received. Chase Manhattan Bank has been requested to extend the Special Letter of Credit involved and the final approval of the AID Form 11 covering this transaction has been mailed. We believe that the transaction has been settled to Mr. Spark's complete satisfaction. If I can be of further assistance to you, please let me know. Sincerely yours, RUTHERFORD M. POATS, For JOHN A. HANNAH. RICHARDS INTERNATIONAL Since Mr. Spark's statement is directed particularly to Central and South America, the comments which follow are confined to our programs in that area of the world. Similar programs are in effect in other countries outside of Latin America. Because of lack of commercial bank credit available to small and medium size enterprises in Latin America, the Alliance for Progress has fostered and financed Intermediate Credit Institutions, a number of which are specifically directed at providing medium-term credit, generally 3 to 7 years, to local private firms for the establishment, expansion and modernization of plants and production facilities. Such Industrial Development Banks devoted to this objective are in operation in Brazil, Costa Rica, Dominican Republic, Ecuador, El Salvador,. Guatemala, Honduras, Nicaragua, Panama and Paraguay. Two loans were also made to the regional Central American Bank for Economic Integration for industrial relending to the five countries comprising the Central American Common Market. In addition, we have extended financing to private enterprise through the local banking communities in Colombia, Dominican Republic, Guyana, Peru, Chile and Uruguay. Therefore, AID has already made available in Latin America significant levels of development financing which could be used by Latins for the importation of bakery equipment as well as other types of machinery or equipment. The money has been made available in a manner which permits the potential Latin importer to deal directly with his local credit institution. Initiative for the use of this financing rests, of course, with the end users of the equipment. JOHN W. ROBY CO., INC. JOHN W. ROBY CO., INC. REPRESENTATIVE JOE L. EVINS, Chairman, House Small Business Committee, Washington, D.C. DEAR SIR: Our firm in Seattle has handled all of the sales for Clinton Engine Corporation in the Far and Middle East and North Africa for the past 20 years and for the past several years all of the sales for Tecumseh Products Company, Engine Division. We specialize in the sales of air cooled engines, 12 HP and under and our job is to set up the sales and services organization for these firms in all of these countries. These American made engines are used by many of the small companies throughout the U.S. to power the finshed products that they manufacture and export and this sales and service organization overseas is extremely important in order to maintain service on these American made products. The present AID procurement program, which allows purchases from such countries as Taiwan and Korea, is causing many problems to the American manufacturers of small equipment and also the engine manufacturers themselves. For instance, we go out and work very hard to make a sale which is eventually published in the Small Business Circular where AID funds are involved. Immediately upon publication, offers flood into our potential buyers from Taiwan, Korea and elsewhere offering an exact copy of these American products at much lower prices than they can be produced in the U.S. and of course a great amount of our small businesses are losing their markets because of this as you cannot pay taxes as we pay them here, labor costs and support these foreign programs and be competitive with countries such as Taiwan, in particular. On spare parts for our air cooled engines, a list of spare parts required will appear in the AID bulletin, immediately the Taiwanese and Koreans will make offers to the buyer on these spare parts at extremely low prices in many cases or just under the American price with a big rebate to the buyer. And you can buy these spare parts from Taiwan or Korea at probably 50¢ on the dollar or less without regards to American patents, copyrights or anything else and they use AID funds to do this. These purchases on spare parts in particular are enough to set up factories to manufacture specifically the parts involved and once the factories are set up, based upon the AID purchases, then these factories in Taiwan and Korea start shooting in parts for our engines in the areas where AID is not involved. This problem is so severe I think it should be brought to your attention and to the attention of your committee and that all purchases from Taiwan and Korea on parts and small finished products should be discontinued. Another good example is on pumps that our company has manufactured in Seattle for the past 12 years. From time to time these pumps appear in the AID bulletin as they are used extensively in the irrigation of rice paddies. Taiwan and Korea have copied these pumps that they produce nut for nut and bolt for bolt. In fact, they even use the photos and description off of our brochures. For your reference, attached is an example of a recent offer of my pumps from Taiwan. They have not only copied my pump but almost every pump manufactured in America. And the same problem arises here that they will supply many times less than 50% of what we can produce it for, get their production set up where AID money is involved, and then start feeding these same pumps into the areas where AID funds are not involved such as, the Philippines, Thailand, Malaysia, etc., and completely ruin the American market and the American exports of these commodities. As I must leave tomorrow morning on a trip to Beirut, Iran and all around the world, I won't have a chance to be at the meeting on May 15 but I would greatly appreciate it if this matter of copying American products in Taiwan and Korea was taken up and a stop was put on the AID purchasing to these two countries. Very truly yours, JOHN W. ROBY, President. JOHN W. ROBY CO. LETTER OF MAY 2, 1969 The Honorable John D. Dingell, Chairman of the Subcommittee on Activities of Regulatory Agencies of the House Small Business Committee forwarded Mr. Roby's letter of May 2, 1969, for AID comment on May 9, 1969. A copy of our response dated July 17, 1969, and Chairman Dingell's acknowledgement of July 24 is attached for inclusion in the record. Hon. JOHN D. DINGELL, DEPARTMENT OF STATE, Chairman, Subcommittee on Activities of Regulatory Agencies, Relating to Small Business, House of Representatives, Washington, D.C. DEAR MR. CHAIRMAN: This is in further reply to your letter of May 9 in which you attached a letter from the John W. Roby Company as illustrative of complaints received by your committee to the effect that AID policies in Vietnam expose small American business concerns to unfair