"b. scrap tobacco, and stemmed and unstemmed filler tobacco described in paragraph 602 of the Tariff Act of 1930, four million five hundred thousand pounds;

"c. coconut oil, two hundred thousand long tons;

"d. buttons of pearl or shell, eight hundred and fifty thousand gross. For each calendar year thereafter through the calendar year 1945, each of the said quotas shall be the same as the corresponding quota for the immediately preceding calendar year, less 5 per centum of the corresponding original quota. For the period January 1, 1946, through July 3, 1946, each of the said quotas shall be one-half of the corresponding quota specified for the calendar year 1945. "(c) The Philippine Government, in imposing and collecting export taxes on Philippine embroideries, shall compute the tax in accordance with the formulae specified in subsection (a) of this section, except that in determining the taxable value of any such article, an allowance shall be made equal to the cost-cost, insurance, and freight the Philippines-of any cloth of United States origin used in the production thereof.

"(d) The United States duty shall be levied, collected, and paid, in the United States, upon all Philippine sugars, which are entered, or withdrawn from warehouse, for consumption in any calendar year after 1939, in excess of eight hundred and fifty thousand long tons, of which not more than fifty thousand long tons may be refined sugars: Provided, however, That for the period January 1, 1946, through July 3, 1946, the quota of Philippine sugars, not subject to the United States duty, shall be four hundred and twenty-five thousand long tons, of which not more than twenty-five thousand long tons may be refined sugars. Any export tax imposed and collected on Philippine sugars entered or withdrawn from warehouse for consumption in excess of the quotas established by this subsection shall be refunded by the Philippine Government.

"(e) Upon the expiration of the Act of June 14, 1935 (49 Stat. 340), as extended to May 1, 1941, by proclamation of the President, dated January 26, 1938, the United States duty shall be levied, collected, and paid, in the United States, upon all Philippine cordage, which is entered, or withdrawn from warehouse, for consumption during the remainder of the calendar year 1941 in excess of four million pounds and in any calendar year after 1941 in excess of six million pounds: Provided, however, That for the period January 1, 1946, through July 3, 1946, the quota of Philippine cordage, not subject to the United States duty, shall be three million pounds. Any export tax imposed and collected on Philippine cordage entered, or withdrawn from warehouse, for consumption in excess of the quotas established by this subsection shall be refunded by the Philippine Government.

"(f) (1) The quotas for sugars shall be allocated annually to the sugarproducing mills and the planters supplying such mills proportionately on the basis of the average annual production of such mills during the calendar years 1931, 1932, and 1933. The allocations so made shall be prorated in each year by the Philippine Government, under export permits issued by that Government, between such mills and planters in accordance with their contracts in force on December 31, 1938. Upon the expiration of any such contracts, allocations so involved shall be prorated, reallocated, or disposed of in such manner, as the Philippine Government may by law prescribe to safeguard the interests of the planters and mill owners and to further the general welfare of the Philippines. "(2) The quotas for cordage, established by subsection (e) of this section, and by the Act of June 14, 1935, shall be allocated according to the same formula used in the allocation of the cordage quota for the years 1938-1939 under the Act of June 14, 1935, as prescribed in Executive Order Numbered 150, issued by the President of the Philippines on April 28, 1938.

"(3) The quotas for all articles for which quotas are established by this section, except sugars and cordage, shall in each instance be allocated by authorities of the Philippine Government among the manufacturers whose products were shipped to the United States during the calendar year 1937, on the basis of the proportion which each manufacturer's maximum production shipped to the United States, directly or through other persons, in any calendar year during the five-year period, 1933 through 1937, bears to the total of such maximum shipments of all such manufacturers.

"(4) The holder of any allotment under any of the quotas established by this Act or by the Act of June 14, 1935, or his successors, representatives, or assignees, may sell or otherwise transfer his or its allotment, or any part thereof, or all or any part of his or its rights to any future allotments, subject

to such laws and rules and regulations as may be enacted and prescribed by the Philippine Government: Provided, however, That in the case of sugars such laws, and rules and regulations as may be enacted and prescribed by the Philippine Government shall be in conformity with the provisions contained in subdivision (1) of this subsection.

"(g) (1) The Philippine Government shall pay to the Secretary of the Treasury of the United States, at the end of each calendar quarter, all of the moneys received during such quarter from export taxes (less refunds), imposed and collected in accordance with the provisions of this section, and said moneys shall be deposited in an account with the Treasurer of the United States and shall constitute a supplementary sinking fund for the payment of bonds of the Philippines, its Provinces, cities, and municipalities, issued prior to May 1, 1934, under authority of Acts of Congress: Provided, however, That moneys received from any export tax imposed on any article which is shipped from the Philippines to the United States prior to July 4, 1946, and which is entered, or withdrawn from warehouse for consumption, on or after July 4, 1946, shall be refunded by the independent Government of the Philippines.

