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I

•

AGREEMENT
BETWEEN
THE GOVERNMENT OF THE REPUBLIC OF INDONESIA
AND
THE GOVERNMENT OF THE UNITED STATES OF AMERICA
FOR THE SALE OF AGRICULTURAL COMMODITIES

AGREEMENT BETWEEN THE GOVERNMENT OF THE
REPUBLIC OF INDONESIA
AND THE GOVERNMENT OF THE UNITED STATES OF AMERICA
FOR SALES OF AGRICULTURAL COMMODITIES

I
The Government of the Republic of Indonesia and the Government of
the United States of America , recognizing the desirability of expanding
trade in agricultural commodities between the United States of America
(hereinafter referred to as the Exporting Country) and the Republic of

Indonesia (hereinafter referred to as the Importing Country) and with
other

friendly

countries

in

a

manner

marketings of the Exporting Country

that

will

in these

not

displace

commodities or

usual
unduly

disrupt world prices of agricultural commodities or normal patterns of
commercial trade with friendly countries;

I

Taking into account the importance to developing countries of their
efforts to help themselves toward a greater degree of self-reliance,
including

efforts

to

meet

their

problems

of

food

production

and

population growth;

Recognizing

agricultural

the

policy

of

the

productivity to combat

Exporting
hunger

and

country

to

malnutrition

use

its

in

the

developing countries, to encourage these countries to improve their own
agricultural
development;

production,

and

to

assist

them

in

their

economic

I

Recognizing the determination of the Importing Country to
its

own

production,

products,

including

storage,
the

and

reduction

distribution
of

waste

in

of

improve

agricultural

all

stages

of

food
food

handling;

Desiring to set forth the understandings that will govern the sales
of agricultural commodities to the Importing Country pursuant to Title
I of the Agricultural Trade Development and Assistance Act, as amended,
(hereinafter referred to as the Act),
governments will take

and

the measures

that

the

two

individually and collectively in furthering

the

above-mentioned policies:

Have agreed as follows:

PART I - GENERAL PROVISIONS

ARTICLE I

A.

Agreement to Finance Commodity Sales

I
The Government of

the Exporting Country undertakes

to

finance

the sales of agricultural commodities to purchasers authorized by the
Government of

the

Importing Country in accordance with the

terms and

conditions set forth in this Agreement.

B.

Purchase Authorizations

The financing of the agricultural commodities listed in Part II
of this Agreement will be subject to:

- 2 -

1.

The

issuance by

Purchase

the Government

Authorizations

and

of

Exporting

their

Country

acceptance

by

of
the

Gover nment of the Importing Count r y; and

2.

The availability of the specified commodities at the time
of exportation .

I

c.

Application for Purchase Authorizations

Application for Purchase Authorizations will be made within 90
days afte r the effective date of this Agreement , and , with respect to
any additional commodities or amounts of commodit i es provided for
any amendment to this Agreement , within 90 days after
date of

such amendment

to

this

Agreement.

in

the effective

Purchase Authorizations

shall include provisions relating to the sales and deli very of such
commodities, and other relevant matters.

o.

Delivery Periods

Except as may be authorized by the Government of the Exporting

I

Country , all deliver i es of commodities sold under this Agreement shall
be made within the supply periods specified in the Commodity Table in
Part II .

E.

Maximum Export Values

The value of the total quantity of ea ch commodity covered by
the Purchase Authorizations shall not exceed the maximum export market
value specified for that commodity in Part II .
- 3 -

The Government of the

Exporting country may limit the total value of each commodity to be
covered by Purchase Authorizations as price declines or other marketing
factors may require, so that the quantities of such commodity sold will
not substantially exceed the applicable approximate quantity specified
in Part II .

F.

I

Ocean Freight

The Government of the Exporting Country shall bear the ocean
freight differential for

commodities the Government of the Exporting

Country requires to be transported in United States flag vessels.

The

ocean freight differential is deemed to be the amount , as determined by
the Government of the Exporting Country, by which the cost of ocean
transportation is higher (than would otherwise be the case) by reason
of the requirement that the commodities be transported in United States
flag vessels.

The Government of the Importing Country shall have no

obligation to reimburse the Government

of

the

Exporting Country or

deposit local currency of the Importing Country for the ocean freight
differential borne by the Government of the Exporting Country.

I

G.

Transportation Letters of Credit

Promptly

after

contracting

for

United

States

flag

shipping

space to be used for commodities required to be transported in United
States flag vessels , and in any event not later than presentation of
vessel

for

loading,

the Government of

the Importing Country or

the

purchasers authorized by it shall open a Letter of Credit, in United
States dollars , for the estimated cost of ocean transportation for such
commodities.

- 4 -

H.

Change in Conditions

The financing,

sale,

and delivery of commodities

Agreement may be terminated by either government

if

under

this

that government

determines that because of changed conditions the continuation of such
financing, sale, or delivery is unnecessary or undesirable.

I
ARTICLE II

A.

Initial Payment

The Government of the Importing Country shall pay, or cause to
be paid, such initial payment as may be specified in Part II of this
Agreement.

The amount of this payment shall be that portion of the

purchase price (excluding any ocean transportation costs that may be
included therein) equal to the percentage specified for initial payment
in Part II,

and payment shall be made

in United states dollars

in

accordance with the applicable Purchase Authorization.

I
B.

