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November 24, 1961

Note: The Agreement entered into force, November 24, 1961.

Reference: This Agreement is also published in 433 VNTS, p. 315.

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 the sales, as specified below, of agricultural commodities to the Government of 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;

Agree 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 commodities under the Act at the time of exportation, the Government of the United States of America undertakes to finance the sale for the Republic of the Philippines pesos to purchasers authorized by the Government of the Republic of the Philippines of the following agricultural commodity in the amounts indicated.

2. Applications for purchase authorizations will be made within 90 calendar days of 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 of 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. Purchase and shipment of the commodity mentioned above will be made within 18 calendar months of the effective date of this Agreement.

ARTICLE II

USE OF PHILIPPINE PESOS

1. 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 amount shown:

a. For United States expenditures under subsections (a), (b), (d), (f) and (h) through (r) of Section 104 of the Act or under any of such subsections, twenty-five percent of the Philippine pesos accruing pursuant to this Agreement.

b. For loans to be made by the Export-Import Bank of Washington under Section 104 (el of the Act and for administrative expenses of the Export-Import Bank of Washington in the Republic of the Philippines incident thereto, twenty-five percent of the Philippine pesos accruing to this Agreement. It is understood that:

(1) Such loans under Section 104 (e) of the Act will be made to United States business firms and branches, subsidiaries or affiliates of such firms in the Republic of the Philippines for business development and trade expansion in the Republic of the Philippines and to United States firms and to 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 the Export-Import Bank of Washington and the Government of the Republic of the Philippines, acting through the Central Bank of the Philippines (hereinafter referred as the Central Bank). The Governor of the Central Bank or his designate will act for the Government of the Republic of the Philippines and the President of the Export-Import Bank of Washington or his designate will act for the Export-Import Bank of Washington.

(3) Upon receipt of an application which the Export-Import Bank is prepared to consider, the Export-Import Bank will inform the Central Bank 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 the Export-Import Bank is prepared to act favorably upon an application, it will so notify the Central Bank 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 the Export-Import Bank is prepared to act favorably upon an application, the Central Bank will indicate to the Export-Import Bank whether or not the Central Bank has any objection to the proposed loan. When the Export-Import Bank approves or declines the proposed loan, it will notify the Central Bank.

(6) In the event the Philippine pesos set aside for Loans under Section 104 (e) of the Act are not advanced within three years from the date of this Agreement because the Export-Import Bank of Washington has not approved loans or because proposed loans have not been mutually agreeable to the Export-Import Bank of Washington and the Central Bank, 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 procurement of military equipment, materials, facilities and services in accordance with Section 104 (c) of the Act, twenty-three percent of the Philippine pesos accruing pursuant to this Agreement.

d. For a grant to the Government of the Republic of the Philippines under subsection (e) of Section 104 of the Act for financing such community development programs as may be mutually agreed, fourteen percent of the Philippine pesos accruing pursuant to this Agreement.

e. 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 as may be mutually agreed, including projects not heretofore included in plans of the Government of the Republic of the Philippines, thirteen 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 between the Export-Import Bank of Washington and the Government of the Republic of the Philippines. In the event that agreement is not reached on the use of the Philippine pesos for loan purposes within three 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 pesos to be deposited to the account of the United States shall be the equivalent of the dollar sales value of the commodity and ocean transportation costs reimbursed or financed by the Government of the United States (except excess costs resulting from the requirement that United States flag vessels be used) converted into pesos, as follows:

a. At the rate for dollar exchange applicable to commercial import transactions on the dates of dollar disbursements 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 for foreign exchange transactions exists, the rate of exchange shall be mutually agreed upon from time to time between the Government of the Republic of the Philippines and the Government of the United States.

2. In the event that a subsequent agricultural commodities agreement or agreements should be signed by the two Governments under the Act, and refunds of Philippine pesos which may be due or become due under this Agreement more than two years from the effective date of this Agreement will be made by the Government of the United States of America from funds available from the most recent agricultural commodities agreement in effect at the time of the refund.

ARTICLE IV

GENERAL UNDERTAKINGS

1. The Government of the Republic of the Philippines agrees that it will take all possible measures to prevent the resale or transshipment to other countries or the use for other than domestic purposes (except where such resale, transshipment or use is specifically approved by the Government of the United States of America) of the agricultural commodities purchased pursuant to the provisions of this Agreement and to assure that the purchase of such commodities does not result in increased availability of these or like commodities to nations unfriendly to the United States of America.

2. The two Governments agree that they will take reasonable precautions to assure that all sales or purchases of agricultural commodities made 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 agrees to furnish, upon request of the Government of the United States of America, information on the progress of the program, particularly with respect to the arrival and condition of commodities and the provisions for the maintenance of usual marketings, and information relating to exports of the same or like commodities.

ARTICLE V

CONSULTATION

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

ARTICLE VI

ENTRY INTO FORCE

The 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 in duplicate, this day of, 1961.