplies, [or] an excessive amount of similar supplies produced locally or imported from outside sources are being used to assist in the maintenance of armed forces in China, or (4) U. S. relief supplies or similar supplies produced locally or imported from outside sources are being exported or removed from China. The U. S. Govt may stop or alter its program of assistance whenever in its determination other circumstances warrant such action.”
Sent Dept. as 1956, August 12, 7 p.m., repeated Nanking as 1407.