Pub. L. 90-137, pt. II, sec. 201

Sec. 201. Part II of the Foreign Assistance Act of 1961, as amended, which relates to military assistance and sales, is amended as follows: (a) Section 502, which relates to statement of policy, is amended as follows: (1) Section 502 is redesignated as section 501. (2) In such new section 501, immediately before the last paragraph insert the following new paragraph: “It is the sense of the Congress that in the administration of this part priority shall be given to the needs of those countries in danger of becoming victims of active Communist or Communist-supported aggression or those countries in which the internal security is threatened by Communist-inspired or Communist-supported internal subversion.” (b) Section 503, which relates to general authority, is amended as follows: (1) Subsection (a) is amended by striking out “, lease, sale, exchange, grant, or any other means” and substituting “or grant”. (2) Subsection (d) is amended by striking out “; and” and substituting a period. (3) Subsection (e) is amended as follows: (A) Subsection (e) is redesignated as section 525. (B) In such new section 525, strike out “guarantying, insuring, coinsuring, and reinsuring” and substitute “Guaranties.—(a) Until June 30, 1968, the President may guarantee, insure, coinsure, and reinsure”. (C) In such new section 525(a), strike out “such” the second place it appears and substitute “any”. (c) Section 504(a), which relates to authorizations, is amended as follows: 81 Stat. 456 (1) Strike out all of the first sentence up to, but excluding, the colon and the proviso, and substitute “There is authorized to be appropriated to the President to carry out the purposes of this part not to exceed $510,000,000 for the fiscal year 1968”. (2) Immediately after the first sentence, insert the following: “Of the amount appropriated pursuant to this subsection for the fiscal year 1968, $24,100,000 shall be available solely for cost-sharing expenses of United States participation in the international military headquarters and related agencies program. No part of any funds made available under any other provision of law shall be used for the cost-sharing expenses referred to in the preceding sentence.”. (d) Section 505(a), which relates to utilization of assistance, is amended as follows: (1) Subsection (a) is redesignated as section 502. (2) At the beginning of such new section 502, strike out “Utilization of Assistance.—(a) Military assistance” and substitute “Utilization of Defense Articles and Defense Services.—Defense articles and defense services”. (e) Section 506, which relates to conditions of eligibility, is redesignated as section 505. (f) Section 507(a), which relates to sales, is amended as follows: (1) Subsection (a) is redesignated as section 522. (2) In such new section 522, strike out “Sales” as the section caption and substitute “Sales From Stock”. (3) In such new section 522, strike out “subsection” each place it appears and substitute in each such place “section”. (g) Section 507(b), which relates to sales, is amended as follows: (1) Subsection (b) is redesignated as section 523. (2) In such new section 523, insert “Procurement for Sales.—” as the section caption. (3) In the third sentence of such new section 523, strike out “credited to the account established under section 508” and substitute “transferred to the general fund of the Treasury”. (4) Strike out “subsection” in the last sentence and substitute “section”. (h) Section 508, which relates to reimbursements, is amended as follows: (1) Section 508 is redesignated as section 524. (2) In such new section 524, insert “(a)” immediately after “Reimbursements.—”. (3) Insert the following new subsection at the end of such new section 524: “(b) (1) The special fund account established under subsection (a) of this section shall terminate as of the end of June 30, 1968, or on such earlier date as may be selected by the President. “(2) Upon the termination of such fund account pursuant to paragraph (1), all of the assets of such fund account (including loans and other payments receivable) shall be transferred to a special account in the Treasury, which special account shall be available solely for the purpose of discharging outstanding liabilities and obligations of the United States arising out of credit sales agreements entered into, and guaranties issued, under this part, prior to June 30, 1968. Any moneys in such special account in excess of the aggregate United States dollar amount of such liabilities and obligations shall be transferred from time to time to the general fund of the Treasury. “(3) After the termination of such fund account pursuant to paragraph (1), the President may finance sales of defense articles and defense services to foreign countries and international organizations only from appropriations made available pursuant to section 504 to carry out this part and only if such countries or81 Stat. 457 international organizations agree to pay not less