Currency Use Payment

The Government of the Importing country shall pay, or cause to
be paid, upon demand by the Government of the Exporting Country in
amounts as it may determine, but in any event no later than one year
after the final disbursement by the Commodity Credit Corporation under
this Agreement, or the end of the supply period, whichever is later,
such payment as may be specified in Part II of this Agreement pursuant
- 5 -

to Section 103(B) of the Act (hereinafter referred to as the currency
Use Payment) .

The Currency Use Payment shall be the amount financed on

credit terms by the Exporting Country equal to the percentage specified
for

Currency

Use

Payment

in

Part

II .

Payment

shall

be

made

in

accordance with paragraph G, and for purposes specified in Subsections
104(A), (B), (E) , and (H) of the Act, as set forth in Part II of this
Agreement .

such payment shall be credited against (a) the amount of

each year's interest payment due during the period prior to the due

I

date of the first installment payment, starting with the first year ,
plus (b) the combined payments of principal and interest starting with
the first

installment payment ,

Payment has been offset.

until the value of the currency Use

Unless otherwise specified in Part II, no

requests for payment will be made by the Government of the Exporting
Country

prior

to

the

first

disbursement

by

the

Commodity

Credit

Corporation of the Exporting country under this Agreement.

c.

Type of Financing

Sales of the commodities specified in Part II shall be financed
in accordance with the type of financing indicated therein.

I

Special

provisions relating to the sale are also set forth in Part II.

o.

Credit Provisions Applicable to Sales to be Financed on Credit

Terms as Specified in Part II:

1.

With respect to commodities delivered in each calendar year

under this Agreement, the principal of the credit (hereinafter referred
to as Pr i ncipal) will consist of the dollar amount disbursed by the

- 6 -

Government of the Exporting Country for the commodities (not including
any ocean transportation costs.)

The Principal shall be paid in accordance with the payment
schedule in Part II of this Agreement.

The first installment payment

shall be due and payable on the date specified

in Part

II of this

Agreement .

I

Subsequent installment payments shall be due and payable at
intervals of one year thereafter.

Any payment of Principal may be made

prior to its due date.

2.

Interest on the unpaid balance of the Principal due

Government of the Exporting Country for

the

the commodities delivered in

each calendar year shall be paid as follows:

a.

In the case of dollar credit , interest shall begin to
accrue

on

the

date

of

last

commodities in each calendar year.

deli very

of

these

Interest shall be

paid not later than the due date of each installment

I

payment of Principal, except that if the date of the
first installment is more than a year after such date
of last delivery, the first payment of interest shall
be made not later than the anniversary date of such
date

of

last

delivery,

and

thereafter

payment

of

interest shall be made annually and not later than the
due date of each installment payment of Principal.

- 7 -

b.

In

the

case

of

convertible

local

currency

credit,

interest shall begin to accrue on the date of dollar
disbursement
Country.

by

the

such

Government

interest

shall

of

the

Exporting

be

paid

annually

beginning one year after the date of last delivery of
commodities in each calendar year, except that if the
installment payments for these commodities are not due
on the same anniversary of such date of last delivery,

I

any such interest accrued on the due date of the first
installment payment shall be due on the same date as
the
shall

first
be

installment,
paid

on

the

and

thereafter

due

dates

of

such
the

interest
susbequent

installment payments.

3.

For the period of time from the date the interest begins to

the due date for the first installment payment, the interest shall be
computed at

the initial

interest rate specified

Agreement.

Thereafter,

the

interest

shall

in Part

be

II

computed

of
at

the
the

continuing interest rate specified in Part II of this Agreement.

I

E.

Payment Provisions Applicable to Sales to be Financed on credit

Terms as Specified in Part II:

All payments shall be made in United States dollars or, if the
Government of the Exporting Country so elects,

1.

The

payments

shall

be

made

in

readily

convertible

currencies of third countries at a mutually agreed rate of exchange and
shall be used by the Government of the Exporting Country for payment of
- 8 -

its obligations or, in the case of currency use Payments, used for the
purposes set forth in Part II of this Agreement: or

2.

The

payments

shall

be

made

in

local

currency

at

the

applicable exchange rate specified in Part I, Article III, paragraph G
of this Agreement in effect on the date of payment and shall, at the
option of the Government of

I

the Exporting Country, be converted to

United States dollars at the same rate, or used by the Government of
the Exporting Country for payment of its obligations or, in the case of
currency use Payments, used for the purposes set forth in Part II of
this Agreement in the Importing Country.

F.

Payment Provisions Applicable to Sales to be Financed on Local

Currency Terms as Specified in Part II:

1.

The Government of the Importing Country shall pay, or cause

to be paid, to the Government of the Exporting country an amount of
local

currency

equivalent

to

the

dollar

amount

disbursed

by

the

Government of the Exporting Country for the commodities to be financed
on local currency terms {not including any ocean transportation costs),

I

less any portion of the initial payment payable in dollars, not later
than 120

days after date of disbursement by

Exporting Country.
shall

be

at

the

the Government

of

the

The calculation of this local currency equivalent
applicable

rate of

exchange

specified

in Part

I,

Article III G of this Agreement, using the rate in effect on the date
of payment by the Government of the Importing Country.

2.

