what has been done to reduce the U.S. assessment rate in the past, and will indicate what can most usefully be done to continue this process in the future. Article 17, paragraph 2. of the Charter of the United Nations provides that "the expenses of the Organization shall be borne by the Members as apportioned by the General Assembly." What this provision means essentially, Mr. Chairman, is that the United States, so long as it is a member of the United Nations, is subject to the rate of assessment apportioned to it by the United Nations General Assembly and decided by a two-thirds majority. To assist in making its apportionment, the General Assembly relies upon the technical advice of an expert Committee on Contributions. This body presently consists of 12 individuals, appointed on the basis of broad geographic representation, personal qualifications, and experience. It includes one American. Rule 161 of the Rules of Procedure of the General Assembly provides that the Committee on Contributions shall advise the General Assembly "concerning the apportionment *** of the expenses of the Organization among Memibers, broadly according to capacity to pay." The terms of reference of the Committee on Contributions have also included from the U.N.'s beginning the provision that "if a ceiling is imposed on contributions, the ceiling should not be such as seriously to obscure the relation between a nation's contributions and its capacity to pay." From the outset of the United Nations, the capacity-to-pay criterion has been applied by the Committee on Contributions through the use of comparative national income statistics. These data have been progressively improved and the comparability of the data has been enhanced by the use since 1964 of comparative net national products at market prices. Net national product is defined as the total of personal and governmental consumption expenditures on goods and services, plus expenditures for investment. Net national product differs from gross national product by excluding depreciation allowance for capital consumption. Acting according to its original criteria, the Committee on Contributions in its first apportionment set the U.S. rate of assessment for 1946 at 49.89 percent. The United States objected to this assessment. While recognizing the difficulty of other states in making contributions after the devastation of the Second World War, Senator Vandenberg, speaking for this Government, pointed out that the United States did not think the U.N. organization ought to rely unduly upon the contributions of a single member. This vigorous U.S. objection succeeded in persuading the Assembly to reduce the U.S. rate for 1946 to 39.89 percent, and it remained at that level through 1949. In 1948, the United Nations agreed in principle that "in normal times, no one member state should contribute more than one-third of the ordinary expenses of the United Nations for any one year." Simultaneously, the General Assembly recognized that "the per capita contribution of any member should not exceed the per capita contribution of the member which bears the highest assessment." In 1954, the 33percent ceiling was brought into effect by a General Assembly resolution. In 1957, the General Assembly, again at our insistence, reduced the ceiling to 30 percent in principle, and the U.S. contribution has been moving toward that rate ever since. Thus, in 1970, when the Committee on Contributions made its apportionment for the years 1971-73, the percentage contributions of the members which had entered the organization during the previous 3 years, amounting to 0.16 percentage points, were distributed proportionately among the membership, with the United States receiving 0.05 percentage points. This process reduced the U.S. contribution from 31.57 percent in 1968-70 to 31.52 percent in the 1971-73 period. As a result of the criteria supplied to the Committee on Contributions by the General Assembly, five general classes of member states exist for the purposes of apportionment. With respect to the criterion of capacity to pay, three of these categories are relatively advantaged, and two are relatively disadvantaged. The three categories of United Nations members who are specially advantaged in the determination of their assessment rates are: 1. Members with per capita incomes below $1,000 per year and assessment rates above the 0.04 percent minimum rate. These less-developed countries are given an allowance for low per capita income which reduces their assessment rate. 2. The second category of specially advantaged members includes only the United States, whose percentage share is reduced below capacity to pay by the application of the ceiling principle. The U.N. Committee on Contributions pointed out with reference to the scale for 1968-70 that if the rate of assessment of the United States were assessed on the basis of comparative national income statistics adjusted for low per capita income, its rate would have been 39.48 percent instead of the actual assessment rate for that period of 31.57 percent. 