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vessels would share equally with Soviet flag vessels in the carriage 
of controlled cargoes in the trade between the two countries. 
FREIGHT RATES 
The freight rate issue is a highly complex and technical one and 
this paper does not purport to cover the matter in great detail. A 
general overview, however, is called for since the rate issue was an 
essential element of the negotiations leading to the Agreement. 
Basically, the United States sought a level of freight rates which 
would at least reach a break-even point for U.S.-flag vessel operators. 
Because of the higher operating costs of U.S.-flag bulk and other 
vessels the payment of some Operating Differential Subsidy (ODS) 
to participating U.S.-flag operators was assumed; this payment offsets 
the cost disparity between operating a ship under the US. flag and 
operating it at considerably lower costs under a foreign flag. 
Resolution of the rate issue was crucial to the implementation of 
the Agreement; without a satisfactory rate U.S.-flag vessels would 
be unable to share in the carriage of Russian cargoes. 
On the day the U.S.-U.S.S.R. Maritime Agreement was signed, the 
issued was resolved. The initial solution provided for the Soviets to 
pay the market freight rate plus a premium over and above these 
fixed rates which would keep ODS at the lowest possible level. Sub- 
sequently, an index system which reflects world market conditions 
was developed and implemented. 
Needless to say, the Soviet purchases of large amounts of U.S. 
grain are always influential in freight rate negotiations, and the process 
of arriving at a mutual understanding on rates is also affected by 
a fluctuating world charter market which makes rate forecasting dif- 
ficult. Additional factors entering the equation involve the availability 
of U.S.-flag vessels and the complex problems involved in the certifica- 
tion of non-availability of U.S. tonnage. 
SELECTED PROVISIONS AND EFFECTS OF THE AGREEMENT 
The Agreement calls for the Designated Representatives of each 
side, a representative of the Maritime Administration for the United 
States and a representative from the Ministry of Merchant Marine 
for the U.S.S.R., to meet annually for a comprehensive review of 
the movement of bilateral cargo and ‘‘for such other purposes related 
to the Agreement as may be desirable.” 
Some of the items which fall into the latter category are bulk 
cargo rates, charter party terms, port charges, visa requirements, the 
determining and policing of the one-third cargo sharing provisions 
of the Agreement, and the establishment of liner freight rates for 
accountable share calculations. 
In the early stages of the Agreement’s implementation, an imbalance 
developed in the carriage of liner cargoes in favor of Soviet vessels. 
As a result, U.S.-flag vessels did not carry a “substantial” share, 
nor did they achieve “‘parity”’ with Soviet flag vessels. 
To correct this it was agreed that the following steps would be 
taken. 
(a) All controlled liner cargoes would be offered to vessels 
of the nation having the smaller share of liner cargoes until parity 
was achieved. 