"(2) The said Secretary of the Treasury is authorized to accept the deposits of the proceeds of the export taxes referred to in subdivision (1) of this subsection in accordance with the Act of June 11, 1934 (48 Stat. 929).

"(3) The Secretary of War of the United States, with the approval of the Philippine Government, is authorized to purchase with such supplementary sinking-fund bonds of the Philippines, its Provinces, cities and municipalities, issued prior to May 1, 1934, under authority of Acts of Congress and, when such bonds are not available, to invest such fund in interest-bearing obligations of the United States or in obligations guaranteed as to both principal and interest by the United States. Whenever the Secretary of War finds that such fund is in excess of an amount adequate to meet future interest and principal payments on all such bonds, he may, with the approval of the Philippine Government, purchase with such excess any other bonds of the Philippines, its Provinces, cities, municipalities, and instrumentalities. For the purpose of this subsection obligations may be acquired on original issue at par, or by purchase of outstanding obligations at the market price. Any obligations acquired by the fund may, with the approval of the Philippine Government, be sold by the Secretary of War at the market price and the proceeds of such sale and the proceeds of the payment upon maturity or redemption of any obligations held in the supplementary sinking fund, as well as all moneys in any manner earned by such fund or on any obligations acquired by said fund, shall be paid into the said fund.

"(4) During the three months preceding July 4, 1946, the Philippine Government, the Secretary of the Treasury of the United States, and the Secretary of War of the United States shall confer to ascertain that portion of the bonds of the Philippines, its Provinces, cities, and municipalities, issued prior to May 1, 1934, under authority of Acts of Congress, which will remain outstanding on July 4, 1946; and the Philippine Government shall turn over to the Secretary of the Treasury of the United States for destruction all such bonds that are then held, canceled, or uncanceled, in any of the sinking funds maintained for the payment of such bonds. After such outstanding portion of this indebtedness is thus determined, and before July 4, 1946, (i) there shall shall be set up with the Treasurer of the United States a special trust account in the name of the Secretary of the Treasury of the United States to pay future interest and principal payments on such bonds; (ii) the Philippine Government shall pay to the Secretary of the Treasury of the United States for deposit in this special trust account all of the sinking funds maintained for the payment of such bonds; and (iii) the Secretary of the Treasury of the United States shall transfer into this special trust account all of the proceeds of the supplementary sinking fund referred to in subdivision (1) of this subsection. Any portion of such special trust account found by the Secretary of War and the Secretary of the Treasury of the United States on July 4, 1946, to be in excess of an amount adequate to meet future interest and principal payments on all such outstanding bonds, shall be turned over to the Treasury of the independent Government of the Philippines to be set up as an additional sinking fund to be used for the purpose of liquidating and paying all over other obligations of the Philippines, its Provinces, cities, municipalities, and instrumentalities. To the extent that such special trust account is determined by the Secretary of the Treasury of the United States to be insufficient to pay interest and principal on the outstanding bonds of the Philippines, its Provinces, cities,

and municipalities, issued prior to May 1, 1934, under authority of Acts of Congress, the Philippine Government shall, on or before July 3, 1946, pay to the Secretary of the Treasury of the United States for deposit in such special trust account an amount which said Secretary of the Treasury determines is required to assure payment of principal and interest on such bonds. Provided, however, That if the Secretary of War and the Secretary of the Treasury of United States find that this requirement would impose an undue hardship upon the Philippines, then the Philippine Government shall continue to provide annually the necessary funds for the payment of interest and principal on such bonds until such time as the Secretary of the Treasury of the United States determines that thhe amount in the special trust account is adequate to meet interest and principal payments on such bonds.

"(5) On and after July 4, 1946, the Secretary of the Treasury of the United States is authorized, with the approval of the independent Government of the Philippines, to purchase at the market price for the special trust account bonds of the Philippines, its Provinces, cities, and municipalities, issued prior to May 1, 1934, under authority of Acts of Congress. The Secretary of the Treasury of the United States is also authorized, with the approval of the independent Government of the Philippines, to invest all or any part of such special trust account in any interest-bearing obligations of the United States or in any obligations guaranteed as to both principal and interest by the United States. Such obligations may be acquired on original issue at part or by purchase of outstanding obligations at the market price, and any obligations acquired by the special trust account may, with the approval of the independent Government of the Philippines, be sold by the Secretary of the Treasury at the market price, and the proceeds of the payment upon maturity or redemption of such obligations shall be held as a part of such special trust account. Whenever the special trust account is determined by the Secretary of the Treasury of the United States to be adequate to meet interest and principal payments on all outstanding bonds of the Philippines, its Provinces, cities, and municipalities, issued prior to May 1, 1934, under authority of Acts of Congress, the Secretary of the Treasury is authorized to pay from such trust account the principal of such outstanding bonds and to pay all interest due and owing on such bonds. All such bonds and interest coupons paid or purchased by the special trust account shall be canceled and destroyed by the Secretary of the Treasury of the United States. From time to time after July 4, 1946, any moneys in such special trust account found by the Secretary of the Treasury of the United States to be in excess of an amount adequate to meet interest and principal. payments on all such bonds shall be turned over to the treasurer of the independent Government of the Philippines.