3. A few countries have also benefited from the application of the per capita ceiling principle which holds that "the per capita contribution of any member state should not exceed the per capita contribution of the member which bears the highest assessment." Relatively small reductions in assessment rates have been applied to Canada, Kuwait, New Zealand, and Sweden over the years in order that their per capita contribution not exceed the per capita contribution of the United States. There are also two categories of specially disadvantaged members who pay more than they would under the strict application of the capacity-to-pay criterion as measured by relative national product. These are: 1. Members individually assessed at the minimum rate of 0.04 percent--which is the case for more than 60 of the poorest members-who pay more because the minimum rate exceeds their assessment based on capacity to pay. 2. Members with per capita incomes above $1,000 per year-except for those affected by the ceilings-also pay more than their relative capacity to pay. This group of developed countries pays more because the assessment rate of each, based on capacity to pay, is substantially increased to pay for the benefits given the advantaged categories, including the United States. To summarize, Mr. Chairman. because of the adoption of an arbitrary ceiling, for over 25 years the United States has paid less than it would have if it had been assessed according to the same criteria applied to the other main industrial states, including the Soviet Union, the United Kingdom. France, and Canada. The legislation you are considering, which relates assessments to population, implies a United Nations assessment rate for the United States which we estimate at 6.20 percent in place of the present U.S. assessment of 31.52 percent. On a strict capacity-to-pay basis, we estimate that at the present time the U.S. rate, based on national income statistics when adjusted to benefit the low per capita states, would actually be 38.40 percent. Comparable figures for the Soviet Union, including Byelorussia and the Ukraine, would be 7.34 percent on a population basis as compared with 14.66 percent on the adjusted basis. In fact, the Soviet Union is now assessed at 16.55 percent. The difference between 14.66 percent and 16.55 percent is the extra amount we estimate the Soviet Union is assessed because of the ceiling principle applied to the U.S. contribution. Comparable figures for France are 1.54 percent on the basis of population as compared with its present assessment of 6 percent; and for the United Kingdom, 1.72 percent on the basis of population as compared with its present assessment of 5.90 percent. These figures show that other major industrial powers would also gain a significant advantage from an assessment based on population. Nevertheless, Mr. Chairman, in our judgment there would be little or no support even from these countries for changing the apportionment pattern in the United Nations to one based on the criterion of comparative population. We strongly doubt that these other prospective beneficiaries would favor it because they would not want to take on the large majority that would oppose it on the grounds of its being unrealistic and unfair. The large population states like China which would be assessed at about 22.85 percent, or Pakistan at 3.34 percent, or Brazil at 2.67 percent, or India at 15.91 percent, or Indonesia at 3.43 percent, et cetera, would obviously find it unacceptable. We are convinced it would be impossible to negotiate such a scale of assessment because of the gross anomalies it would introduce. Very poor countries would find themselves paying many times their present rate, while the rate of most affluent countries would be substantially reduced. Based on average per capita incomes, an Indonesian would contribute about 44 times more of his income than the average U.S. citizen; the average Nigerian would contribute about 49 times more. In terms of time per capita worked to pay toward their country's U.N. assessment, under the population scale an American would work 2 minutes, an Ethiopian 2 hours, an Englishman 4 minutes, and a Brazilian 25 minutes. In fact, under the population scale, everyone's per capita contribution, expressed in time worked to pay toward the U.N. assessment, would exceed that of the average American. Now, obviously, Mr. Chairman, we could not defend such a scale on the grounds of reason or equity, and certainly could not expect to gain a two-thirds majority for it. I strongly hope the Congress would not decide that the United States should pay its U.N. assessment at a 6-percent rate. If we unilaterally sought to pay on the basis of population, the United States would soon be sufficiently in arrears to lose its vote in the General Assembly and, even earlier, would have pushed the United Nations over the fiscal brink. Mr. Chairman, this is not a formula for reducing the U.S. contribution; it is a formula for abandoning the United Nations. Now, I have been speaking of assessed contributions. Insofar as voluntary contributions are concerned, we now contribute at varying rates-depending on our interest in the programs-but generally at a rate not to exceed 40 percent. Were we to reduce our contributions to about 6 percent, we would be contributing