RAMPARTS MAGAZINE MISREPRESENTS ROLE OF CENTRAL INTELLIGENCE AGENCY IN FIGHTING AGAINST IMPORTATION OF DANGEROUS DRUGS

• Document Type: CREST
• Collection: General CIA Records
• Document Number (FOIA) /ESDN (CREST): CIA-RDP73B00296R000300070027-3
• Release Decision: RIFPUB
• Original Classification: K
• Document Page Count: 3
• Document Creation Date: December 12, 2016
• Document Release Date: November 16, 2001
• Sequence Number: 27
• Publication Date: June 2, 1971
• Content Type: OPEN

Jane 21, 1971
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CONGRESSIONAL RECW_) - Extensions of Remarks TE 5305
,The objective of the new policy is to induce
foreign concerns to take the Antidumping
Act into account before they engage In
sales to the United States.
The 25 Percent Rule
The Antidumping Act provides that in
normal situations fair value shall be deter-
mined by comparing the ex factory home
market price of the merchandise under In-
vestigation with the ex factory price at which
the merchandise is sold in the United States.
If the price in the United States Is less than
the home market price, then there are "sales
at less than fair value" within the meaning
of the statute.
The Act also states that in situations where
the quantity of merchandise sold in the
home market is so small in relation to the
quantity sold for exportation to countries
other than the United States as. to form an
inadequate basis for comparison, then third
country price should he used as the basis for
comparison.
The Antidumping Regulations provide that
generally for purposes of determining what
constitutes all "inadequate basis of com-
parison" for fair value purposes, home mar-
ket sales will be considered to be inadequate
if less than 25 percent of the non-U.S. sales
of the merchandise are sold in the home mar-
ket.
The selection of home market or third
country price for fair value comparison can
easily be crucial to the results of antidump-
ing Investigations, for frequently home mar-
ket price tends to be higher than third coun-
try price. This is particularly true where
merchandise is sold in a protected home mar-
ket and, when sold in third countries, is ex-
posed to the vagaries of world competition.
It has been Treasury's experience that
cases arise where sales in the home market
are adequate as a basis for fair value conh-
pa.rison, even though less than 25 percent of
the non-U.S. sales are sold in the home mar-
ket. From a technical standpoint, the exist-
ing regulations provide for this.situation,
since the 25 percent rule Is introduced by
the adverb "Generally." Examination of the
precedents, however, revealed that the Treas-
ury has not, in recent years at least, made
an exception in applying the 25 percent rule.
This left the Treasury with two alterna-
tives. It could have ignored the previous in-
terpretations of the Antidumping Regula-
tions which had, in effect, applied the regula-
tions as if the word "Generally" were not
there, or it coud propose a change in the
Antidumping Regulations to eliminate the
26 percent rule. We chose the latter course,
The proposal was published in the Federal
Register of April 27, and is currently open
for comment by interested persons. Any com-
ments received will be carefully considered
before we take final action on this proposal.
A LOOK INTO THE FUTURE
In my judgment, we have only come to
the end of the beginning of the rejuvenation
process. But, I believe we have made a solid
start.
Let me take a final brief moment to touch
upon what I see happening in the future. We
have taken steps to initiate a fresh examina-
tion of the Treasury's antidumping proce-
dures and regulations to see what more can
be done. The regulations were substantially
revised in mid-1968 after a broad review,
with the dual objectives of conforming the
Treasury's procedures to the requirements
of the International Anti-Dumping Code,
and also of having the regulations imple-
ment in clear and precise language the ob-
jectives of the Antidumping Act. With al-
most three additional years of experience
under the regulations, as then revised, it is
now appropriate to stop and take a new look
to see whether additional changes may be ap-
propriate. A Notice of Proposed Rule Making
to this effect was published in the Federal
Register of April 13, 1971. .
Sixty days are being allowed for the sub-
mission of comments. I would assume that
many persons present here today-if you are
not already aware of the Treasury's invita-
tion to submit comments-may wish to do
So.
Let me emphasize that the Treasury De-
partment continues, as always, to adhere to
its policy of equitable administration of the
Antidumping Act. With the increased per-
sonnel assigned to this field and modernized
procedures and policies, we shall speed up
antidumping investigations, thereby making
administration of the law more effective-all
this without sacrificing equity.