"(h) No article shipped from the Philippines to the United States on or after January 1, 1941, subject to an export tax provided for in this section, shall be admitted to entry in the United States until the importer of such article shall present to the United States collector of customs a certificate, signed by a competent authority of the Philippine Government, setting forth the value and quantity of the article and the rate and amount of the export tax paid, or shall give a bond for the production of such certificate within six monthsfrom the date of entry."

SEC. 2. Section 8 of the said Act of March 24, 1934, is hereby amended by adding thereto a new subsection as follows:

“(d) Pending the final and complete withdrawal of the sovereignty of the United States over the Philippine Islands, except as otherwise provided by this Act, citizens and corporations of the Philippine Islands shall enjoy in the United States and all places subject to its jurisdiction all of the rights and privileges which they respectively shall have enjoyed therein under the laws of the United States in force at the time of the inauguration of the Government of the Commonwealth of the Philippine Islands."

SEC. 3. Section 10 of the said Act of March 24, 1934, is hereby amended by adding the following subsection thereto :

"(c) (1) Whenever the President of the United States shall find that any properties in the Philippines, owned by the Philippine Government or by private persons, would be suitable for diplomatic or consular establishments of the United States after the inauguration of the independent Government, he may, with the approval of the Philippine Government, and in exchange for the conveyance of title to the United States, transfer to the said Government or private persons any properties of the United States in the Philippines. Title to any properties so transferred to private persons, and title to any properties

so acquired by the United States, shall be vested in fee simple in such persons and the United States, respectively, notwithstanding the provisions contained in subsection (a) of this section.

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"(2) Whenever, prior to July 4, 1946, the President of the United States shall find that any properties of the United States in the Philippines would be suitable for diplomatic and consular establishments of the United States after the inauguration of the independent Government, he shall designate the same by the issuance of a proclamation or proclamations, and title to any properties so designated shall continue to be vested in fee simple in the United States notwithstanding the provisions contained in subsection (a) of this section.

"(3) Title to the lands and buildings pertaining to the official residences of the United States High Commissioner to the Philippine Islands in the cities of Manila and Baguio, together with all fixtures and movable objects, shall continue to be vested in the United States after July 4, 1946, notwithstanding the provisions contained in subsection (a) of this section.

"(4) Administrative supervision and control over any properties acquired or designated by the President of the United States pursuant to this subsection, and over the official residences in the Philippines of the High Commissioner, shall, on and after July 4, 1946, be exercised by the Secretary of State, in accordance with Acts of Congress relating to property held by the United States in foreign countries for official establishments."

SEC. 4. Section 13 of the said Act of March 24, 1934, is hereby amended to read as follows:

"SEC. 13. (a) Notwithstanding any provision of law in force on July 3, 1946, the importation into the United States, on and after July 4, 1946, of any articles the growth, produce, or manufacture of the Philippines shall be subject to the customs laws of the United States in the same manner as articles the growth, produce, or manufacture of other foreign countries generally: Provided, however, That during the period in which the executive agreement provided for in subsection (b) of this section is in full force and effect, any Philippine article shall be entitled to such preferential customs treatment as may be provided for in the said agreement.

"(b) The President of the United States is hereby authorized to enter into an executive agreement with the President of the Philippines, to become effective on July 4, 1946, providing for the gradual elimination, during the period July 4, 1946, through December 31, 1960, hereinafter referred to as the independence period, of preferential customs treatment accorded by the United States to Philippine articles and by the Philippines to American articles: Provided, however, That no such agreement shall be made unless the President of the Philippines shall have been duly authorized by act of the National Assembly of the Philippines to make and enter into such agreement. In addition to the inclusion of such provisions as the President of the United States and the President of the Philippines may consider to be appropriate to safeguard to each party the advantages granted under the agreement by providing for the termination of the agreement at any time, upon not more than six months' prior notice, in the event of the adoption or application by the other party of measures or practices which would tend to nullify or impair any such advantage, and such other provisions as the Presidents may consider to be reasonable and necessary to assist in the administration thereof, the said agreement shall contain provisions to the following effect:

"(1) During the period July 4, 1946, through December 31, 1946, except as otherwise hereinafter specifically provided, every Philippine article shall be entitled to an exclusively preferential reduction of 75 per centum of the United States duty. During the same period, except as otherwise hereinafter specifically provided, every American article shall be entitled to an exclusively preferential reduction of 75 per centum of the Philippine import duty. On each succeeding January 1 thereafter these preferential reductions shall be progressively diminished by an additional 5 per centum of the United States duty and of the Philippine import duty, respectively. No third country, including Cuba, shall be entitled to any benefits arising under this Act or under any agreement made pursuant thereto.