The Government

of

the

Exporting country shall

determine

which of its funds shall be used to repay to the Government of the
- 9 -

Importing

Country

any

local

currency

due

the

Government

of

the

Importing Country as a result of refunds received by the Government of
the Exporting Country of dollar amounts financed hereunder.

G.

Deposit of Payments

The Government of the Importing country shall make , or cause to

I

be made, payments to the Government of the Exporting Country in the
currencies, amounts, and at the exchange rates provided for

in this

Agreement as follows:

1.

Dollar

payments

shall

be

remitted

to

the

Treasurer,

Commodity Credit Corporation, United States Department of Agriculture,
Washington, D.C. 20250, unless another method of payment is agreed upon
by the two governments.

2.

Payments

in the local currency of the

Importing country

(hereinafter referred to as Local Currency), shall be deposited to the
account of the Government of the United States of America in interest
bearing accounts in banks selected by the Government of the United

I

States of America in the Importing Country.

H.

Uses of Local Currency

1.

The

local

currency

accruing

to

the

Government

of

the

Exporting Country from sales of commodities financed on Local Currency
terms

shall

Exporting

be

made

Country

in

available
such

for

manner

- 10 -

use
and

by

the

order

or

Government

of

the

priority

as

t he

Government of the Exporting Country shall determine, for the purposes
and in the proportions indicated in Part II of the Agreement.

a.

Any percentage of such Local currency indicated in Part

II for loans to intermediary financial institutions will be available
for

loans

by

the Government of

institutions located or
purpose of

I

relending

to

operating

the Exporting country
in

individuals,

the

financial

to

Importing Country

cooperatives,

for

corporations,

the
or

other entities within the Importing Country, in order to finance:

{i)

Productive, private enterprise investment within
the Importing Country including such
in

projects

carried

out

by

investment

cooperatives

and

non-profit voluntary organizations;

{ii)

Private

enterprise

facilities

for

aiding

the

utilization and distribution, and increasing the
consumption
agricultural

of

and

markets

commodities

for ,
and

United
the

States

products

thereof; or

I
{iii) Private enterprise support of self-help measures
and projects outlined in Part II below.

b.

The Government of the Exporting country will keep the

Government of the Importing Country informed, in a timely manner, as to
the

intermediary

financial

institutions

selected

as

loans, the amount of such loans, and repayment terms.

- 11 -

recipients

of

The repayment

terms will be consistent with the currency conversion obligations of
the Government of the Importing Country under this Agreement.

c.

Any percentage of such Local Currency indicated in Part

II for agricultural technical assistance shall be made available by the
Government
expand

of

private

the

Exporting

sector

country

enterprise

in

for

activities

the

to

Importing

support
Country,

and
and

activities to develop and expand markets for United states agricultural

I

commodities and products thereof.

d.

Local currency paid to the Government of the Exporting

country by the intermediary financial institutions (under the terms of
their loan agreements) may be used by that Government:

( i)

To

finance

enterprise

additional
investment

productive,
under

private

agreements

with

intermediary financial institutions;

(ii)

To

develop

new

markets

for

United

States

agricultural commodities;

I
(iii) To pay United States obligations in the Importing
Country; or

(iv)

To be converted to United States dollars.

- 12 -

I.

Currency conversion Requirements

1.

The

Government

of

amount
the

of

Local

Exporting

currency

country

which

from

has

the

accrued

sale

of

to

the

commodities

financed on Local currency terms under this Agreement, and which has
been repaid to that Government by intermediary financial institutions,
less amounts thereof used to pay United States obligations, or used for
the

I

development

of

new

markets

for

United

States

agricultural

commodities , if any, in the Importing Country, shall be convertible to
United

States

specified

dollars

in Part

in

II.

equivalent shall be at

accordance

The

with

calculation

of

the
the

conversion
United

schedule

States

dollar

the applicable rate of exchange specified

in

Part I, Article III G of this Agreement on the date of conversion .

2.
Country

Local Currency received by the Government of the Exporting

under

the

terms

of

a

local

agreement

with

an

intermediary

financial institution in excess of the amount specified in paragraph l
above may be converted to United States dollars as mutually agreed.

J.

Sales Proceeds

I
The
Country from

total

amount

the sale of

of

the

proceeds

accruing

commodities financed

to

the

on credit

Importing

terms

under

this Agreement, to be applied to the economic development purposes set
forth in Part II of this Agreement, shall be not less than the Local
currency equivalent of the dollar disbursement by the Government of the
Exporting country in connection with the financing of the commodities
'

on credit terms (other than the ocean freight differential) , provided,
however, that the sales proceeds to be so applied shall be reduced by

- 13 -

the

currency

Use

Payment,

Importing Country .
Local

Currency

if

any,

made

by

the

Government

of

the

The exchange rate to be used in calculating this

equivalent

shall

be

the

rate

at

which

the

central

monetary authority of the Importing Country , or its authorized agent,
sells

foreign

exchange

for

Local

Currency

commercial import of the same commodities.

in

connection

with

the

Any such accrued proceeds

that are loaned by the Government of the Importing Country to private
or non-governmental organizations shall be loaned at rates of interest

I

approximately equivalent to those charged for comparable loans in the
Importing Country.

The

Government

of

the

Importing

Country

shall

furnish in accordance with its fiscal year budget reporting procedure,
at such times as may be requested by the Government of the Exporting
Country but not less often than annually, a report of the receipt and
expenditure

of

the

proceeds,

certified

by

the

appropriate

audit

authority of the Government of the Importing Country, and in case of
expenditures the budget sector in which they were used.