competition from foreign suppliers. We have now had an opportunity to investigate the Roby allegations. The Roby letter indicates that AID Small Business Circulars tend to bring about unfair foreign competition. As you are aware, these circulars are published in compliance with Section 602 of the Foreign Assistance Act of 1961, as amended. This section requires that, insofar as practicable and to the extent consistent with the accomplishment of the purposes of the Act, AID shall provide advance information to U.S. suppliers (and particularly to small independent businesses) about proposed purchases of commodities and services which are to be financed by AID Small Business Circulars are not mailed by AID to foreign commercial addresses, but copies of these notices may of course be forwarded by the various embassies here to interested suppliers in their countries. Because of the delay involved in such forwarding and the relatively short time period before offers must be submitted to Saigon, foreign suppliers would find this of marginal value. They depend primarily on information from their sales agents in Vietnam, just as most American suppliers do. As for foreign competitors making unfair use of specifications and performance standards that are included in the circulars, the alternative would appear to be omitting information needed by all potential competitors for the business, including American firms. With respect to Mr. Roby's allegation that American suppliers' products are being copied by manufacturers in Korea and Taiwan, we asked him if he could conveniently provide us with information about specific cases so that our embassies in those countries could initiate investigations. Mr. Roby replied that he did not have data readily available concerning instances of copying by Korean manufacturers, but he did provide us with two names of Twaiwanese manufacturers. The Taiwanese Minister of Economic Affairs investigated these firms and was not able to find any official record of the existence of one of them. Regarding the other company, he informed us that his government records show that this firm exported only one lot of electrical switches to Vietnam in 1967 and has made no exports to Vietnam since that time. Our Mission in Saigon has obtained computer data on the volume of AIDfinanced commodities by source countries from July 1, 1967 to May 24, 1969 on the kinds of commodities the John W. Roby Company offers for sale to Vietnamese importers. I am appending a tabular summary of these data. It is readily apparent from this summary that U.S. suppliers account for an overwhelming proportion of AID-financed imports in the categories of interest to the John W. Roby Company, and that Taiwan and Korea are generally lowvolume suppliers of these commodities in the Vietnamese market. Total imports are shown for the period covered, and none of the commodities listed was, at the same time, financed by the Government of Vietnam. In conclusion, the evidence at our disposal does not seem to us to support Mr. Roby's overall contention. However, we fully agree that American companies should be protected in every possible way against patent infringement and all other unfair competitive practices. Before the issue was raised by Mr. Roby, and in order to ensure high maintenance standards, we had decided to amend our regulations so as to limit to U.S. sources future AID-financed procurement in Vietnam for all replacement parts intended for use in U.S. machinery. If your committee has any further information on this subject that you feel warrants investigation, please let me know. Sincerely, JOHN A. HANNAH. AID-FINANCED COMMODITIES IMPORTED INTO SOUTH VIETNAM BY SOURCE COUNTRIES, JULY 1, 1967, TO MAY 24, 1969 6 64, 200 None 0 None 0 Code 722.1051 generator sets, gasoline-engine driven, alternating current, 5 kw. and under: Code 722.1066 parts for motors, generators, and rotating converters: Other sources Other sources.. None Note: The period covered for pumps is from July 1, 1967, to June 6, 1969 SELECT COMMITTEE ON SMALL BUSINESS, Hon. JOHN A. HANNAH, 91ST CONGRESS, Washington, D.C., July 24, 1969. Administrator, Agency for International Development, Department of State, Washington, D.C. DEAR MR. HANNAH: I wish to compliment you and the AID officials in the Saigon, Korea, and Taiwan areas for the thorough and comprehensive report you forwarded under date of July 17, 1969, on the complaints of the John H. Roby Company of Seattle, Washington. I am passing this information along to the Roby Company. The interest, cooperation, investigation, and research your organization has given this matter are appreciated. Sincerely yours, Chairman, Subcommittee on Activities of Regulatory Agencies JOHN D. DINGELL, Relating to Small Business. CLINTON ENGINES CORP., June 6, 1969. Congressman JOHN C. CULVER, Washington, D.C. DEAR CONGRESSMAN CULVER: Today our representative for the Far, Middle and Near East received the following cable: "This day several licenses with great volume applied in GVN found favor Honda gasoline engines as gasoline engines marine in use adaptible with loc illy made stern arrangement and propellers Honda brand one cylinder vertical type air cooled four cycle stop 4.5 hp FOD $45.00 6.8 hp $64.50 stop please interfere It was my understanding that there was an agreement that U.S. goods would be bought when available. If this is allowed to happen the Japanese will take over this market and receive U.S. dollars for their engines. I think that now is the time to stop this as support must be a two way street. I would sincerely appreciate your giving this your prompt attention and you will be receiving other congressional help as all U.S. engine manufacturers are requesting help. Sincerely, DON L. McDONALD, Vice President. JOHN W. ROBY CO. LETTER OF JUNE 6, 1969 This complaint was the subject of an inquiry which we received from the Honorable John C. Culver on June 18. 1969. A copy of the AID response dated August 14, 1969, is attached for inclusion in the record. DEPARTMENT OF STATE, Hon. JOHN C. CULVER, DEAR CONGRESSMAN CULVER: This is in further reply to your inquiry of June 18 on behalf of Mr. Donald L. McDonald, an official of the Clinton Engines Corporation. Mr. McDonald enclosed a letter from Mr. John W. Roby, the company's representative in East Asia, in which Mr. Roby alleges that American suppliers of gasoline engines for commercial import into Vietnam are exposed to unfair competition from other countries. We have now received a report on this subject from our Mission in Saigon. Mr. Roby suggests that letters of credit have recently been opened for large quantities of Japanese gasoline engines financed with the Government of Vietnam's (GVN) foreign exchange. He states that while gasoline engines were formerly bought from the United States under AID financing, American sup |