that, several of CIEP's constituent agencies will lead discussions of inter national finance, the oil producer-consumer conference, and foreign investmen policy.

On the second day, discussions will focus on strategy for the multilateral trad negotiations, export financing and promotion, and international commodit policy.

As you are well aware, there are frequently divergent views within th executive branch as to the appropriate U.S. Government policy on specific inter national economic issues. One of CIEP's primary functions is to bring thes differences into focus in an effort to stimulate agreement on the best approac so that appropriate recommendations can be made to the President. That is on of the major objectives of the International Economic Policy Review, althoug it would be unrealistic to expect every issue to be fully resolved in this 2-da session.

EXAMPLES OF HOW CIEP OPERATES

As is usually true of Cabinet-level entities, the full Council has not m frequently. The most recent CIEP meeting was held just 3 weeks ago, March 26. Most of the Council's work necessarily is conducted by subcommitte or interagency task forces, CIEP is an active, working member of the Econom Poney Board. The EPB was established last fall by the President with bros jurisdiction over all economic matters. In addition, the CIEP Executive I restor is a member of the EPB Executive Committee, which meets daily consider economic matters. The CIEP staff works with the EPB by providi staff support with respect to the international economic policy aspects of t issues brought before it.

CIEP has been involved recently in a variety of interagency task forces esta lished to deal with current economic policy issues. Some examples follow: Foreign investment in the United States. CIEP established a staff lev interagency task force on foreign investment in the United States in June 19 to review our policy towards inward investment. The task force recommend tions were approved by the CIEP Council in December 1973 and the then CIE Executive Director was the principal administration witness in three differe sers of hearings on foreign investment in early 1974. In addition, the CIE staff level committee undertook a review of the special problems of governme investment in the United States in the spring of 1974, and began an extensi review of OPEC investment in the United States, specifically, in September 19 time of the conclusions reached by CIEP in 1973 was that steps should be tak to obtain better and more comprehensive data concerning foreign investment the United States. Therefore. CHEP proposed that the Departments of Commer and Treasury undertake a benchmark survey of such investment and work with various congressional committees in supporting the Foreign Investme Study Act of 1974, passed by Congress and signed into law last October. addition, CIEP and OMB have recently completed the initial phase of an ministration review of existing reporting requirements with respect to forei investment in the United States. The report, entitled "United States Gove ment Data Collection Activities with Respect to Foreign Investment in United States," is intended as a catalog of the existing requirements. Ho fully, it will provide a basis for future congressional and executive branch c sideration of the need for new reporting procedures.

Critical materials study.-The combination of the OPEC embargo and wi spread shortages of other raw materials in late 1973 and early 1974 raised question of U.S. vulnerability to foreign producers' manipulation of supply a prices of critical imported materials. Under the joint direction of CIEP & the National Security Council, this issue was examined in depth. We evalua all of our major imported nonfuel raw materials in order to determine the ext of our economic dependence, and reviewed existing guidelines for strate stockpiles. We concluded that generally, the United States is not seriously vuli able to another OPEC-type action involving non-fuel imported raw materials. reliance on such materials is a modest 15 percent, compared to Europe, 75 1 cent, and Japan, 90 percent. In fact, only three materials were found to h any significant degree of vulnerability-bauxite, chromium, and platinum. findings were presented in a "Special Report on Critical Imported Materia published 4 months ago, and have subsequently been confirmed by similar stud outside of the Government.

Multinational corporations.-As a part of its general work on investment matters, CIEP chaired an interagency working group on investment and MNC issues arising in the OECD context. In particular, the CIEP interagency group developed administration positions with respect to: (1) investment incentives and disinentives, (2) a guideline for national treatment for foreign investors, and (3) the need for a code of conduct to govern the activities of MNC's. As the interest in MNC issues increased and broadened during the past year, CIEP recognized the teed for the creation of a focal point within the executive branch to deal with VNC issues as they arise in a number of different international contexts. For imple, at one time last year the executive branch was considering proposals with respect to regulation and control of MNC's in the OECD, in ECOSOC, in NOTAD, in the Latin American Foreign Ministers meeting and the ILO. In sponse to this proliferation of activities, CIEP established, under the chairmanp of the State Department, an interagency working group on multinationa! porations. The purpose of this committee is to develop executive branch posis to provide guidance to our representatives and negotiators to the various rnational meetings and to provide for executive branch coordination of ou ponses to emerging MNC issues.

8. policy regarding international commodity agreements.-As a consequence the rising prices and limited availabilities of many industrial raw materials in **) and early 1974, as well as the price increases by the OPEC countries with pect to petroleum, many raw materials producing countries have been seeking maintain high prices for the raw materials they produce. To deal with this *lem. CIEP has participated with the Departments of State, Treasury, ComThe Interior, the Office of the Special Trade Representative and others, in valuating U.S. policy concerning involvement in international commodity agree**s and other forms of financial assistance to raw materials producers. A precary report on this subject is due by the end of April.

propriation policy.—The Presidential statement of January 1972 remains the for U.S. policy on expropriations: International law requires that any ng of American property must be accompanied by prompt, adequate, and tive compensation. The USG will give full diplomatic support to the claims ́s investors for equitable treatment in accordance with these international dards. CIEP was instrumental in the formulation of this policy and continues ve overall responsibility for its coordination, review and implementation. CIEP Interagency Expropriation Committee, chaired by the Department of e and reporting to CIEP, is charged with the operational management of priation cases.

t-West trade.-CIEP took the lead in a number of pioneer studies on East"-t trade, and the development of our economic relations with the Soviet Union Eastern Europe as our policy of détente took shape in the 1971-73 period. quently, CIEP chaired an interagency task force which completed a study e economic aspects of the proposed LNG project with the U.S.S.R. in Febdr 1974. In 1974 CIEP also chaired an interagency task force which examined "t protection for U.S. firms in the U.S.S.R.. and chaired two interagency ng groups on proposed amendments to the Export Administration Act dealIt with export licensing to the Communist countries.

