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.ARRANGEMENT BETWEEN THE GOVERNMENT OF THE REPUBLIC OF INDONESIA AND THE GOVERNMENT OF THE REPUBLIC OF PAKISTAN FOR THE SUPPLY OF COTi'ON YARNS TO THE REPUBLIC OF INDONESIA, PARTIALLY AGAINST

RAW

COTI'ON TO BE DELIVERED UNDER THE UNITED STATES PL-480

PROGRAMME.

The Government of the Republic of Indonesia and the Government of the

Republic of Pald.stan desirinB to make arrangements for the export of cotton yarns amounting to approximately

u.s.,81,000,000

F.O.B. from Pald.stan to the Republic of Indonesia, and for the acceptance in Pald.stan of raw cotton of

the value of

u.s.,$650

1000 in partial payment

(65

per cent) for the cotton

yarns so exported (the balance,

35

per cent, to be paid in

u.s.

dollars) have concluded an arrangement as set forth below.

This Arrangement was made in the knowledge that the Government of the

. United States of America have agreed to issue to the Government of the Republic of Indonesia a pirchase authorization (hereinafter called PA) for raw cotton pirsuant to Title I, United States Public Law

480-83rd

Congress (hereinafter referred to as PL

480),

and have agreed that the Government of the Republic of Indonesia may transfer, as needed, to the Government of the Republic of Pakistan

the autbori ty to sub-authorize the PA.

For the pirpose of this Al:Tangement the rate of conversion between Pound Sterling and the

u.s.

dollar will be: Pound Sterling one equal to U.S. dollars two and eighty cents only.

I. The Government of the Republic of Pakistan

A. will facilitate the export of cotton yarns manufactured in Pakistan at competitive prices and according to agreed qualities;

B. will arrange for the acceptance of raw cotton made available to the Government of the Republic of Indonesia by the United States of America under the PL

480

in partial payment for the F.O.B. value of the cotton yarns exported to importers in Indonesia under this A.ITangement;

C. will arrange for the contracting f'or the raw cotton under the PA prior to

March

31, 1964,

and for the shipnent prior to April

30, 1964,

with the understanding that these terminal contracting and shipping dates may be extended by agreement betweon the Government of' the Republic of Indonesia and the Government of the United States of America;

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-D. will arrange that the raw cotton under the PA shall be imported under the applicable regulations of the United States Department of Agriculture, and agree that the raw cotton shall not be imported into Pakistan unless respective letters of credit for cotton yarns have been opened, with the understanding that the imports of PL

480

financed raw cotton will only amount to

65

per cent of the

F.o.B.

value of letters of credit so opened;

E. will inform the Government of' the Republic of Indonesia from time to time of the net value of shipments of cotton yarns, of letters of' credit

opened for raw cotton, and of the net value of actual shipnents of raw cotton received;

F. recognize that the raw cotton imported from the United States of America into Pakistan under this ArranBement will be in addition to raw cotton that would otherwise be imported from the United States of' America and countries friendly to the United States of America;

G. accept that claims in respect of deficiency in quality or quantity of cotton yarns shall be settled by negotiations between exporters in

Pakistan and importers in Indonesia in accordance with normal commercial practice, and that any deficiency in quality and quantity will be made good by additional supplies of cotton yarns, or, failing that, by remittance in

u.s.

dollars in favour of importers in Indonesia.

II. The Government of the Republic of Indonesia

A. will transfer to the Government of the Republic of Pakistan the authority to sub-authorize the PA for raw cotton equivalent to the value of

u.s.$650,000

as soon as possible after the Government of the Republic of

Indonesia has received the PA;

B. will arrange for the import of cotton yams from Paki.stan and will issue licences and/or make allocations to importers in Indonesia as soon as possible after the coming into effect of this .Arrangement, provided that sixty-five per cent of the total F.O.B. value of the exported cotton yarns shall be in the aggregate equivalent to ｵＮｳＮｾＶＵＰＬＰＰＰ＠ worth of raw cotton.

Such licences shall be valid only for Paki.stan and shall be distinguiShed from ordinary import authorizations by notation:

"For PL

480

Transactions only".