K.

Computations

The computation of the initial payment , Currency use Payment

I

and all payments of Principal and interest under this Agreement shall
be made in United States dollars.

- 14 -

I

I

ARTICLE III

A.

World Trade

The two governments shall take maximum precautions to assure
that sales of agricultural commodities pursuant to this Agreement will
not

displace

usual

marketings

of

the

Exporting

Country

in

these

commodities or unduly disrupt world prices of agricultural commodities
or normal patterns of commercial trade with countries the Government of
the Exporting Country considers to be friendly to it
this Agreement as Friendly Countries).

(referred to in

In implementing this provision

the Government of the Importing country shall :

1.

Insure that total imports from the Exporting Country and

other Friendly Countries into the Importing Country paid for with the
resources of the Importing Country will equal at least the quantities
of agricultural commodities as may be specified in the Usual Marketing
Table set forth in Part II during each import period specified in the
Table and during each subsequent comparable period in which commodities
financed

under

commodities

this Agreement are being

to satisfy

these

usual

delivered.

marketing

The

imports

requirements

for

of

each

import period shall be in addition to purchases financed under this
Agreement.

2.
fair

Take steps to assure that the Exporting Country obtains a

share of any

increase

in

commercial

commodities by the Importing Country.

- 15 -

purchases

of

agricultural

3.

Take all possible measures to prevent the resale, diversion

in transit, or transshipment to other countries or
than

domestic

pursuant

to

transit,

purposes

this

of

the

Agreement

transshipment

agricultural

(except

or

use

where

is

the use for other

conunodities

such

resale,

specifically

purchased

diversion

approved

by

in
the

Government of the United States of America).

4.

I

Take all

possible measures to

commodity of either
Part

II

of

this

domestic or
Agreement,

prevent

the

foreign origin, which

during

the

export

export

any

is defined in

limitation

specified in the Export Limitation Table in Part II

of

period

(except as may be

specified in Part II or where such export is otherwise approved by the
Government of the United States of America) .

B.

Private Trade

In

carrying

governments

shall

out

seek

the
to

provisions

assure

of

this

conditions

of

Agreement ,
commerce

the

two

permitting

private traders to function effectively.

I

c.

Self-Help

Part II describes the program the Government of the Importing
Country

is

distribution

undertaking
of

to

agricultural

improve

its

commodities .

production ,
The

storage,

Government

of

and
the

Importing Country shall furnish, in such form and at such time as may
be requested by the Government of the Exporting Country , a statement of
the

progress

the

Government

of

the

carrying out such self-help measures .

- 16 -

Importing

Country

is

making

in

D.

Reporting

In

addition

to

any

other

reports

agreed

upon

by

the

two

governments, the Government of the Importing Country shall furnish , in
such form and at such time as may be requested by the Government of the
Exporting Country:

l.

I

A report on the arrival of each shipment of commodities

purchased under the Agreement which shall include:
vessel;
date

the commodity and quantity received;

discharge

was

completed;

the

the name of each

the discharge port;

condition

of

the

the

commodity

on

arrival ; any significant loss or damage in t r ansit; and advice of any
claims for , or recovery of , or reduction of freight charges due to loss
or damage in transit on U.S. flag ships;

2.

A report covering the supply period specified in Part II,

Item I of the Agreement and containing: statistical data on imports by
country of origi n to meet usual marketing requirements specified

in

Part II, Item III of the Agreement ; a statement of the measures taken
to

I

implement

Article;

the provisions

statistical

data

on

of

Section A,

exports

by

Items

country

3 and
of

4 of

this

destination

of

commodities the same as or like those imported under the Agreement, as
specified
utilization

in

Part
of

II ,

Item

commodities

IV

of

imported

the

Agreement;

under

the

a

statement

Agreement ;

and

of
a

statement of measures taken to implement the publicity provisions of
Section I of this Article.

- 17 -

E.

Procedures for Reconciliation and Adjustment of Accounts

The two governments shall each establish appropriate procedures
to facilitate the reconciliation of their

respective records on the

amounts financed with respect to the commodities delivered during each
calendar

year.

Country and

the

The

Commodity

Credit

Government of

the

Corporation

of

the

Exporting

Importing country may make

such

adjustments in these accounts as they mutually decide are appropriate.

I
F.

Definitions

For the purposes of this Agreement:

1.

Delivery

shall

be

deemed

to

have

occurred

as

of

the

on-board date shown in the ocean Bill of Lading which has been signed
or initialed on behalf of the carrier,

2.

Import shall be deemed to have occurred when the commodity

has entered the country, and passed through customs ,

if any, of the

Importing Country, and

I
3.

Utilization

shall

be

deemed

to

have

occurred

when

the

commodity clears customs and enters normal distribution channels within
the Importing Country, including: being transported to mills, bakeries,
refineries

or

other

facilities

transported

to

local,

regional

for
or

further

central

processing;

storage

for

being

subsequent

distribution; or being transported directly to commercial or government
wholesale, retail, or ration center outlets.

- 18 -

G.

