¹ New York Times, Sept. 19, 1961, p. 45, col. 2.

² International Bank for Reconstruction and Development, Multilateral Investment Insurance, March, 1962 (hereinafter cited as Bank Report).

³ International Chamber of Commerce, Preliminary Statement of Views on Multilateral Investment Insurance, Doc. No. 111/114, May 4, 1962.

⁴ Consultative Assembly Doc. No. 1419 (rev.) (1962); ibid. No. 1429 (1962).

⁵ Economie Co-operation Act of 1948, 62 Stat. 137; 43 A.J.I.L. Supp. 64 (1949).

⁶ The balance of payments should be distinguished from the balance of trade. During 1962 the United States had a favorable balance of trade of $5,900,000,000 but expenditures for foreign aid, armed forces overseas, and the like, amounted to $8,000,000,000, causing a deficit of $2,100,000,000, and a consequent drain on United States gold reserves.

⁷ Many statements of the opposing view were made during the hearings on H.E. 10650, which contained the Administration’s tax proposals for 1962. An analysis of 82 companies made by the National Association of Manufacturers, for example, seemed to confirm the view that investment in foreign subsidiaries tended to increase the exports of the U. S. parent. Business International, June 15, 1962. During 1962 the remittance of profits and dividends to the United States from foreign investments equaled 2.91 billion dollars, up 8.9% from 1961, while investments and other outflow of funds equaled 1.38 billion dollars, yielding a favorable balance of 1.53 billion dollars. Ibid., March 29, 1963.

⁸ The Mutual Security Act of 1959, 73 Stat. 246, 251.

⁹ Internal Revenue Code of 1954, Sees. 951-964.

¹⁰ See, generally, Business International, Aug. 31, 1962 ; Sept. 14, 1962; and Oct. 5, 1962.

¹¹ See Rubin, Private Foreign Investment: Legal and Economic Realities 5-19 (1956). For a statement of the traditional doctrine, see 1 Hyde, International Law, Chiefly as Interpreted and Applied by the united States 710-717 (2d rev. ed., 1947). The two positions on non-discriminatory expropriations are set out in Compensation for American-Owned Lands Expropriated in Mexico, Dept. of State Pub. 1288, Inter-American Ser. 16 (full text of official notes July 21, 1938, to November 12, 1938, with respect to compensation of United States nationals for expropriation of agrarian properties by Mexico).

¹² For a discussion of this dilemma in the context of a specific Asian country, see Montoya, , “Problems of Foreign Investment,” 8 Far Eastern Law Rev. (Phi.) 93 (1960)Google Scholar.

¹³ For a summary of recent investment code proposals, see Fatouros, , “An International Code to Protect Private Investment—Proposals and Perspectives,” 14 U. Toronto Law Rev. 77 (1961)CrossRefGoogle Scholar; Brandon, Survey of Current Approaches to the Problem, Report of Conference on the Encouragement and Protection of Investment in Developing Countries, Sept. 29-30, 1961, Int. and Camp. Law Q. Supp., Publication No. 3 (1962). Various compromise suggestions have also been put forward, such as the proposal that the IFC draft an investment code “to which governments would subscribe but which would not be a negotiated instrument,” Beale, , “Government Efforts to Increase Private Investments Abroad,” 39 Dept. of State Bulletin 967, 970 (1958)Google Scholar (Speech before 2nd International Investment Law Conference, Nov. 21, 1958, Washington, D. C.) ; see also Gardner, “A Critique of U. S. Foreign Investment Policy, “Spring, 1959, U. Illinois Law F. 121. Perhaps the most promising effort at the present time is the study by the O.E.C.D. of the Abs-Shawcross Draft Convention of 1959, which is itself a joint effort of a group of European lawyers led by Lord Shawcross, and the German Society to Advance the Protection of Foreign Investments. Brandon, above; “The Proposed Convention to Protect Private Foreign Investments— A Bound Table,” 9 Journal of Public Law 115 (1960). The objections to a multilateral investment code are stated in Bubin, op. cit. note 11 above; Miller, , “Protection of Private Foreign Investment by Multilateral Convention,” 53 A.J.I.L. 371 (1959)Google Scholar; Walker, , “Treaties for the Encouragement and Protection of Foreign Investment: Present United States Practice,” 5 A. J. Comp. Law 229 (1956)CrossRefGoogle Scholar. See, generally, Fatouros, Government Guarantees to Foreign Investors (1962); Schachter, , “Private Foreign Investment and International Organization,” 45 Cornell Law Q. 415 (1960)Google Scholar.

¹⁴ Dr. F. V. García-Amador has prepared for the International Law Commission of the United Nations several drafts and comments with respect to a Convention on the International Besponsibility of the State for Injuries Caused in its Territory to the Person or Property of Aliens. García-Amador, Fourth Report on International Besponsibility to the International Law Commission, seriatim in U.N. Docs. A/CN. 4/96, 106, 111, 119, 125 and 134 (1956-1961). The most important private work has been the revision of the 1929 Harvard Besearch Draft Convention on a similar subject by Profs. Sohn and Baxter, the revision itself now being in the 12th draft. Sohn and Baxter, , “Responsibility of States for Injuries to the Economic Interests of Aliens,” 55 A.J.I.L. 545 (1961)Google Scholar. This work is currently being revised and expanded by the authors.