The import licences and/or allocations shall be valid until March 31,

1964,

but this date may be extended pari passu with the terminal dates

for the contracting for, and shipment of, raw cotton from the United States of America mentioned in paragraph

r.c.

above;

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-C. will arrange that importers in Indonesia of cotton yams complete their purchase contracts with exporters in Pakistan as expeditiously as possible, and will arrange that such purchase contracts call for a shipment date as early as possible and mutually convenient;

D. will solely be responsible for the deposit to the account of the Government of the Thlited States of America of the Rupiah equivalent of U.S. dollar disbursement as required under the PL

480

.Agreement between the Governments of the Republic of Indonesia and the United States of America and under the PA;

E. will recommend to the Government of the United States of America a reasonable extension of the PA in the event that the fulfilment of the Arrangement as mentioned in ｰ｡ｲ｡ｧｾ｡ｰｨ＠ I.e. above is prevented by some occurrence such as railway and natural catastrophes, fire, explosions, strike, lockout, war, riot, civil commotion as well as other events which will generally be recognized as oases of "force majeure", over which the Government of the Republic of Pakistan has no control;

F. recognize that the cotton yarns imported from Pakistan to Indonesia under this .Arrangement will be in addition to the cotton yams that would otherwise be imported from the United States of .America and countries friendly to the United States of .America.

III. General stipulations:

A. Any residual amount of sub-authorizations against the PA in the neighbourhood of ｵＮｳＮｾＱＰＰＰ＠ for which the United States of America cannot reasonably be expected to make shipnent, shall be settled without delay, by the Government of the Republic of Indonesia to the National Bank of Pakistan in cash.

B. Commercial contracts for the delivery of the cotton yarns shall be made on terms to be negotiated between exporters in Pakistan and importers in Indonesia.

c.

The annexed procedure shall be regarded as a pa.rt of this Arrangement ! D. This .Arrangement shall come into force on the date of signature.

In itness Whereof, the undersigned, being duly authorized

have signed the present Arrangement. 1

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Done in duplicate, in the English language, at Djakarta, this

seventh day of January,

1964.

For the Government of the Republic of Indonesia,

Signed

Sudojo Tjitrokusumo,

Acting Chief of the Directorate

for International Economic Cooperation,

Department of Foreign Affairs, Djakarta.

For the Government of the Republic of Pakistan,

Signed

Ghulam G. Khan,

Charge d'.Af'faires a.i. of Pakistan, Embassy of the Republic of

Pakistan,

Djakarta.

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PROCEDURE

A. For cotton ya.ms that will be imported by the Repiblic of Indonesia. 1. The Government of the Republic of Indonesia will issue import licences

and/or make allocations to its importers for the F.O.B. value of the cotton yarns, and the cost of shipment from Pakistan to Indonesia if shipnent is required to be a.ITanged by the Pakistan exporters.

2. Importers in Indonesia will place orders for the cotton yams with

exporters in Pakistan and open

u.s.

dollars ilTevooable sight letters of' credit in favour of' exporters in Pakistan to cover the purchases. All contract prices shall be expressed in Pound Sterling which shall be converted into U.S. dollars at the fixed rate of Pound Sterling one equal to

u.s.

dollars two and eighty cents only. The U.S. dollars irrevocable sight letters of credit will be opened imnediately after conclusion of the relevant contract and advised through the National Bank of Pakistan.

3. _{Exporters in Pakistan will ship} the cotton yams and draw drafts against the U.S. dollars irrevocable sight letters of credit. The drafts shall be drawn separately (a) for manufacturing charges expressed in

u.s.

dollars representing the sum of thirty-five (35) per cent of the contract prices for exported cotton yarns, (b) for raw cotton in partial payment for exported cotton yarns expressed in

JJ

.s.

dollars repres.enting the sum of sixty-five (65) per cent of the contract prices for the exported cotton yarns, and (c) for the actual cost of shipment of the cotton yarns from Pakistan to Indonesia to be reimbursed to the exporters in Pakistan by the importers in Indonesia in case shipment is required to be a.ITanged by the exporters.

4.

The National Bank of Pakistan will negotiate drafts dravm by the exporters.

5.

The National Bank of Pakistan will forward the drafts and relevant documents to Bank Indonesia.

6.

The National Bank of Pakistan will draw in reimbursement in U.S. dollars on the

u.s.

Bank nominated by Bank Indonesia for the sum of drafts for

manufacturing charges and shipnent costs i f applicable, the amount of which corresponds to that as stipulated in paragraphs 3.(a) and 3.(c) of this P.t-ocedure. Bank Indonesia will credit the sum of drafts for raw cotton in partial payment for exported cotton yarns, the a.mount of which corres-ponds to that as stipulated in paragraph 3.(b) of this f>rocedure, to the

u.s.

dollars Escrow Account in the name of the National Bank of' Pakistan.

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The amounts in the U.S. dollars Escrow Account will be debited only in accor-dance with the terms stipulated in the paragraph B.8.(i) of this Procedure.