Let me also emphasize that the Treasury
Department and the Administration are
strongly opposed to having the Antidumping
Act transformed into an instrument of pro-
tectionism. On the other hand, we are
equally strongly opposed to allowing foreign
firms to injure U.S. industry by unfair price
discrimination. It is with the latter objec-
tive in mind that the Treasury Department
Introduced the changes in the administra-
tion of the Antidumping law, which I have
discussed with you today. To the extent that
we succeed In our objective, the Treasury's
rejuvenation of the Antidumping Act will
become an increasingly important influence
in favor of a freer international trade policy.
In conclusion, I would like to repeat a
statement made by Secretary Connally on
May 17 before the Subcommittee on Inter-
national Trade of the Senate Committee on
Finance:
"The efforts to foster increased competi-
tiveness in our economy must be actively
pursued in the context of fair and liberal
trading arrangements."
RAMPARTS MAGAZINE MISREPRE-
SENTS ROLE OF CENTRAL INTEL-
LIGENCE AGENCY IN FIGHTING
AGAINST IMPORTATION OF DAN-
GEROUS DRUGS
HHON. CHARLES S. GUBSER
OF CALIFORNIA ,
IN THE HOUSE OF REPRESENTATIVES
Wednesday, June 2, 1971
Mr. GUBSER. Mr. Speaker, recently
Ramparts magazine published an article
which, like so many other articles which
appear in new left publications, attempt-
ed to discredit established agencies of the
Government, including the Central- In-
telligence Agency. Unfortunately, the
Stanford Daily, the newspaper pub-
lished by students at Stanford Univer-
sity, saw fit to lend credibility to this
article by reprinting it.
A tearsheet from the Stanford Daily
was sent to me by a constituent and I
submitted it to the Bureau of Narcotics
and Dangerous Drugs with a request for
comment. Under date of May 27 I re-
ceived a reply from Mr. John E. Ingersoll,
director of the Bureau of Narcotics and
Dangerous Drugs. His letter should be
brought to the attention of all responsible
Members of Congress and the press since
it certainly contradicts the implications
contained in the Ramparts magazine
article. Mr. Ingersoll's response follows:
Hon. CHARLES S. GUBSER
U.S. House of Representatives
Washington, D.C.
DEAR CONGRESSMAN GUBSER: This is In
response to your letter of May 21, 1071, *hich
enclosed a tearsheet from the "Standard
Daily" (a publication of Stanford Univer-
sity) of the article entitled, "The New Opium
War," as reprinted from "Ramparts Mag-
azine."
Charges made in the article ap;,ear to be
a part of a continuing effort tt ciscredit
agencies of the U.S. Government, sach as the
U.S. Military, the FBI, the CIA, ai,d the De-
partment of State, all of which are. in point
of fact, working actively with the Bureau of
Narcotics and Dangerous Drugs ( 'DD) in
our worldwide effort to curtail international
drug traffic.
Actually, CIA has for sometime been this
-Bureau's strongest partner in identifying
foreign sources and routes of illegal trade in
narcotics. Their help has included 1ooth direct
support in intelligence collection, aa, well as
in Intelligence analysis and production. Liai-
son between our two agencies is close and
constant in matters of mutual interest. Much
of the progress we are now makiri in iden-
tifying overseas narcotics traffic con, in fact,
be attributed to CIA cooperation.
In Burma, Laos, and Thailand, opium Is
produced by tribal peoples, some of whom
lead a marginal existence beyond the polit-
ical reach of their national go"ernments.
Since the 1950's, this Southeast Asian area
has become a massive producer of illicit
opium and is the source of 500 to 70) metric
tons annually, which is about half of the
world's illegal supply. Up to now. however,
less than ten percent of the heroin entering
the United States comes from Fir Eastern
production.
The dimensions of the drug pribiem and
the absence of any strong political base for
control purposes has been a dhomma for
United Nations opium control i,oaies op-
erating in Southeast Asia for many years.
Drug traffic, use, and addiction a.p;hears to
have become accepted as a fact of ,if:. in this
area and, on the whole, public attitudes
are not conducive to change.