¹⁵ Rubin, op. cit. note 11 above, at 29.

¹⁶ A discussion, with examples, is found in the commentary by Dr. García-Amador on Ch. 3 (Contractual Eights) of the Draft Code. García-Amador, note 14 above, at 119. On the Calvo clause, see generally 2 Hyde, International Law, Chiefly as Interpreted and Applied by the United States 994-998 (2d rev. ed., 1947); Lipstein, “The Place of the Calvo Clause in International Law,” 1945 Brit. Yr. Bk. of Int. Law 130. Some proposals have been made for the direct referral of investment disputes to an international body. See, e.g., Lee, , “Proposal for the Alleviation of the Effects of Foreign Expropriatory Decrees upon International Investments,” 36 Canadian Bar Rev. 351, 357 (1958)Google Scholar.

¹⁷ Consultative Assembly Recommendation 159 on the Development of Africa, in Council of Europe, Texts Adopted by the Assembly, 10th Ordinary Session, 1st Part (1958). The recommendation was further elaborated in a report of the Assembly’s Economic Committee in 1959. Council of Europe, Report on Investment Statute and a Guarantee Fund Against Political Bisks, Consultative Assembly Doc. No. 1027 (1959). See also Consultative Assembly Recommendations 211 (1959) and 223 (1960) on the same subject.

¹⁸ Proceedings of 47th Conference of the Interparliamentary Union, p. 1070 (1958).

¹⁹ Eeghen, Van, “Multilateral Investment Guarantees,” 5 A.B.A. Section of International and Comparative Law Bulletin 36 (July, 1961)Google Scholar.

²⁰ Export Insurance Law (Law No. 67 of March 31, 1950), extended to the insurance of foreign investment capital as of April, 1956, and that of foreign investment profits as of May, 1957. A summary of the Japanese plan is contained in Annex A-2 of the Bank Report.

²¹ Budget Law of 1959, Art. 18, par. 1, (1959) Bundesgesetzblatt, Part II, p. 793. A summary of the German plan is contained in Annex A-3 of the Bank Report.

²² Whitman, The United States Investment Guaranty Program and Private Foreign Investment, Princeton Studies in International Finance, No. 9 (1959). See also Rivkin, , “Investment Guaranties and Private Investment,” 19 Fed. Bar Journal 357 (1959)Google Scholar; Tidd, , “The Investment Guaranty Program and the Problem of Expropriation,” 26 George Washington Law Rev. 710 (1958)Google Scholar; International Cooperation Administration, Investment Guaranty Handbook (1960 ed.); and “New Developments in Investment Guarantees,” 1962 Proceedings, American Society of Int. Law 77-89.

²³ The cumulative total for all guarantees issued through June 30, 1963, is $1,194,000,000. The figure given in the text is described as the “maximum outstanding liability,” and would appear to be more significant, since cancellations of coverage have taken place as political conditions improved. Both figures are somewhat misleading, since the insured value of a particular risk is included two or three times, if two or all three hazards are covered. The cumulative total for convertibility alone, for example, is $647,000,000.

²⁴ A payment of $650,000 was made in 1961 under a Development Loan Fund repayment guarantee. Two payments were made in 1962 under the investment guarantee program involving a total net cost after salvage of approximately $1,400.

²⁵ 75 Stat. 424.

²⁶ This is the designation commonly used. In point of fact, the coverage may be determined by the Administrator; the law merely authorized guarantees “assuring against loss . . . due to such risks as the President may determine, upon such terms and conditions as the President may determine. ...” Foreign Assistance Act of 1961, par. 221 (b) (2), 75 Stat. 429, 22 U.S.C.A. par. 2181 (b) (2). No all-risk guarantees had been written by September, 1963, although negotiations for several were reported in progress.

²⁷ Foreign Assistance Act of 1961 $221 (a), 75 Stat. 429, 22 U.S.C.A. $2181 (a).

²⁸ Thus, it is reported that guarantees will be written on investments in Colombia in the absence of formal agreement, but upon specific approval of the investment by that country. Business International, Oct. 26, 1962.

²⁹ See note 47 below.

³⁰ Address by Robert L. Garner, Conference on Legal Problems of International Financing, Yale Law School, March 2, 1962. In its report on the Foreign Assistance Act of 1961, the Senate Committee on Foreign Relations stated with respect to the guarantee program: “The purpose ... is to expand the role of private enterprise in furthering the economic growth of less-developed countries and areas.” 1961 U. S. Code Cong. & Admin. News 2486.

³¹ Address by Samuel V. Goekjian, Esq., Conference on Legal Problems of International Financing, Tale Law School, March 3, 1962.