Applicable Exchange Rates

For

the purposes of this Agreement,

the

applicable

exchange

rate for determining the amount of any Local currency to be paid to the
Government of the Exporting Country shall be a rate in effect on the
date of payment by the Importing Country which is not less favorable to
the Government of the Exporting Country than the highest exchange rate

•

legally obtainable

in

the

Importing Country and which

is

not

less

favorable to the Government of the Exporting Country than the highest
exchange rate obtainable by any other nation.

With respect to Local

Currency:

1.

As long as a unitary exchange rate system is maintained by

the Government of the Importing Country, the applicable exchange rate
will

be

the

rate

at

which

the

central

monetary

authority

of

the

Importing Country, or its authorized agent, sells foreign exchange for
Local Currency .

2.

If a unitary rate system is not maintained, the applicable

rate will be the rate (as mutually agreed by the two governments) that

I

fulfills the requirements of the first sentence of this Section G.

H.

Consultation

The two governments shall,

upon request

of

either

of

them,

consult regarding any matter arising under this Agreement, including
the operation of arrangements carried out pursuant to this Agreement.

- 19 -

I.

Identification and Publicity

The Government of
measures

as

may

be

identification of food

the

mutually

Importing count ry shall
agreed

commodities at

prior
points

to
of

undertake such

delivery
distribution

for
in

the
the

Importing Country, and for publicity in the same manner as provided for
in Subsections 103(L) and 108(A)(2) of the Act •

•

PART II - PARTICULAR PROVISIONS

Item 1.

Commodity Table:

'

Supply

Approximate

Period
Commodity

Quantity

(U.S. Fiscal Year)

Wheat

(Metric Tons)

1987

TOTAL

Item II.

I

Maximum Export
Market Value
(U.S. Dol. Million)

210 , 000

23 . S

210 ,000

23 . S

Payment Terms:

Convertible

Local

Currency

Credit

(CLCC).

Th irty -two

(32)

years.

(1) Initial payment - ten (10) percent .

(2) Currency Use Payment -

ten (10) percent for Section 104(A)

purposes.

(3) Number of installments payments - twenty-six (26).

- 20 -

( 4) Amount

of each

installment payment -

approximately equal

annual

amounts .

(5) Due date of the first installment payment - seven (7) years after
date of last delivery of commodities in each calendar year.

(6) Initial interest rate - two (2) percent •

•

(7) Continuing interest rate - three (3) percent.

Item III.

Usual Marketing Table:

usual Marketing
Import Period
Commodity

Requirements

(U.S. Fiscal Year)

(Metric Tons)

1987

1,372,800

Wheat/wheat flour
(grain equivalent
basis)

•

Item IV.

Export Limitation

(A) Export limitation period:

The export limitation period shall be
1987,

or

commodities

any

subsequent

financed

under

United
this

States

United States fiscal year
fiscal

Agreement

utilized.

- 21 -

are

year
being

during

which

imported

or

•

•

(B) Commodities to which export limitations apply:

For the purposes of Part I, Article III (A)(4) of this Agreement,
the commodities which may not be exported are: for wheat/wheat flour wheat, wheat flour, rolled wheat, semolina, farina, and bulgur (or the
same products under different names).

Item

v.

Self-Help Measures:

(A) The Government of the Republic of Indonesia agrees to undertake
self-help measures to improve the production, storage , and distribution
of agricultural commodities.
implemented

to

The following self-help measures shall be

contribute directly to

development

progress

in

poor

rural areas and enable the poor to participate actively in increasing
agricultural production through small farm agriculture.

(B) The Government of the Republic of Indonesia agrees to undertake the

following activities and in doing so to provide adequate financial,
technical, and managerial resources for their implementation:

These

self-help

agricultural

measures

diversification

financial markets.

will

address

and

related

priority

constraints

agro-processing

and

to

rural

In the event that the agriculture and rural sector

support program is not approved, the funds will be jointly programmed
for use in child survival, roads, and/or irrigation activities.

- 22 -

Representatives of the signatory governments will, no later than ninety
(90)

days

after

the

signing

of

the

Agreement,

complete work

on

a

Memorandum of Understanding (MOU) detailing the self-help measures to
be

carried

out

under

this

Agreement.

information necessary to fulfill

This

MOU

will

the requirements set

contain

forth

the

in,

and

executed in the same manner as, the Agreed Minutes.

Item VI.

I

Economic Development purposes for which proceeds accruing to

the Importing Country are to be used:

(A) The proceeds accruing to the Importing Country from the sales of
commodities financed under this Agreement will be used for

financing

the self-help measures set forth in the Agreement, and for agricultural
development, rural development, nutrition and population planning, in a
manner designed to increase the access of
country to an adequate,

nutritious,

the poor in the recipient

and stable

food

supply.

Sales

proceeds will be apportioned between the Department of Finance and the
Department

of

Agriculture

over

a

two-year

period

approximately

as

follows:

I

1.

Department of Finance:

Secretariat

General,

the

us$7

million will be attributed to the

Directorate

General

of

Internal

Monetary

Affairs and the Office of Education and Training within the Department
of Finance over a two-year period, IFY 88/89 and IFY 89/90.

- 23 -

I

I

2.

Department of Agriculture:

US$12 million will be attributed to

the Secretariat General, the Directorate General of Food Crops and the
Agency for Agricultural Research and Development within the Department
of Agriculture over a two-year period, IFY 88/89 and IFY 89/90.