far less than our fair share to important peacekeeping, economic development, and humanitarian activities. Mr. Chairman, that having been said, our experience of the past 25 years demonstrates that we can and should continue to seek downward revision both in our assessment percentage and in the U.N. ceiling rate itself. This experience has shown in particular that reductions are most successfully accomplished when new members with substantial contributions enter the Organization. Under this condition, none of the old members would have its own contribution raised if the ceiling rate were lowered. Consequently, we are looking forward to the time when, for example, it will be possible for the Federal Republic of Germany to enter the Organization with a percentage assessment rate which has already been set by the Committee on Contributions at 6.80 percent. Should the United States get almost the full benefit of this amount, its rate of assessment could reach the 25 percent recommended by the Lodge Commission last April. You will recall that this Presidential Commission made the following recommendation: As new members are brought into the U.N., their assessed contributions to the regular budget, which may be substantial, will call for a redistribution of the financial burdens reflected in the scale of assessment. Furthermore, for its own independence and development, an international organization of 127 members should not depend upon one state for almost one-third of the contributions to its regular budget. The Commission recommends that the United States affirm its intention to maintain and increase its total contributions to the U.N., but that, as part of a redistribution of responsibilities, it will seek over a period of years to reduce its current contribution of 31.52 percent to the assessed regular budget of the Organization so that eventually its share will not exceed 25 percent. In recommending that the United States seek a reduction of the percentage of its assessment for the regular budget, the Commission wishes to emphasize that it is in no way proposing any diminution of the overall commitment of U.S. resources to the U.N. system. Each reduction in the U.S. share of the regular budget must be clearly marked by at least a corresponding increase in U.S. contributions to one or more of the voluntary budgets or funds in the U.N. system. Mr. Chairman, we have given this recommendation of the Lodge Commission the most serious consideration. We have decided that it is an appropriate and necessary goal for the United States to pursue and we shall work to achieve it as rapidly as we can. hopefully in connection with the admission of new members. We believe that a redue tion of our assessment to 25 percent would be beneficial to the U.N. because the Organization ought not to be overly dependent on the contribution of a single member. Above all, we do not believe it is politically advisable for an organization of sovereign and juridically equal states, which is approaching universality of membership, to perpetuate such an extreme disparity between voting power and influence, on the one hand, and financial contributions on the other. Mr. Chairman, a 25-percent ceiling for assessed contributions would achieve a better balance between voting power and capacity to pay, without abandoning capacity to pay as a major criterion. Finally, let me stress that we have had this matter under study for some time and our decision to work toward this goal has been taken as a matter of principle and not in retaliation for recent events in the General Assembly. Thank you. Mr. FRASER. Thank you very much, Mr. Secretary. Mr. Gross? Mr. GROSS. Mr. De Palma, which one of the Lodge's headed this commission? Which one? Mr. DE PALMA. Ambassador Lodge. Mr. GROSS. Which one of the well-traveled Lodge's? Mr. GROSS. Henry, the most traveled of the Lodge's. I never heard of him being very much interested in saving any money for the taxpayers of this country when it came to spending for international purposes, so I am not very much impressed with any commission report which emanates from the hands of Henry Cabot Lodge. Is he the same Henry Cabot Lodge who traveled far and wide trying to drum up support around the world to help us in the war in Vietnam? Mr. DE PALMA. He was involved in that effort, yes. Mr. GROSS Do you remember the Council on Foreign Relations, that exclusive club in New York that limits its voting membership to a few miles from the heart of Wall Street? Mr. DE PALMA. Yes, I am aware of that organization. Mr. GROSS. You are aware of that? Mr. DE PALMA. Yes, sir. Mr. GROSS. Is he a member of that organization, do you know? Mr. GROSS. He maintains a residence in New York, he is a fullfledged member of it, isn't he? Mr. DE PALMA. I just don't know. Mr. GROSS. I can look that up, I guess. I have a copy of the report upstairs. We have not had any direct witnesses from the Council on Foreign Relations, have we? Mr. FRASER. Not as such, but we did have Ambassador Lodge before our subcommittee explaining the proposals several months ago. Mr. GROSS. You are for a 6-percent cut, is that right? Mr. DE PALMA. I think we should work toward it, yes, sir, |