The U.S. Government has been concerned
that Southeast Asia could become the major
source of Illicit narcotics for U S. addicts
after the Turkish production is brought
under control. The Bureau of Na. cotics and
Dangerous Drugs, with the he]:) of CIA,
DOD, and the Department of State. has been
working to define and characterize the prob-
lem so that suitable programs to suppress
the illicit traffic and eliminate illegal opium
production, such as the propos?d United
Nations pilot project in Thailand, can be
Implemented.
It Is probable that opium production in
Southeast Asia will be brought under effec-
tive control only with further pedit.ical de-
velopment in these countries. Nevertheless,
in consideration of U.S. Military personnel
in the area, as well as the possiaility that
opium from this area may become a source
for domestic consumption, concerned U.S.
Agencies, Including CIA, Bureau o, Customs,
DOD, and State, are cooperating with BNDD
to work out programs to meet the immedi-
ate problem as well as provide It-riger term
solutions.
Since the subject matter of your letter
concerns CIA, I have taken the liberty of -
furnishing a copy along with my reply to -
Director Richard Helms.
Sincerely, -
JOHN E. INGERSOLL,
Director..
As an enclosure to his letter, Mr. In-
gersoll included a paper entitled "Recent
Trends in the Illicit Narcotics Market
in Southeast Asia." This should also be
of interest to every person who is con-
cerned about. this problem anc I there-
fore include the text herewith:
RECENT TRENDS IN THE ILLICIT NARCOTICS
MARKET IN SOUTHEAST ASIA
1. The reported increasing Incidence of
heroin addiction among U.S. servicemen in
Vietnam and recent intelligence indicating
that heroin traffic between Southeast Asia
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ii CONGRESSIONAL RECORD - Extensions of Remarks June 2, 1971
r (!
~ ijJ ?~Il
and the United states may also be increas- country. However, large areas of production 15. The typical refinery is on a small trlb-
ing suggest that Southeast Asia is grow- in Thong Saly, Houa Phan, and Xiang utary of the Mekong River in at isolated
Ing in importance as a producer of heroin. Khoang have fallen under the control of the area with a military defense perimei or guard-
While this phenomenon in part reflects im- Pathet Lao and North Vietnamese. ing all ground approaches. Most of these re-
provement in information available in re- 9. The trade in Northwest Laos is less well fineries operate under the protection of the
cent months to the U.S. Government, there structured and organized for significant com- various military organizations in .t -.e region,
are also good indications that production of mercial exploitation. There are no advance . or are owned or managed by the leaders of
illicit narcotics in Southeast Asia has in- purchasing agents or pick-up caravans. . which The the eamilitary groups. The the roiinits ro-
deed risen Ili 1971, harvested opium and the poppy plants
are ground up for smoking are transported Burma. Leaders of these groups al:ao hold
to nearby village markets by the growers an ownership interest in Wooly o1 these fa-
t. The Burma, Laos, Thailand border area, themselves. In highlaiid market places the cilitics. In Thailand, the refineries appear to
known also as the' "Golden Triangle," is raw opium and its by-product are used open- be operated by units of the KMT irregulars,
considered one of the world's largest opium ly as currency. Ethnic Chinese merchants are whereas in Laos, most of the refu,~ries oper-
producing regions, This region normally Sc- the traditional purchasers of the opium ate under the protection of elefficuts of the
counts for about 700 tons of opium annual- products throughout Laos. The produots they Royal Laotian Armed Forces (FAR). While
ly or about one-half of the world's total, il- collect are transported to population cen- the management and ownership of the Lao-
licit output, A substantial proportion 1s con- ters and also to processing plants along the tian refineries appear to be primarily in the
sumed within the region. Burma, by far Mekong River by travelers, particularly gev- hands of a consortium of Chinese. some re-
the largest producer of opium in this region, ernment soldiers, who have he most mobil- ports suggest that a senior FAR fficer may
accounts for about 400 tons annually.,. ity and access to air travel in the area, and hold an ownership interest in a f,,w of these
BURMA refugees. Opium produced in, the Commu- facilities.