than the value thereof in United States dollars. All payments of principal and interest on account of such sales shall be transferred to the general fund of the Treasury: Provided, That the limitations of this paragraph shall not apply to sales made pursuant to sections 522 and 523.” (i) Section 509, which relates to exchanges and guaranties, is amended as follows: (1) Subsection (a) is hereby repealed. (2) Subsection (b) is redesignated as section 525(b) and is amended by adding at the end thereof the following: “The total face amount of contracts of guaranty, insurance, coinsurance, and reinsurance (including contracts with any agency of the United States Government) issued in the fiscal year 1968 shall not exceed $190,000,000.” (j) Section 510 which relates to special authority, is amended as follows: (1) Section 510 is redesignated as section 506. (2) Strike out. “1967” each place it appears and substitute in each such place “1968”. (k) Section 511, which relates to restrictions on military aid to Latin America, is amended as follows: (1) Section 511 is redesignated as section 507. (2) In subsection (a), strike out “section 507” and substitute “chapter 3”: and strike out the colon and the proviso. (l) Section 505(b), which relates to utilization of assistance, is redesignated as subsection (c) of such new section 507. (m) Section 512 which relates to restrictions on military aid to Africa, is amended as follows: (1) Section 512 is redesignated as section 508. (2) Strike out “shall be furnished on a grant basis” in the first sentence and substitute “or sales shall be furnished under this Act”. (3) Strike out “The value of grant programs of defense articles” in the second sentence and substitute “The total value of military assistance and sales”. (4) Strike out “other than section 507” in the second sentence. (5) Strike out “$25,000,000” and substitute “$40,000,000”. (n) Section 513, which relates to the certification of recipient’s capability, is amended as follows: (1) Section 513 is redesignated as section 509. (2) In subsection (a), strike out “section 507” and substitute “chapter 3”. (o) Section 514, which relates to administration of sales and exchange programs involving defense articles and services, is amended as follows: (1) Section 514 is redesignated as section 521. (2) Insert the following new chapter heading before such new section 521: “Chapter 3— Foreign Military Sales”. (3) In the section caption strike out “and Exchange”. (4) In subsection (a), strike out “or exchange”. (5) At the end of subsection (a), add the following: “It is the purpose of this chapter to authorize measures consonant with that objective to enable allied and other friendly foreign countries, having sufficient wealth to develop and maintain their defense capacities without undue burden to their economies, to acquire defense articles and defense services on a reimbursable basis. Tn carrying out this chapter, special emphasis shall be placed on procurement in the United States, but consideration shall also be given to co-production or licensed production outside the United States of defense articles of United States81 Stat. 458 origin when such production best serves the foreign policy, national security, and economy of the United States. In evaluating any sale proposed to be made pursuant to this chapter, there shall be taken into consideration (1) the extent to which the proposed sale damages or infringes upon licensing arrangements whereby United States entities have granted licenses for the manufacture of the defense articles selected by the purchasing country to entities located in friendly foreign countries, which licenses result in financial returns to the United States, and (2) the portion of the defense articles so manufactured which is of United States origin.” (6) Subsection (b) is amended as follows: (A) Strike out “section 511(a)” and substitute “section 507(a)”. (B) Strike out “85,000,000” and substitute “$75,000,000”. (C) Strike out the colon and the proviso. (7) Add the following new subsection: “(c) No defense article or defense service shall be furnished under this chapter to any country or international organization unless (1) the President finds that the furnishing of defense articles and defense services to such country or international organization will strengthen the security of the United States and promote world peace, (2) the country or international organization shall have agreed not to transfer title to, or possession of, any defense article so furnished to it to any other person, organization, or government, unless the consent of the President has first been obtained, and (3) the country or international organization is otherwise eligible to receive defense articles or defense services. The President shall promptly submit a report to the Speaker of the House of Representatives and to the Committee on Foreign Relations of the Senate on the implementation of each agreement entered into pursuant to clause (2) of this subsection.”