B. For the United States raw cotton that will be imported by Pakistan.

1. The United States Depa.r"bnent of .Agriculture (Commodity Credit Corporation) will issue Letters of CoJ!IIIlitment to the bank in the United States of America nominated by Bank Indonesia in respect of the

u.s.

dollar letters of credit opened under the PA by the National Bank of Pakistan.

2. Importers in Paldstan will place orders for the raw cotton with exporters in the United States of America.

3.

_{The National Bank of Pakistan will open U.S. dollar letters of credit in}

favour of the raw cotton exporters and advise them through the bank in the

United States of America holding Letters of Commitment which have been issued.

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4. Exporters in the United States of America will ship the raw cotton and draw

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drafts against the

u.s.

dollar letters of credit.

5.

The bank in the United States of America will negotiate the drafts and pay

exporters in the United States of America in U.S. dollars and will forward shipping documents to the National Bank of Pakistan.

6.

The United States Department of Agriculture (Commodity Credit Corporation) will make reimbursement for

95

per cent of the invoice vaLe of each shipnent paid by the bank in the United States of America, while the remaining 5 per cent will be for the account of the importers in Pakistan. In the aggregate the amount reimbursed by the Comnodi'ty Credit Corporation will total the :full dollar amount authorized in the PA. Any claims resulting from shipments deficient in quality or quantity (or in respect of other claims as specified in the PA) will be settled directly between the importers in Pakistan and the exporters in the United States of America.

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The bank in the United States of America will notify Bank Indonesia and

request it to deposit an amount of Rupiah equivalent to the

u.s.

dollar amount reimbursed by Comnodi ty Credit Corporation to the Special United States

Government Account, and the National Bank of Pakistan will confirm the amount debitable to its U.S. dollars Escrow Account as provided in paragraph B.8.(i) below.

8. Bank Indonesia will

(i) debit the U.S. dollars Escrow Account in the name of the National Bank of Pakistan the amounts of the

u.s.

dollar drafts ,

(ii) credit the Special United States Government Account with appropriate

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CONFIDENTIAL

Djakarta, 7th January,

1964.

Sir,

I have the honour to refer to the negotiations between the represen-tatives of the Government of the Republic of Pakistan and the represenrepresen-tatives of the Government of the Republic of Indonesia leading up to the signing today of the Arrangement between ｾ･＠ Government of the Republic of Pakistan and the Government of the Republic of Indonesia for the Supply of Cotton Yarns to the Republic of Indonesia, Partially against Raw Cotton to be delivered from the United States of .America under the United States PL

480

Programne and to

confim on behalf of the Government of the Republic of Pakistan, the following understandings reached during the course of the negotiations.

1. The use of the words "competitive prices" in clause I.A. of the above-mentioned Arrangement will not effect the already contracted prices of the cotton yarns as agreed between the Pald.stan exporters

and tl}e Indonesian importers in the Commercial Contract dated 3oth

November,

1963,

at Karachi.

2. Notwithstanding the foregoing paragraph, the contracted F.O.B. prices as expressed in Pound Sterling in the Coimnercial Contract dated }oth November,

1963,

at Karachi, will be reduced to the extent of

u.s.,30.02 (u.s.

cents two only) per Pound Sterling.

I shall be grateful for your- confirmation of the above-mentioned understandings on behalf of the Government of the Republic of Indonesia.

Please accept, Sir, the assurance of my high

consideration.-Mr. Sudojo Tjitrokusumo,

Acting Chief of the Directorate

Signed

Ghulam G. Khan,

Charge d'.Affaires a .i. of Pakistan, Embassy of the Republic of Pald.stan, Djakarta.

for International Economic Cooperation, Department of Foreign Affairs,

Djakarta.

FULL POWER

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WHEREAS ·it is expedient that a fit

person should be invested with Full Power and

Authority to sign, on behalf of the Government

of the Republic of Pakistan, the Agreement for

the supply of yarns to Indonesia

ｾ｡ｲｴｩ｡ｬｬｹ＠

against

raw cotton to be delivered from United States

under P.L.480 Program.me.

NOW THEREFORE I, Zulfikar Ali Bhutto,

Minister for External Affairs in the Governaent

of the Republic of Pakistan, do hereby certify that

G.G • . Khan, Charge d'Affaires in Indonesia, is, by

these Presents, named, constituted and appointed

as Plenipotentiary having Full P wer and Authority

to sign the Agreement mentioned above on behalf of

the Government of the Republic of Pakistan.

IN WITNESS WHEREOF, I have signed these

Presents and affixed thereto my seal.

DONE at Karachi this seventll day

of January

in

the year one thousand, nine hundred

and sixty four •.

Signed