3. Production in Burma is concentrated nisi-controlled ar~~F,~~ 1 its way into 16, border Most area of are the ethnic narcotics Chinese. 1 buyeri ~~ ihn ile the ma tri-
ny
in the Eastern and Northern parts of Shan the regular markei t, L1E5 of these buyers
pool their purchases. no largy
State and in the Southwestern part of Ka- OISTTRIBUT.on
chin state. Poppy fields cover the rugged 10. The KMT irregular "armies" and the syndicate appears to be involved.'rbe opium,
slopes in Eastern Shan State around Keng Burmese Self Defense Forces (KKY) are the morphine base, and heroin purch!ised in this
Tung and in Northern Shan State from most important trafficking syndicates in area eventually finds its way into rlangkok,
Lashio east and north to the China border. Northern Southeast Asia: The KMT irrcgu- Vientiane, and Luaing Prabang, where addi-
The latter territory, comprised of the former 'tars-formerly the remnants of the Chinese tional processing may take place before de-
Wa and Kokang feudal states, is now a cen- Nationalist forces which retreated across the livery to Saigon, Hong Kong, and other inter-
ter of insurgency directed against the Bur- Chinese border in 1949-11ow composed national markets.
largely of recruits from the local population, 17. Much of the opium and its derivatives
mere governmen with lnucli of the area un- have a combined strength of between 4,000 transisting Thailand from Burma moves out
de insurgent con ntrol.
4. The growing season varies with the al- and 6,000 well-armed men. The largest force, of such Northern Thai towns as Chiang Rai,
titude, but the planting season generally with an estimated strength of 1,400 to 1,000, Chiang Mai, Lampang, or Tak by various
falls during the months of August and Sep- is the Fifth Army. The second largest with modes of ground and water trait Iport. These
a troop strength of. between 1,200 and 1,700 narcotics, along with those produced in Thai-
March. seven At garmonths is the Third Army. The headquarters of both l- land, are smuggled into Bangkok for further
later during d, with h the February harvest and some
armies are located in a remote part of North- refinement into morphine or heroin. A con-
vest time the women of the hill tribes slit . siderable quantity of the raw opium and
opium by by ern Thailand between Fang and Mae Sai. It
the poppies and collect the raw
hand. The opium plants themselves are is estimated that these two KMT irregular morphine base is sent by fishing rawler from
ground into a compound for smoking. In forces control more than 80 percent of the Bangkok to Hong Kong during a period from
opium traffic from the Shan State. about 1 January to 1 May. During this pe-
by the rlod, approximately one fishing, trawler a
and the r traded 'raw to opium itinerant Chi- 11. The KEY have been major competitors
by the growers Burma,
nese merchants who transport it to major of the KMT irregulars in the opium trade. day-carrying one to three tons of opium
collection. points, particularly around Lashio The KKY are comprised of former Shan State and/or quantities of morphine br:se-leaves
and Keng Tung. Agents of the major en- insurgents and bandits who have allied Bangkok for Hong, Kong. The boats proceed
trepreneurs circulate through the hill couu- themselves with the Burmese government to the vicinity of the Chinese Communist-
against both the KMT and Chinese Commu- controlled Lema Islands-15 miles south of payment and pickup. Payment is often in ntst-backed insurgents. In return the gov- Hong Kong-where the goods ate loaded into
the form of weapons and ammunition, al- ernment of Burma allowed them to pursue Hong Kong junks.
