Embargo Regulations Under the Trading With the Enemy Act Letter to the Speaker of the House and the President of the Senate.

Dear Mr. Speaker: (Dear Mr. President:)

Today I issued a Determination that the extension for one year of the authorities currently exercised under Section 5 (b) of the Trading With the Enemy Act, 50 U.S.C. App. 5 (b), with respect to the countries indicated below, is in the national interest. This Determination was issued pursuant to Section 101 (b) of Public Law 95-223, December 28, 1977, 91 Stat. 1625.

The Foreign Assets Control Regulations, 31 CFR Part 500, prohibit persons subject to the jurisdiction of the United States from engaging in unlicensed commercial or financial transactions with North Korea, Vietnam, Cambodia or nationals of these countries. The Regulations prohibit importation or dealing in merchandise of these countries or transactions in blocked assets of these countries or their nationals absent a license from the Office of Foreign Assets Control, Department of the Treasury.

In the case of the People's Republic of China (PRC), Chinese assets have remained blocked under the Regulations but current commercial or financial transactions are authorized except for the control of strategic items.

On December 15, 1978, I announced that the United States and the PRC had agreed to recognize each other and to establish diplomatic relations as of January 1, 1979. As part of our resumption of normal relations, the United States and the Government of the PRC entered into an Agreement Concerning the Settlement of Claims, signed on May 11, 1979.

Under the Agreement, the Government of the PRC agreed to pay to the Government of the United States $80.5 million in settlement of claims of United States nationals arising out of expropriation losses in China. The Government of the PRC will pay $30 million of the total on October 1, 1979, and the remainder in five equal annual installments.

Under the Agreement, the United States will unblock Chinese blocked assets by October 1, 1979. Along with the general unblocking of Chinese assets, the United States will impose a twelve-month moratorium on the transfer of blocked Chinese assets to state custodians of abandoned property under state laws providing that abandoned or unclaimed property is to be transferred to their custody. The moratorium is designed to facilitate Chinese recovery of this class of assets.

The Transaction Control Regulations, 31 CFR Part 505, are Treasury regulations which prohibit U.S. persons from engaging in unlicensed sales of strategic goods located abroad to almost all Communist countries.

The Cuban Assets Control Regulations, 31 CFR Part 515, are parallel to the Foreign Assets Control Regulations in content. However, foreign subsidiaries of U.S. firms may engage in certain non-strategic types of trade with Cuba under Treasury license.

The Foreign Funds Control Regulations, 31 CFR Part 520, continue to block the property of Czechoslovakia and the German Democratic Republic pending a claims settlement of private American property following World War II. The Regulations also continue to block such assets of Estonia, Latvia, and Lithuania as a reflection of the U.S. policy of nonrecognition of the forcible incorporation of those countries into the USSR.

I have determined that the authorities for these four regulatory programs should be extended because the results attendant upon the lapse of these authorities would be unacceptable in light of present U.S. foreign policy objectives. Their extension would be in the national interest of the United States for the following reasons.

(1) Current trade and financial embargoes against Cambodia, Cuba, North Korea, and Vietnam should continue until such time as the policies of those countries make it appropriate for us to modify our restrictions on trade and financial transactions with those countries.

(2) The Transaction Control Regulations are needed to support controls to which we have agreed with our allies with respect to the export of strategic goods to Communist countries.

(3) Freezing of Vietnamese and Cuban assets and controls over the remaining World War II assets of the German Democratic Republic and Czechoslovakia should continue until American claims against these countries are settled. Controls over the remaining World War II assets of the Baltic States should continue as a reflection of the U.S. policy of nonrecognition of the forcible incorporation of these countries into the USSR.

(4) To implement the US-PRC Claims/Assets Agreement, authority for administration of blocked PRC assets should continue through the period of the extension of the authorities.

In light of these considerations, pursuant to Public Law 95 223, I have extended the exercise of these authorities for another year, until September 14, 1980.

Sincerely,

JIMMY CARTER