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May 14, 1964

Note: The Agreement entered into force, May 14, 1964.

Reference: This Agreement is also published in IV DFA TS No. I, p. 44.

The Government of the Republic of the Philippines and the Government of the United States of America:

Recognizing the desirability of expanding trade in agricultural commodities between their two countries and with other friendly nations in a manner which would not displace usual marketings of the United States of America in these commodities or unduly disrupt world prices of agricultural commodities or normal patterns of commercial trade with friendly countries;

Considering that the purchase for Philippine pesos of agricultural commodities produced in the United States of America will assist in achieving such an expansion of trade;

Considering that the Philippine pesos accruing from such purchase will be utilized in a manner beneficial to both countries;

Desiring to set forth the understandings which will govern t1 e sales, as specified below, of agricultural commodities to the Republic of the Philippines pursuant to Title I of the Agricultural Trade Development and Assistance Act, as amended (hereinafter referred to as the Act) and the measures which the two Governments will take individually and collectively in furthering the expansion of trade in such commodities;

Have agreed as follows :

ARTICLE I
SALES FOR PHILIPPINE PESOS

1. Subject to issuance by the Government of the United States of America and acceptance by the Government of the Republic of the Philippines of purchase authorizations and to the availability of the specified commodities under the Act
at the time of exportation, the Government of the United States of America undertakes to finance the sales for Philippine pesos, to purchasers authorized by the Government of the Republic of the Philippines, of the following agricultural commodity in the amount indicated:

2. Applications for purchase authorizations will be made immediately after the effective date of this agreement, except that applications for purchase authorizations for any additional commodities or amounts of commodities provided for in any amendment to this agreement will be made within 90 days after the effective date of such amendment. Purchase authorizations will include provisions relating to the sale and delivery of commodities, the time and circumstances of deposit of the Philippine pesos accruing from such sale, and other relevant matters.

3. The financing sale and delivery of commodities under this agreement may be terminated by either Government if that Government determines that because of changed conditions the continuation of such financing, sale, or delivery is unnecessary or undesirable.

ARTICLE II
USES OF PHILIPPINE PESOS

The Philippine pesos accruing to the Government of the United States of America as a consequence of sales made pursuant to this agreement will be used by the Government of the United States of America, in such manner and order of priority as the Government of the United States of America shall determine, for the following purposes, in the proportions shown:

A. For United States expenditures under subsections (a), (b), (d), (f) and(h) through (s) of Section 104 of the Act, or under any of such subsections, 50 percent of the Philippine pesos accruing pursuant to this agreement.

B. For loans to be made by the Agency for International Development of Washington (hereinafter referred to as AID) under Section 104 [e) of the Act and for administrative expenses of AID in the Republic of the Philippines in-
cident thereto, 15 percent of the Philippine pesos accruing pursuant to this agreement. It is understood that:

(1) Such loans under Section 104 (f) of the Act will be made to United States business firms and branches, subsidiaries, or affiliates or such firms in the Republic of the Philippines for business development and trade expansion in the Republic of the Philippines and to the United States firms and Philippine firms for the establishment of facilities for aiding in the utilization, distribution, or otherwise increasing the consumption of, and markets for, United States agricultural products.

(2) Loans will be mutually agreeable to AID and the Government of the Republic of the Philippines acting through the Central Bank of the Philippines (hereinafter re I erred to as CB). The Governor of the CB, or his designate, will act for the Government of the Republic of the Philippines and the Administrator of AID, or his designate, will act for AID.

(3) Upon receipt of an application which Alt) is prepared to consider, AID will inform CB of the identity of the applicant, the nature of the proposed business, the amount of the proposed loan, and the general purposes for which the loan proceeds would be expended.

(4) When AID is prepared to act favorably upon an application, it will so notify CB and will indicate the interest rate and the repayment period which would be used under the proposed loan. The interest rate will be similar to that prevailing in the Republic of the Philippines on comparable loans, and the maturities will be consistent with the purposes of the financing.

(5) Within sixty days after the receipt of the notice that AID is prepared to act favorably upon an application CB will indicate to AID whether or not it has any objection to the proposed loan. Unless within the sixty-day period AID has received such a communication from CB, it shall be understood that CB has no objection to the proposed loan. When AID approves or declines the proposed loan it will notify CB.