though gold and silver rupees are also used. their opium trafficking activities. 18. Opium and its derivatives which move
5. The opium harvested in Shan, Wa, and 12. The Shan States Army, an insurgent through Laos are transferred from the
Kokand areas is picked up by caravans that group, Is also heavily involved in the opium Mekong River refineries by river craft and
are put together by the major insurgent business. It maintains several camps in FAR vehicles to Ban Houei Sat, further
leaders in these areas, The caravans, which Northern Thailand where opium is marketed downstream on the Mekong iii Laos, from
can include up to 600 horses and donkeys fnr Weapons and military supplies, where it is transported on Royal Laotian Air
and 300 to 400 men, take the opium nn 140 tons of raw opium is nor- Force (RLAF) aircraft to Luring Prabang
ported annually out of Northeast or Vientiane. From Vientiane narcotics are
southeasterly jo ongy to ekoRiver i` lorcign markets. Most of this
plants that lie. along the Mekong River iii usually sent via RLAF aircraft, as well as
the TRChilek (Burma) -Mae Sat (Thailand), opium is stored or processed in the Mekong Air Laos, to other cities in Laos such as
Bel Houei Sai (Laos) area. Caravans carry- River tri-border area before transiting Thai- Savannakhet or Pakse or to international
ing in excess of 16 metric. tons have been land and Laos. Tachilek, Burma is probably' markets. A considerable portion of the Lao-
reported, the most important transshipment point in tian produced narcotics is smuggled into
THAILAND the border area. In 1970, out of a total of 123 Saigon on military and commnercial air
6'. Opium-growing areas in northern Thai- tons reportedly shipped out of Northeast flights, particularly on Royal Air Laos and
land are located in the upland tracts oc- Burma, 45 tons was received in the Tachilek Air Vietnam. Although collusion between
cupied by various tribal groups. The pro- area. In the first two months of 1971, 58 out crew members and air line agents on one
".?s of Ching Mai, Chiang Rai, and Nan, of a total of 87 tons had Tachilek as its desth- hand and individual narcotics smugglers on
nave the largest concentration of nation, Other important transshipment the other has been reported, poor handling
educe most Thai opium. Illicit opium points appear to be located in the vicinity of commercial cargo and the laxity of Lao
,..u ion in Thailand is estimated at 200 of Ban Houei Sat, Laos, and Mae Salong, customs control in Vientiane and other sur-
Thailand. reptitious loading of narcotic:. aboard cam-
LAOS 14. There appear to be at least 21 opium meroial flights,
7. Another, less productive, opium growing refineries of various sizes and capacities lo- RECENT CHANGES IN TH AREA
area is along the 2,500 to 4,500 foot high cated in the tri-border area, of which about est
here are tenta
19,
able
to be
7 are
are loc ted largerTquantities of rativopiune maynnow be
opium
s that mountainsides e17Meovin thisos.
areaeis. of a heroin stage. The most importantprocess
cultivated ated b by ti
relatively lower grade and thus less suit- in the areas around Tachilek, Burma, Ban moving into the tri-border araa for refining
able for refinement into morphine base or Houei Sai and Nam Keung, Laos, and Mae and that larger quantities of this raw opium known
reftned
bein
now
are
if not
into heroin. In these areas gcorn, the p p- largest of these refinlerieseis t e o e at Ban and heroin in ghis area. As sug.ges edlin para-
pave ave been encouraged to o grow ich c are planted among the corn. When row is bell ved capab ee of prlocessing somehl 0 ofgrap1971h indicateabove, at he Tach i ekmtraus-
corn Is cut, the poppies continue to g'
until they too can be harvested, kilos of raw opium per day. The 14 refineries shipment and refining area may be receiving
8. Major producing areas include Phong in the Tachilek area apparently process the and processing sizably larger smounts of raw
Province the in North, l Northeast, and In 1970, about 30 tons was converted by the changes in the type of refinedt(Sam narcotics pro. the
Silly eua) Province
processing the Plains de Jarres area of Xiang Khoang Tachilek refineries into refined opium, mor- Thailand a d H uei plants In hslits n w aPwei
Province in the East-central part of the - phine base, and heroin.
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i;o be converting most of their opium into
No.,4 or 06 i5crcent pure white heroin. Pre-
viously, these refineries tended to produce
relined opium, morphine base and No. 3
smoking heroin. An increased demand for
No. 4 heroin also appears to be reflected in
the steady rise In its price. For example, the
inid-April 1.971 price in the Tachilek area for
a kilo of No. 4 heroin was reported to be
U.S. $1,700 as compared to U.S. $1,240 in
September 1970. Some of this increase may
also reflect a tight supply situation in the
area because of a shortage of chemicals used
in the processing of heroin. Rising prices for
opium and Its derivatives can also he seen
in other areas of Southeast Asia.
20. The establishment of new refineries
since 1969 in the tri-border area, many with
a capability for producing 96 percent pure
heroin, appears to be due to the sudden
increase In demand by a large and relatively
affluent market in South Vietnam. A recent
report pertaining to the production of mor-
phine base in the Northern Shan States
ui l indicate a possible trend toward ver-
,,erations-producing areas estab-
.cir own refineries-in the produc-
sea, of narcotics. Such a development would
significantly facilitate transportation and
distribution?of refined narcotics to the mar-
a't places.