(B) In the use of proceeds for these purposes, emphasis will be placed
on

directly

improving

the

lives

of

the

poorest

of

the

recipient

country's people and their capacity to participate in the development
of

their

which

country.

finance

This will

agricultural

be

achieved

through

di versification

and

supporting budgets
financial

markets

development as a means to increase the potential for rural employment
and incomes.

PART III - FINAL PROVISIONS

A.
of

This Agreement may be terminated by either government by notice

termination

Government of

to
the

the

other

government

Exporting Country

if

for

any

and

it should determine

self-help program described in the Agreement is
developed .

reason ,

by

the

that

the

not being adequately

such termination will not reduce any financial obligations

the Government of the Importing Country has incurred as of the date of
termination.

- 24 -

This Agreement shall enter into force upon signature.

IN WITNESS WHEREOF, the respective representatives, duly authorized
for the purpose, have signed the present Agreement.

I

DONE at Jakarta,

Indonesia,

in duplicate,

this

sixteenth day of

June, 1987.

FOR THE GOVERNMENT OF THE

FOR THE

REPUBLIC OF INDONESIA

I

GOVERNMENT OF THE

UNITED STATES OF AMERICA

Signed

Signed

Ors. Haringun Hardjotanojo

Paul Wolfowitz

Acting Director General

Ambassador Extraordinary

of

and Plenipotentiary of

Foreign Economic Relations ,

the United States of

Department of

America to the Republic

Foreign Affairs

of Indonesia

- 25 -

AGREED MINUTES OF TITLE I, PL 480 AGREEMENT FOR FY 1987

ATTACHMENT I

PROVISIONS OF FY 1987 PL 480 TITLE I AGREEMENT

I

I

AGREEMENT

The

representatives

extensive

changes

of
in

the

United

the

PL

States

480

explained

program

caused

that
by

in

view of

recent

U.S.

legislation, all negotiations in FY 1987 would have to cover the full
text

of

an

negotiations

agreement.
between

This
the

Government of Indonesia

full

United

text

requirement

States

Government

applies
(USG)

to

the

and

the

(GOI), even though some portions of the full

text do not apply to the Agreement with Indonesia.

It

was

agreed

following

by

portions

the

representatives

within

Part

I

of

of
the

both
FY

governments

1987

Agreement

that

the

are

not

applicable:

Article II, part F.
Article II, part G.2
Article II, part H.
Article II, part I.

It is also understood that the phrase,

"or deposit local currency of

the Importing Country", in the last sentence of Article I, Part F, does

not apply to this Agreement.

the time of signing, there is a unitary rate of exchange in Indonesia,
the following portions of Article III, paragraph Gare not applicable:

n

• which is not less favorable to the Government of

Exporting

Country

obtainable

I

I

It is further understood that since, at

in

than

the

the

highest

Importing

Country

exchange
and

rate

which

is

the

legally
not

less

favorable to the Government of the Exporting country than the
highest

exchange

rate

obtainable by any

other

nation.

With

respect to Local Currency:

1.

As long as a unitary exchange rate system is maintained by

the Government of the Importing Country, • •

"

2.

If a

unitary

n

rate system is not

maintained,

the

applicable rate will be the rate (as mutually agreed by the two
governments)

that

fulfills

the

requirements

of

the

first

sentence of this Section G."

COMMODITY COMPOSITION

The

commodity

Agreement.

composition

is

shown

in

Part

II,

Item

1,

of

the

This provides for approximately 210,000 MT of wheat with a

market value of

us$23.S

million.

The representatives of the GOI understand that the export market value
specified

in

Part

II

may

not

be

exceeded.

This

means

that,

if

commodity prices increase over those used in Part II of the Agreement,
the quantity to be financed under the Agreement will be less than the

- 2 -

approximate

maximum quantity set

forth

in Part

II.

However,

should

actual prices be lower at the time of purchase, the GOI may purchase up
to maximum export market value.

COMMODITY DELIVERIES

The supply period of the Agreement is United States fiscal year 1987
(October

1,

1986

September

30,

1987).

In

order

to

expedite

implementation of the Agreement after signature, the GOI agrees to make
early

request,

through

authorizations (PA's).
credit will

its

Embassy

in

Washington,

for

purchase

GOI representatives also agree that letters of

be opened promptly for

both commodity and

freight

after

PA's are issued.

PAYMENT TERMS

Payment terms are shown in Part II,
financing

for

the

Agreement

Item II, of

provides

for

the Agreement.

US$23.5

million

The
under

convertible local currency credit (CLCC) terms of thirty-two (32) years
including a seven (7) year grace period, an initial payment (IP) of ten
(10)

percent, a Currency Use Payment of ten

percent

initial

interest

rate,

and

a

three

(10)
(3)

percent, a
percent

two

(2)

continuing

interest rate.

ARREARAGES

It was noted by the representatives of both governments that there were
no Title I arrearages as of December 31, 1986.

- 3 -

I

I

USUAL MARKETING REQUIREMENTS

The usual marketing requirements
III, of the Agreement.

(UMR) are set forth in Part II, Item

The 1987 UMR is 1,372 , 800 MT of wheat.

The GOI

representatives were reminded that the USG hopes that the United States
would receive a

fair

share of any increase in Indonesia's commercial

purchase of wheat.

EXPORT LIMITATIONS

The provisions shown in Part II,

Item IV, paragraphs A and B of the

Agreement are standard.

