' 

LIMITED OFFICIAL USE 
BACKGROUND MEMORANDUM 
The second round of negotiatione with Czechoslovakia 
egan in Washington on January 22, 1968 and were recessed on January 30. The Czech Delegation had to leave for Canada, but will return to Washington to complete the talks on February 7 or 8. 
At the beginning of the current round, three majorissues remained unresolved: (a) arbitration, (b) routes, and (c) conditions for conducting business and converting rev nues (&ales/currenay}. The arbitration and sales/ curre cy issues have been resolved at delegation level, le ving only the q~estion of routes to be settled when the talks are resumed next week. 
Arbitration 
The baa1c difference involved the procedure for selecting the third arbitrator in the event the Parties ould n t agree on the chcice. The Czechs firmly opposed 
anJ oommitment to agree on a n utral party to ex se making the selection. They propoaed a g lots for the third arbitrator from an 
at name submitted by both go rnmenta. 
egat on w oppo d to a sya'bem which would 
h e the n n of a third arbitrator. A 
c01111111~mia s vised under which the two governments (it unable to agree on the third arbitrator themselves,) 
agree upon one or six named parties (heads or international bodies such as the International Court of Just Oh 11 ot Oonne.roe) to make t 1 etion.