HON. BENJAMIN S. ROSENTHAL
of NEW YORK
IN THE HOUSE OF REPRESENTATIVES
Wednesday, June 2, 1971.
Mr. ROSENTHAL. Mr. Speaker, repre-
sentatives of U.S. transatlantic airlines
are going to Montreal later this month
to negotiate air fares-actually the word
should be to "fix" air fares, for the com-
peting carriers meet in private to decide
the rates they all will charge.
The prices are fixed by the Interna-
tional Air Transport Association. Frances
Cerra, Newsday's consumer writer, has
aptly described IATA as "a cartel which
operates without the participation of
consumers and above the laws of the
United States and any international or-
ganization."
The position of the American carriers
is thrashed out by the airlines and the
Civil Aeronautics Board in secret ses-
sions. The people who must pay the fares
will be given no opportunity to partici-
pate or express their views; after all,
they have little choice: only one or two
transatlantic airlines land in the United
States that are not IATA members.
The Aviation Consumer Action Project
has written to CAB Chairman Secor D.
Browne protesting the lack of public par-
ticipation in these proceedings. That let-
ter said, in part:
Such practices on the part of a federal
regulatory agency are hostile' to elementary
notions of due process and deprive citizens
of basic participatory rights assured in the
First Amendment.
I would like at this time to join them
in urging an end to these secret meetings
with the airlines in the course of fare
negotiations.
So that all my colleagues may be aware
of this situation, I am inserting in the
RECORD at this point the Aviation Con-
sumer Action Project's letter to CAB
Chairman Browne, and Miss Cerra's very
fine article on the setting of international
air fares:
AVIATION CONSUMER ACTION PROJECT,
Washington, D.C., May 25, 1971.
H011. SECOR-D. BROWNS,
Chairman,
Civil Aeronautics Board,
Washington, D.C. -
DEAR ChIAIRMAN BRowNE: The traffic con-
ference of the International Air Transport
Association (IATA) is scheduled to meet at
Montreal on June 28, 1971, to negotiate trans-
atlantic air fares. The Presidents of the
transatlantic IATA carriers will meet in New
York on May 27, 1971, to discuss the Montreal
fares conference. And the Board, in accord-
ance with its customary practice, will prob-
ably meet with the representatives of the U.S.
carriers and discuss with them the various
views and positions which they will adopt in
the IATA negotiations at Montreal. All these
meetings will, as usual, be held in secret.
Members of the public and farepayers will
not be given an opportunity to present their
views and opinions in any of those meetings.
The' Aviation Consumer Action Project
(ACAP), is writing to express its deep re-
sentment and disapproval of the restrictive
price-fixing practices of IATA? and the
Board's complicity in those practices.
ACAP is a non-profit consumer organiza-
tion which has been founded for the purpose
of providing an independent voice for the
advocacy of consumer and environmental in-
terests in matters and proceedings before
the Board and other regulatory agencies.
Whatever may be the underlying reasons
.for the Board's approval of U.S. carriers'
participation in IATA meetings, ACAP is of
the opinion that there cannot be any justi-
fication for the Board's secret meeting with
airline executives on the eve of the IATA
conference. The issues raised by such a meet-
ing are rendered all the more serious when
the Board, on the exclusive basis of the air-
lines' in camera presentations, formulates
policies and opinions with respect to the ap-
propriate and permissible fare levels for
various international routes and traffic re-
gions. Such policies and opinions are com-
municated to the carriers by the Board in
the form of "directives." For all practical
purposes these directives are informal de-
cisions of the Board which tentatively set
forth the fares that the Board considers
reasonable and legal.
The Federal Aviation Act and the regula-
tory scheme Outlined therein do not permit
the Board to make ex parte decisions after
hearing the airlines In closed sessions. Such
practices on the part of a federal regulatory
agency are hostile to elementary notions of
due process and deprive citizens of basic par-
ticipatory rights assured In the First Amend-
ment. They are wholly inconsistent with the
procedural principles embodied in the Ad-
ministrative Procedure Act.