SELF-HELP MEASURES AND USES OF SALES PROCEEDS

Section 109(A) of PL 480 requires that, before entering into agreements
for

the sale of commodities, consideration be given to the extent to

which

the

ｲ･｣ｩｾｮｴ＠

country

is

undertaking

self-help

measures

increase per capita production and improve the means for
distribution of agricultural commodities.

to

storage and

In addition, it is required

that particular account be taken to determine the extent to which the
measures are being carried out in ways designed to contribute directly
to development progress in poor rural areas and to enable the poor to
participate
small

actively

in

farm agriculture.

increasing

agricultural

Literacy and

health

production

programs

for

through

the

rural

poor are also possible subjects for self-help measures.

The

self-help

described

(1)

measures
to

the

which

the

maximum

GOI
extent

-

4 -

agrees

to

feasible,

undertake
in

shall

specific

be
and

I ｾ＠

I

measurable

terms,

and

( 2)

in a

manner

which

ensures

that

the

needy

people in Indonesia will be the major beneficiaries of the self-help
measures pursuant to the Agreement.

To the maximum extent feasible,

self-help measures agreed to are to be additional to the measures that
the GOI otherwise would have undertaken irrespective of this Agreement.

The uses of sales proceeds shall be shown in Part II, Item V, of the
Agreement.

COMPLIANCE AND REPORTING REQUIREMENTS

Compliance and reporting are an essential part of the Title I PL 480
program.

The GOI representatives understand that their government will

be responsible for

compliance with the reporting provisions contained

in Articles

II

and III

of Part

understand

that

compliance,

shipping and arrival

submission

I

of

of the Agreement.
timely

and

information,

Likewise,

accurate
self-help ,

reports
and

they
on

uses of

sales proceeds facilitates timely administration of Title I activities
by the U.S. government.

The

USG

representatives

informed

the

GOI

representatives

Annual Self-Help Measures Report is due in the
by November 15 of the

u. s.

u.s.

that

the

Mission, Jakarta,

fiscal year following the signing of the

Agreement.

The

GOI

representatives

were

also

reminded

of

their

government's

responsibility to submit a report, at least annually, which details the
receipt and expenditure of proceeds generated by the internal sale of
the PL 480 Agreement commodity.

This report should be certified by the

- 5 -

appropr i ate GOI audit authority.

Representat i ves of both governments

agreed that the appropriate audit authority is the internal audit unit
of Badan urusan Logistik
that

this

repor t

be

( BULOG).

submitted

at

The USG representatives suggested
the

same

time

as

the

Self-Help

Measures Report .

SHIPPING ISSUES

I

I

The

GOI

representatives

were

informed

that ,

pursuant

to

the

Food

Security Act of 1985 , seventy (70) percent of the tonnage of the goods
covered by the FY 1987 PL 480 Agreement wil l be carried on u.s . flag
vessels.

As

indicated

in Part

I,

Article

I,

paragraph

F,

of

the

Agreement, the USG will bear the ocean freight differential cost for
the portion of the commodities carried by U. S . flag vessels.

The GOI representatives agreed to the new cargo apportionment with the
proviso that the 30 percent which could be shipped on non-u.s.

flag

vessels would all move on Indonesian flag vessels or vessels under the
control of Indonesian shipping companies.

This was agreed upon by the

USG representatives.

GOI and USG representatives had earlier discussed the use of u.s. flag
tankers

to

transport

wheat

to

Indonesia .

At

that

time,

the

GOI

representatives provided the following statement (which was transmitted
to Washington) on the issue:

- 6 -

QUOTE:
Your request to use tanker vessels

We regret to inform you once again that we are not able to grant your
above mentioned request to use such transportation modes for

reasons

clearly stated in our letter to you No. B-85/III/01/1984 of January 19,
1984.

I

I

In addition, your request to permit such vessels to participate only on
the

basis

of

full

lightening

into

smaller

bulk

carriers

does

not

eliminate the hazards (danger) to the labourers who have to go via the
manholes into the cargo holds to guide the suckers enabling them to
reach the wheat grains.

our great concern is the safety of the workers

and we will not take the risks.

Safety could perhaps be ensured if the

tankers are converted into open hatches similar to those of normal bulk
carriers.

As long as the tankers have only manholes, the danger still

exists.

Apart

from

the safety of

the workers,

tanker

vessels with existing

manholes will be very slow in discharging and therefore nowhere near
that of bulk carriers' discharge capacity.

This is definitely a major disadvantage.
UNQUOTE.

- 7 -

AGREED MINUTES OF TITLE I, PL 480 AGREEMENT FOR FY 1987

ATTACHMENT II

OPERATIONAL CONSIDERATIONS

I

I

PURCHASE AUTHORIZATION

The

USG

representatives explained that,

authorizations

will

not

be

issued

as

until

a

general

the

U.S.

rule,

purchase

Department

Agriculture (USDA) has received an operational reporting cable.

of

Early

submission of an operational reporting cable can expedite PA issuance.
The

following

information,

developed

in

consultation

with

the

GOI,

should be contained in the operational reporting cable:

(1) Type and grade of commodity to be purchased in accordance with
official U.S. standards.

(2) Proposed contracting and delivery schedules.

"Deli very"

means

delivery of commodity on board vessel at U.S. port.