"ternational aviation policy.—In the spring of 1974, CIEP chaired an intertask force to review the critical financial problems of U.S. international arriers. That summer, the work of the task force was turned over to the ment of Transportation for the development of administration action plan with the serious problems of international aviation. CIEP is now particig in the overall administration review of international aviation policy which aired by State and Transportation.

OPERATIONS

- Chairman. I would like to turn for a few moments to a discussion of the ration of the CIEP staff. I am pleased to say that this is one staff in gton which has remained a small and, hopefully, an efficient operation beginning. The staff is composed of 40 total members. The nucleus of the @its permanently assigned members. They provide the economic, legal, and ational affairs skills needed because of the broad range of complex issues ich CIEP deals. Our detailees are equally as important to our operation 1* they not only bring to us certain badly needed individual skills but also the Council useful insights from the point of view of their parent agencies.

The staff is organized into four groups. Group I is responsible for developmen issues, including everything primarily affecting the less developed countries, fool East-West trade, AID), expropriations, and other like issues.

Group II deals with financial, investment and service issues, including energ foreign inward investment, airlines, maritime matters, multinational corpor tions, monetary affairs, law-of-the-sea issues, and taxation.

Group III handles industrial issues, relations with developed countries inclu ing the OECD, raw materials, critical materials, technology, nuclear energy, an trade.

Group IV provides operational support and is responsible for organizations domestic policy coordination matters and special projects in addition to the prep ration of the annual International Economic Report.

An organizational chart describing the CIEP staff and the group assignmen is attached for your reference as exhibit A.

APPROPRIATIONS REQUEST

CIEP's budget has not grown significantly over the years, and we are seeki only a small increase this year which will partially cover increased costs due inflation. The current year's budget is $1.6 million, and we are seeking $1.6 million for fiscal year 1976. We are asking for $1.670 million for the fiscal ye ending September 30, 1977.

We understand that the authorization for funding for the "transition perio occasioned by the change in the commencement of fiscal years from June 30 September 30 will be handled by way of a bill covering all Federal agencies, that funding for that period should not properly be included in our request.

The authorization for fiscal year 1976 reflects an increase of only $57,000 ov that appropriated for 1975. Some $15,000 of the increase will be used for dir and related increased personnel expenditures. The remaining $42,000 will be us for increased costs related to travel, space rentals, and printing of the annu report. The small increase of $13,000 for fiscal year 1977 is based on an anti pated increase in space rental costs and increases in terminal leave paymen for departing personnel.

Incidentally, in accordance with the recommendation of the Conference Co mittee on CIEP's 1975 appropriation bill, we have asked for an amendment our authorizing legislation permitting CIEP to continue to appoint and co pensate its staff without regard to the provisions of law regulating the empl ment and compensation of persons in the Government service. You will rec that language to that effect has been included in each act making appropriatic for CIEP operations since its statutory establishment. However, because su language is more appropriate in basic authorizing legislation and may be subj to a "point of order" in annual appropriation bills, we are seeking an ame ment to our basic statute through the committees having jurisdiction over authorizing legislation. As I mentioned, this is in accordance with your reco mendation last year.

Mr. STEED. You may proceed.

SUMMARY STATEMENT

Mr. DUNN. Congress established CIEP under the Internationa Economic Policy Act of 1972, Public Law 92-412. The original ration ale applies today. There is need for an organization within the Exec utive Office of the President to insure that international economi policy is formulated in a realistic and balanced manner. The counci attempts to provide a top-level focus for coordinating input from al agencies in the executive branch working in this area. CIEP therefor assists the President in his determination of international economi policy for the United States. There is no other entity in the administra tion either by design or activity which performs this function.

The most recent full Council meeting was held 4 weeks ago, on Marc 26. However, most of the Council's work is conducted in subcommittee or by interagency task groups. CIEP also is an active participant i the activities of the Economic Policy Board. The Executive Directo is a member of the EPB Executive Committee, which meets daily t consider economic matters. The CIEP staff works closely with th EPB, providing staff support and handling interagency coordinatio for international economic policy aspects of issues brought before th Board.

INTERNATIONAL ECONOMIC POLICY ISSUES

CIEP has been involved recently in a variety of economic polic issues. Among others, we have been concerned with foreign investmen in the United States, critical imported materials, multinational corpo rations. U.S. policy regarding international commodity agreement expropriation policy, East-West trade, and international aviatio policy. Many of these topics were discussed in this year's annual repor which was submitted to the Congress on March 20, 1975.

STAFF OF COUNCIL

Mr. Chairman, I would like to turn briefly to a discussion of th organization of the staff. Our permanently authorized staff is no composed of 31 members; we have requested authorization for 30 fo fiscal year 1976. This nucleus provides the economic, legal, intern: tional business and financial skills needed to cover a broad range o complex issues.

We also plan about 10 detailees which bring to us not only specif individual skills but also parent agency viewpoints helpful for pa ticular current issues.

The staff is organized into four groups: Development issues, 1 nancial issues, industrial issues, plus the fourth group which provid operational support and is responsible for domestic policy liaison. also is primarily responsible for the preparation of the Annual Inte national Economic Report of the President.

BUDGET

CIEP's budget has not grown significantly over the years. We a seeking only a small increase this year to cover partially increase