ACAP urges the Board not to engage in
secret or private audiences with the airlines
concerning fares or other matters to be nego-
tiated in the IATA conference, except in open
proceedings of record, in which all interested
and affected parties would have the right
to attend and lawfully participate. We urge
the Board to abstain from convening any
secret meeting with the airlines whether
prior to or in the course of IATA fares nego-
tiations.
Sincerely,
K. G. J. PILLAI,
REUBEN B. ROBERTSON III.
INTERNATIONAL FARES: ARE THEY SET FAIRLY?
(By Frances Cerra)
Unless you really dig baeoukl music or
care about the color scheme of a plane's
interior, it doesn't pay to shop around for
the cheapest flight to Athens. Whatever air-
line you choose, the flight will cost ,ou $555
round trip for a 17- to 28-day stay.
The same is true for Rome or Cairn or any
other international destination except Lux-
embourg, (Icelandic, a maverick airline,
flies there.) The prices are fixed by the In-
ternational Air Transport Association. it car-
tel which operates without the participation
of consumers and above the laws of the U.S.
and any international organization. Tills year
the price of international travel bicreased
from eight to 12 per cent as a result of IATA
agreements. Next month, the proces. of fix-
ing the 1972 prices will begin, but a mew ele-
ment may be added: A new consumer :;coup
backed by Ralph Nader promises to challenge
the IATA system in the courts.
Since its formation in 1920, IATA hak, been
involved in the complicated maneuvers of
international politics. Many govcrnmments in
the world subsidize their own air?Il+ie and
therefore want to be protected fram true
competition on air fares. These governments
therefore adopt the IATA agreements its law
and threaten to prosecute any foreign airline
which tries to charge lower fares. Great Brit-
ain, which subsidizes BOAC, actually made
such a threat against the U.S. airlines. In 1963
when the Civil Aeronautics Board ol,posed a
five per cent increase in air fares. Fared with
this threat and an international inciCert, the
CAB backed down.
Foreign governments also enforce tae IATA
agreements by another simple measure: They
refuse to allow an airline that is not a mem-
ber of the cartel to land in their countries.
That is why Icelandic Airlines, the only non-
member of IATA, can land only in Luxem-
bourg. No other European country will give
it landing rights.
A spokesman for Pan American. whose
president, Najeeb E. Halaby, is on the execu-
tive committee of IATA, said that be would
not call IATA agreements "price fixi.ig." but
"an area of cooperation."
"If there were not an area of cooperation,"
he said, "many airlines would not be able to
exist. The U.S. airlines in particular would
have a hard time because they are not subsi-
dized by the government. IATA makes for
fair play, and without it there would be
chaos."
Herb Aswall, the acting chief of the IATA
rates and fares section of the Civil Aeronau-
tics Board, which sets domestic air fare rates,
echoed Pan American's concern. "With 20
carriers flying the Atlantic alone," he said,
"to not have IATA would result in chaos be=
cause we would have to deal with each in-
dividual foreign government to establish
fares. And because the CAB has no authority
to regulate international-fares, we mfplit have
to accept an uneconomic fares, which would
drive an American carrier out of business,"
Dr. K. G. J. Pillai, author of a book on
IATA called "Air Net," and head of the new
Aviation Consumer Action Project, c.- IIs such
arguments illogical. "The private airlines are
now at a disadvantage in IATA because they
are negotiating as private concerns with gov-
ernment-owned airlines. That is exactly why
we say IATA should not exist. If, there were
competition in air fares I personally don't
think it would be very destructive because
the efficient airlines would survive. But the
alternative is for the U.S. government to
directly represent the private airlines in
these conferences."
Pillai said that such negotiations would
not be unusual for the government which
now makes tariff and excise duty agr-cements
on thousands of products like oil rind tex-
tiles, and even airmail rates. "I can't- under-
stand why, air fares should be different," he
said. Pillai said that If the government was
involved in fixing the international air fares,
the consumer would have a better chance of
influencing the negotiations. Right now, he
charges, the consumer has no chance of in-
fluencing IATA.
Approved For Release 2002/01/02 : CIA-RDP73B00296R000300070027-3