(3) Name and address of bank in Indonesia and U.S. commercial bank
through which Letter of Credit for commodity and ocean freight
will be opened.

- 8 -

I

I

(4) Assurance that appropriate GOI authorities are prepared to make
prompt transfers of funds to cover

initial payment and ocean

freight costs on commodities purchased under the Agreement.

The

GOI

provides

appropriate

assurance

authorities

to

timely

information
complete

in

to

the

information,

implementation

outlined

arrangements

relay

Washington all instructions,
ensure

that

of

points

.Indonesian

Agreement,

(2),

(3),

instructions regarding arrangements for

and contracting for
Operations

freight:

Division,

(FAS), USDA, telephone

and

Export

( C)

made

by

Embassy

in

and

to

including:

(A)

(4)

(B)

above:

purchasing commodity

instructions to contact PL 480

Credits,

(202)

be

and authority necessary

the

(1),

will

Foreign

447-5780, for

Agricultural

Service

assistance in implementing

the Agreement.

ADDITIONAL LANGUAGE FOR IFB'S

The

GOI

representatives

requested

that

the

following

(or

similar)

language be included in IFB's issued pursuant to this Agreement:

"Sellers to furnish to S.G.s. 3 copies of final invoice prepared as
per L/C requirements, l

copy of dated on-board bill of lading, l

copy of letter of credit with any amendments thereto,
sales contract, and l copy of commission declaration.

l

copy of

S.G.s. will

furnish without delay to sellers original and 4 copies of clean
report of findings (LKP)."

The USG representatives agreed to this addition.

- 9 -

REGULATORY/LEGISLATIVE REQUIREMENTS

The GOI representatives understand that, under current regulatory and
legislative requirements:

-

(1) Purchase of commodities under the Agreement must be made on the
basis of invitations for bids {IFB' s)

publicly advertised in the

United states and on the basis of b ids {offers) which shall conform

I

to the IFB.

Bids are to be received and publicly opened in the

United States.

All awards

under

IFB' s

must be

consistent with

open, competitive and responsive bid procedure.

-

(2) Terms of all IFB's {including IFB's for ocean freight) must be
submi tted to the General Sales Manager, FAS, USDA, for review prior
to issuance.

-

(3) If the GOI nominates a purchasing or shipping agent to procure
commodities or arrange ocean transportation under

the Agreement,

the GOI is required to notify the General Sales Manager, FAS, USDA,
in

•

writing,

of

such

nomination

proposed agency agreement.

and

may

attach

a

copy

of

the

All purchasing and shipping agents must

be approved by the General Sales Manager, FAS, USDA, in accordance
with regulatory standards designed to eliminate certain potential
conflicts of interest.

LETTERS OF CREDIT

The GOI assures that appropriate measures will be taken to ensure that
operable and irrevocable letters of credit for
- 10 -

both commodities and

I

I

freight will be issued, advised or confirmed by a prior designated U.S.
bank.

The

GOI

refuse

understands
to

load

commodities

or

that

commodity

vessels

ocean

when

freight

and

ocean

acceptable

are

not

freight

letters

available

at

This can result in costly claims by vessel owners

suppliers

of

credit

time

of

may
for

loading.

(demurrage)

and by

commodity suppliers (carrying charges).

The GOI

understands

it must open letters

of

credit

for

one hundred

( 100) percent of ocean freight not later than forty-eight

( 48)

hours

prior to vessel presentation for loading, providing for sight payment
or

acceptance

of

a

draft

in

U.S.

dollars

in

favor

of

the

ocean

transportation supplier on the basis of tonnage and rates specified in
the applicable charter party or booking note.

A

review

of

concerning

section

payment

of

17.9(m)
the

of

the

Title

final

ten

(10)

charges has been undertaken.
freight

I

financing

percent

of

regulations

ocean

freight

It is understood that, where the ocean

contract provides for demurrage/dispatch, ninety

( 90)

percent

of the ocean freight must be paid promptly on arrival of cargo.
remaining
promptly

ten
to

(10)

the

percent,

carrier

upon

less

dispatch

completion

of

if

any,

the

should

laytime

be

The
paid

statement.

Claims against the carrier for damaged or lost cargo should be pursued
through normal channels and not be deducted from the ocean freight.

- 11 -

I

PERFORMANCE BONDS

The

GOI

understands

that,

if

the

corrunodity

IFB

issued

by

the

GOI

requires a performance bond, the requirement must be fair to both buyer
and

seller.

USDA

has

concerns

developed

performance

and

may

satisfies

these

which

Likewise,

the USDA will be available

to

be

used

bond
in

language

which

commodity IFB' s.

coordinate implementation of

this performance bond language with GOI purchasing officials in the U.S.

r

- 12 -

AGREED MINOTES

Attachments I and II constitute the minutes of negotiation of the FY
1987 PL 480 Title I Agreement as agreed upon by the representatives of
the signatory Governments.

DONE at Jakarta, in duplicate, on this sixteenth day of June, 1987.

REPUBLIC OF INDONESIA

UNITED STATES OF AMERICA

ｉ ｾ＠

Signed
Sukriya
ａｾ｜

Vice-Chairman

Ｇ＠

Signed

!Dti l!jt
...Ｍ ａｾｬｴｵｲ｡＠

D. Sisson
Attache

Badan Urusan Logistik

Embassy of the

Republic of Indonesia

United States of America