³² Address by Charles M. Spofford, Esq., 1963 Proceedings, American Society of Int. Law 134 at 137.

³³ Council of Europe, note 17 above.

³⁴ New York Times, Sept. 26, 1952, p. 1, col. 1.

³⁵ Council of Europe, Report of the Study Group for the Development of Africa, Consultative Assembly Doc. No. 701 (1957). See generally Gaitskell, , “Europe and the Economic Development of Africa,” 6 European Yearbook 29 (1958)Google Scholar.

³⁶ Council of Europe, Report on Investment Statute and a Guarantee Fund Against Political Risks, Consultative Assembly Doc. No. 1027 (1959) at 22.

³⁷ New York Times, note 1 above.

³⁸ Council of Europe, note 36 above, note at 23.

³⁹ Van Reghen, note 19 above.

⁴⁰ Ibid, at 37.

⁴¹ International Bank for Reconstruction and Development, note 2 above.

⁴² ibid, at 22.

⁴³ As of June 30, 1963, maximum outstanding liabilities under the United States program were $884,000,000. The Reserve Fund at the same date was $269,000,000, of which sum $199,000,000 consisted of authority to borrow from the Treasury which has not so far been exercised, and $70,000,000 consisted of direct appropriations and fee income.

⁴⁴ New York Times, note 1 above.

⁴⁵ Hearings Before the House Committee on Foreign Affairs, 87th Cong., 1st Sess., p. 910 (1961). As a statement of the United States position on an international program, Mr. Coffin’s statement is of considerable interest:

“Proposals have recently been made in several quarters for the establishment of an international guarantee institution. Such an organization, perhaps associated in some manner with the International Bank, would to a large degree be aimed at superseding existing unilateral or bilateral guarantee systems under which individual capital exporting countries provide specific guarantees to their own citizens who invest abroad, often under agreements with the receiving countries.

“An international guarantee organization would provide equal protection to investors from all the independent countries which became members—and would thus exercise a powerful pull on all these countries to join. In this way it would create the same protection for all private investment in less-developed countries, thus encouraging greater investment from countries which do not yet have a guarantee program and eliminating differences and ‘competition’ between guarantee systems.

“More importantly, such a guarantee institution would directly associate the less-developed countries that desire private investment in the substance and obligations of the guarantee program. Such full membership would provide for the views of the investment-exporting countries. It would provide not only a uniform and widely applicable guarantee system, but also a working forum in which views and approaches on private foreign investment could be exchanged and co-ordinated on the basis of equality. It is to be hoped that such a forum would be of assistance in coping with emerging problems or differences over private investment at an early stage, before such difficulties reach the point of extremity.

“No funding or legislative authority is now being requested for United States membership in such an international guarantee institution. The idea is as yet in the proposal and study stage. But if the idea proves attractive and feasible—and particularly if it has attraction to a significant number of less-developed countries themselves—the United States should be prepared to respond promptly and affirmatively.

“The executive branch will, therefore, be interested in exploring the merits of these proposals with other interested governments during the coming months.”

⁴⁶ The best concise description of the complicated financial and governmental undertakings with respect to this project is contained in a booklet published by the Government of Ghana: The Volta Kiver Project: Statement by the Government of Ghana (1962).

⁴⁷ This program has been in the process of rapid development since its inception in 1961 by the Foreign Credit Insurance Association, 60 John St., New York, N. Y. For background see Oppenheimer, “Credit Insurance and Foreign Trade,” Bests Ins. News (F. & C. Ed.), Feb., 1962, p. 81. Coverage of hazards deemed uninsurable has also been made available by U. S. Government reinsurance of private companies in the case of flood and nuclear incidents.

⁴⁸ See, generally, 2 Couch, Insurance (2d) 434-598.

⁴⁹ Travelers Health Assoc. v. Virginia, 339 U. S. 643, 94 L. Ed. 1154, 70 S. Ct. 927 (1949).

⁵⁰ 63 Stat. 298.

⁵¹ See, e.g., Mass. G. L. (Ter. Ed.), Ch. 175 $63 (3A).

⁵² There may Ъе some problem in this connection arising from the new insuring authority given to A.I.D. under the Foreign Assistance Act of 1961. Using these new powers, for example, a foreign subsidiary of a U. S. investor may now be insured against fire and causalty risks as well as against the traditional political hazards. A situation is thus presented where the United States is insuring a company of country X against a loss by fire occurring in X and damaging property in X. Whether the references to prior U. S. statutes in the bilateral treaties can be construed as including exemption from the local requirements for this type of insurance is a matter for thought.

⁵³ Convertibility must be clearly distinguished from devaluation, which is quite another thing, and against which investors now and again request protection. In theory, at least, devaluation merely confers formal status upon an existing situation. Values of physical property and such intangibles as good will can be expected to reflect the change in due course.

⁵⁴ Sauer, , “The Export-Import Bank and Private Foreign Investment,” 19 Fed. Bar Journal 327 (1959)Google Scholar.

⁵⁵ Council of Europe, note 36 above, at 2.