I Letter from Mr. David N. Laux, Chairman of the Board and Mana-
ging Director, American Institute in Taiwan, to Mr. Ding Mou-
Shih, Representative, Coordination Council for North American
Affairs.
March 16, 1989
Mr. Ding Mou--Shih
Representative
Coordination Council
for North American Affairs
4201 Wisconsin Avenue, N.W.
Washington, D.C. 20016
Dear Mr. Ding :
I have the honor to refer to the understandings reached during
discussions held in Washington, D.C., January 4-6, 1989, betw-
een representatives of the Coordination Council for North Ame-
rican Affairs and the American Institute in Taiwan regarding
outstanding issues under the AIT-CCNAA Arrangement Concerning
in Certain Machine Tools (the "VRA"). I wish to obtain your c-
onfirmation that the enclosed Memorandum of Understandings co-
rrectly reflects the agreements reached during the discussions
of January 4-6, 1989.
Sincerely,
[Signed]
David N. Laux
Chairman of the Board
and Managing Director
Enclosure :
Memorandum of Understandings,
January 6, 1989.

II Memorandum of Understandings, January 6, 1989.
The American Institute in Taiwan (AIT) and the Coordination
Council for North American Affairs (CCNAA), met in Washington
, D.C., January 4-6, 1989, to discuss outstanding issues und-
er the AIT-CCNAA Arrangement Concerning Trad Machine Tools (
the "VRA"). The following agreement was reached concerning t-
he overshipment of machine tools during 1987 :
1 CCNAA and AIT agreed that CCNAA's 1987 overshipments of NC
lathes, non-NC lathes, machining centers and milling machi-
nes udner the VRA are deemed to be as follows :

NC Lathes 17 units
Non-NC Lathes 324 units
Machining Centers 149 units
Milling Machines 241 units

(Hereinafter, the overshipment in each category of the for-
egoing machine tools is referred to as an "overshipment".)
2 AIT and CCNAA agreed that the overshipments shall be deduc-
tied from CCNAA's export ceilings for the applicable categ-
ory of machine tools under the VRA in the amount and manner
set out below ;

Machine Tool Annual Reductions
1989 1990 1991
NC Lathes 6 6 5
Non-NC Lathes 108 108 108
Machining
Centers 45 40 34
Milling
Machines 81 80 80

3 CCNAA understands that the treatment of overshipments of m-
achining centers for 1987, as set forth in paragraph 2, is
based upon the following two conditions :
a that in the event that there are any machine tool oversh-
ipments in any period after 1987, AIT will not grant any
request for treatment similar to that accorded the overs-
hipments of machining centers for the 1987 period; and
b the authorities represented by CCNAA will make every eff-
ort to improve the administration of the VRA in order to
minimize the potential for overshipments during the rema-
ining life of the VRA. In consideration of CCNAA's accep-
tance of these conditions, AIT agreed that the deduction
of 119 machining centers, as set forth in paragraph 2, d-
ischarges CCNAA from its obligations under the VRA with
respect to the overshipment of 149 machining centers in 1
987.
4 In the event that AIT and CCNAA determine that CCNAA's 1988
export ceiling for any category of machine tools has not b-
een fully used by CCNAA, such unused export limits shall be
applied equally to the annual reduction for that category,
as set forth in paragraph 2, in 1989, 1990, and 1991.
5 For the purpose of the "representative product mix" referr-
ed to in paragraph 9 of the VRA, effective as of January 1,
1989, the following two subcategories will be established
for milling machines :
(a) Numerically controlled (NC) milling machines with contro-
ls and
(b) Numerically controlled (NC) milling machines without con-
trols but with facings for numerical controls.
Exports of the first subcategory of milling machines from
the territory represented by CCNAA to the territory repr-
esented by AIT shall not exceed three percent (3%) of the
apparent consumption of NC milling machines in the terri-
tory represented by AIT. Exports of the second subcatego-
ry of milling machines from the territory represented by
CCNAA to the territory represented by AIT shall not exce-
ed five percent (5%) of the difference of the apparent c-
onsumption of milling machines and NC milling machines in
the territory represented by AIT.
6 With respect to the annual reductions for milling machine
overshipments referred to in paragraph 2, these reductions,
may be made from the export ceilings for numerically contr-
olled and/or non-numerically controlled milling machines.

III Letter from Mr. Ding Mou-Shih, Representative, Coordination
Council for North American Affairs, to Mr. David N. Laux, C-
hairman of the Board and Managing Director, American Instit-
ute in Taiwan.
March 16, 1989
Mr. David N. Laux
Chairman of the Board
and Managing Director
American Institute in Taiwan
1700 North Moore Street, Suite 1705
Arlington, Virginia 22209
Dear Mr. Laux :
I have the honor to refer to your letter of March 16, 1989,
concerning understandings reached during discussions held
in Washington, D.C. on January 4-6, 1989, between represent-
atives of the Coordination Council for North American Affai-
rs and the American Institute in Taiwan regarding outstandi-
ng issues under the AIT-CCNAA Arrangement Concerning Trade
in Certain Machine Tools (the "VRA"). I wish to confirm that
the Memorandum of Understandings enclosed with your letter
of March 16, 1989, correctly reflects the agreements reached
during the discussions of January 4-6; 1989.
Sincerely,
[Signed]
Mou-shih Ding
Representative