"(2) Notwithstanding subdivision (1) of this subsection, no United States duty shall be levied, collected, or paid upon any of the following Philippine articles within its respective quota as hereinafter provided:

"a. cigars (exclusive of cigarettes, cheroots of all kinds, and paper cigars and cigarettes, including wrappers);

"b. scrap tobacco, and stemmed and unstemmed filler tobacco described in paragraph 602 of the Tariff Act of 1930;

"c. coconut oil;

"d. buttons of pearl or shell.

"The exclusive preferences provided for in subdivision (1) of this subsection shall not apply to any of the foregoing Philippine articles entered, or withdrawn from warehouse, for consumption in excess of its respective quota.

"(3) For the period July 4, 1946, through December 31, 1946, each of the said quotas shall be the same as the corresponding quota provided for in subdivision (3) of subsection (b) of section 6 for the period January 1, 1946, through July 3, 1946. For the calendar year 1947 each of the said quotas shall be the same as the corresponding quota provided for in subdivision (3) of subsection (b) of section 6 for the calendar year 1945, less 5 per centum of the corresponding original quota provided for in the said subdivision. For each calendar year thereafter during the independence period each of the said quotas shall be the same as the corresponding quota for the immediately preceding calendar year, less 5 per centum of the corresponding original quota.

"(4) The annual quotas provided for in subsections (d) and (e) of section 6 for Philippine sugars and Philippine cordage, respectively, shall be continued throughout the independence period: Provided, however, That for the period July 4, 1946, through December 31, 1946, the quota for Philippine sugars shall be four hundred and twenty-five thousand long tons, of which not more than twenty-five thousand long tons may be refined sugars: Provided, further, That for the period July 4, 1946, through December 31, 1946, the quota for Philippine cordage shall be three million pounds. The exclusive preferences provided for in subdivision (1) of this subsection shall not apply to any Philippine sugars or Philippine cordage entered, or withdrawn from warehouse, for consumption in excess of their respective quotas.

"(5) In determining the dutiable value of Philippine embroideries brought into the United States, an allowance shall be made equal to the cost-cost, insurance, and freight the Philippines-of any cloth of United States origin used in the production thereof.

"(6) The rate of the United States tax on the processing of coconut oil, wholly of Philippine production or produced from materials wholly of Philippine growth or production, shall be no higher, throughout the independence period, than the rate applicable to the processing of palm kernel oil or to the taxable processing of palm oil.

"(7) The quotas hereinabove mentioned shall continue to be allocated, throughout the independence period, in the same manner as is provided for in subsection (f) of section 6.

"(8) Where any article the growth, produce, or manufacture of the Philippines, brought into the United States from the Philippines, upon which any United States duty has been levied, collected, and paid, is used in the manufacture or production of articles in the United States, on the shipment of said articles to the Philippines, within three years after the arrival of such merchandise in the United States, the full amount of the duty paid upon the merchandise so used, less 1 per centum of such duty, shall be refunded as drawback under such rules and regulations as the Secretary of the Treasury of the United States may prescribe. Where any article the growth, produce, or manufacture of the United States, brought into the Philippines from the United States, upon which any Philippine import duty has been levied, collected, and paid, is used in the manufacture or production of articles in the Philippines, on the shipment of said articles to the United States, within three years after the arrival of such merchandise in the Philippines, the full amount of the duty paid upon the merchandise so used, less 1 per centum of such duty, shall be refunded as draw-back under such rules and regulations as the Secretary of Finance of the Philippines may prescribe.

"(9) Notwithstanding subdivision (1) of this subsection, no Philippine import duty shall be levied, collected, or paid upon American cigarettes, brought into the Philippines from the United States, within the quotas hereinafter established. For the period July 4, 1946, through December 31, 1946, the said quota shall amount to one billion one hundred and twenty-five million cigarettes. For the calendar year 1947 the quota shall be two billion one hundred million cigarettes and for each calendar year thereafter the quota shall be the same as the quota for the immediately preceding calendar year less one hundred and fifty million cigarettes. The exclusive preferences provided for in subdivision (1) of