(6) In the event the Philippine pesos set aside for loans under Section 104(e) of the Act are not advanced within 3 years from the date of this agreement because AID has not approved loans or because proposed loans have not been mutually agreeable to AID and CB, the Government of the United States of America may use the Philippine pesos for any purpose authorized by Section 104 of the Act.

C. For a loan to the Government of the Republic of the Philippines under Section 104 (g) of the Act for financing such projects to promote economic development, including projects not heretofore included in plans of the Government of the Republic of the Philippines, as may be mutually agreed, 35 percent of the Philippine pesos accruing pursuant to this agreement. The terms and conditions of the loan and other provisions will be set forth in a separate loan agreement. In the event that agreement is not reached on the use of the Philippine pesos for loan purposes under Section 104 (g) of the Act within 3 years from the date of this agreement, the Government of the United States of America may use the Philippine pesos for any purpose authorized by Section 104 of the act.

ARTICLE III
DEPOSIT OF PHILIPPINE PESOS

1. The amount of Philippine pesos to be deposited to the account of the Government of the United States of America shall be the equivalent of the dollar sales value of the commodities and ocean transportation costs reimbursed or financed by the Government of the United States of America (except excess costs resulting from the requirement that United States {lag vessels be used) converted into Philippine pesos as follows:

(a) at the rate for dollar exchange applicable to commercial import transactions on the dates of dollar disbursement by the United States, provided that a unitary exchange rate applying to all foreign exchange transactions is maintained by the Government of the Republic of the Philippines, or

(b) if more than one legal rate for foreign exchange transactions exists, at a rate of exchange to be mutually agreed upon from time to time between the Government of the United States of America and the Government of the Republic of the Philippines.

2. Any refunds of Philippine pesos which may become due under this agreement will be made by the Government of the United Stales of America from funds available under this agreement. Any refunds of Philippine pesos which may be due or become due under any prior agreement under the Act for which undisbursed funds are no longer available in the accounts of the United States disbursing officer in the Republic of the Philippines will be made by the Government of the United Slates of America from funds available under this agreement. Any refunds of Philippine pesos which may be due or become due under this agreement more than 2 years from the effective date of this agreement may, in the event that any subsequent agreement or agreements should be signed by two Governments under the Act, be made by the Government of the United States of America from funds available from the most recent agreements in effect at the time of the refund.

ARTICLE IV
GENERAL UNDERTAKINGS

1. The Government of the Republic of the Philippines will take all possible measures to prevent the resale or transshipment to other countries or the use for other than domestic purposes of the agricultural commodities purchased pursuant to this agreement (except where such resale, transshipment or use is specifically approved by the Government of the United States of America) ; to prevent the export of any commodity of either domestic or foreign origin which is the same as, or like, the commodities purchased pursuant to this agreement during the period beginning on the date of this agreement and ending with the final date on which such commodities are received and utilized, (except where such export is specifically approved by the Government of the United States of America) ; and to ensure that the purchase of commodities pursuant to this agreement does not result in increased availability of the same or like commodities to nations unfriendly to the United States of America.

2. The two Governments will take reasonable precautions to assure that all sales and purchases of agricultural commodities pursuant to this agreement will not displace usual marketings of the United States of America in these commodities or unduly disrupt world prices of agricultural commodities or normal patterns of commercial trade with friendly countries.

3.In carrying out this agreement, the two Governments will seek to assure conditions of commerce permitting private traders to function effectively and will use their best endeavors to develop and expand continuous market demand for agricultural commodities.

4. The Government of the Republic of the Philippines will furnish quarterly information on the progress of the program, particularly with respect to the arrival and condition of commodities; provisions for the maintenance of usual marketings; and information relating to imports and exports of the same or like commodities.

ARTICLE V
CONSULTATIONS

The two Governments will, upon request of either of them, consult regarding any matter relating to the application of this agreement, or to the operation or arrangements carried out pursuant to this agreement,

ARTICLE VI
ENTRY INTO FORCE

This Agreement shall enter into force upon signature.

IN WITNESS WHEREOF, the respective representatives, duly authorized for the purpose, have signed the present agreement.

Done at Manila, in duplicate this 14th day of May, 1964,