(3) The International Anti-Dumping Code provides that a dumping investigation shall be initiated only when there is evidence of both sales at dumping prices and injury to a domestic industry. The Antidumping Act, on the other hand, states specifically that the injury determination shall be undertaken only after the Treasury Department has determined that sales have been at less than fair value. This is an extremely important conflict inasmuch as it will tend to transfer, at least initially, to the Treasury the present role of the Tariff Commission in making the injury investigations required under the Antidumping Act. The International Anti-Dumping Code places the American producer at a serious disadvantage. This is best exemplified by the requirements, mentioned above, that dumped imports be found to be the principal cause of material injury and that evidence of injury be included in the complaint. Members of the steel industry have spent months developing information regarding dumping. Were domestic producers to be required also to include evidence of injury in the complaint, an additional time consuming burden would thereby be placed. There is a serious question as to whether any industry could make out a case of injury under the Code's standard. Ambassador Roth himself recognized this in a statement made in July, 1967, before the Subcommittee on Foreign Economic Policy of the Joint Economic Committee on the subject of the adjustment assistance provisions of the Trade Expansion Act: "In the complex environment of our modern economy, a great variety of factors affect the productive capacity and competitiveness of American producers, making it virtually impossible to single out increased imports as the major cause of injury." Small businesses in the United States are discriminated against by the International Anti-Dumping Code. In Article 5(a), the Code provides that investigations of dumping practices should normally be initiated only upon a request by an "industry" supported by evidence of both dumping and injury. Under the Antidumping Act of 1921, the Customs Bureau is authorized to conduct investigations of possible dumping on its own motion. Lack of resources and manpower may therefore prohibit small businesses from obtaining relief from dumping practices under the Code. Further, "industry" is defined in Article 4 of the Code "as referring to the domestic producers as a whole ***" thereby requiring smaller producers to first persuade most other producers to agree upon a complaint. The Customs Bureau should continue to conduct investigations on its own motion when it believes dumping may be taking place. The International Anti-Dumping Code is also inconsistent with the Antidumping Act in giving "the authorities" discretion to determine whether the antidumping duty to be imposed shall be less than the full margin of dumping, whether to assess antidumping duties nationally or in only limited geographic areas and to limit the periods during which provisional measures may be imposed. AISI is opposed to revisions which would weaken the effectiveness of existing procedures. Specifically, the new regulation Section 53.15 (19 Code of Federal Regulations) provides that "whenever the Secretary of the Treasury is satisfied during the course of an antidumping investigation that * * * price revisions have been made which eliminate the likelihood of sales at less than fair value and that there is no likelihood of resumption of the prices which prevailed before such revision *** or whenever the Secretary concludes that there are other changed circumstances on the basis of which it may no longer be appropriate to continue an antidumping investigation, the Secretary shall publish a notice to this effect in the Federal Register." This would seem to permit the Secretary to terminate an antidumping investigation even after a finding of dumping had been made. This revision vitiates a very important section of the Antidumping Act in that such assurances of future fair value sales or price revisions need not be made until after the foreign exporter has been found to have been dumping. The Secretary is therefore in a position to thwart the mandate of the Act. It is interesting to note that the revision made in Section 53.15 is not even referred to as a revision in the introductory material describing proposed amendments in the regulations. Yet it is quite different from its predecessor (Section 14.7 (b) (9)). That Section provides that the Secretary may determine that it is no longer appropriate to continue an antidumping investigation when he is satisfied that "promptly after the commencement of an antidumping investigation *** (i) price revisions have been made which eliminate the likelihood of sales below fair value or (ii) sales to the United States of the merchandise have terminated and will not be resumed; or whenever the Secretary concludes that there are other changed circumstances on the basis of which it may no longer be appropriate to continue an antidumping investigation." ." The present Section has been interpreted as permitting the Secretary to act in cases of inadvertent dumping when the exporter immediately revises his selling prices upward. It was not intended to prevent the imposition of sanctions after an exporter has been found to be dumping. Still other proposed revisions tend to perpetuate existing Treasury practices which favor foreign exporters in a manner not required by the Antidumping Act. Such revisions should not be permitted to become effective. For example, the proposed Regulations in Section 53.4(b) provide "Generally, the quantity of such or similar merchandise sold for consumption in the country of exportation will be considered to be an inadequate basis for comparison if it is less than 25 percent of the quantity sold other than for exportation to the United States." The comparable section in the present Regulations is Section 14.7(a)(2) which provides, largely in the language of the Antidumping Act, that the Secretary may use the price at which such merchandise is sold for exportation to countries other then the United States if the quantity sold for consumption in the country of exportation is so small as to be an inadequate basis for comparison. By reason of the geographical proximity of other markets, European producers often sell slightly less than 25% of their output in their home market. AISI believes that a home market percentage of less than 25% is an adequate measure of fair value in many cases. Since deducting freight rates from selling prices to determine fair value causes fair value to be lower on third country sales, home market sales on which the mill receives the highest return should be included in any calculation of fair value. In any event, fair value should be determined by reference to the highest price at which goods are sold in the export market. Further, Section 53.27 imposes an additional burden on the domestic industry filing the complaint by requiring it to furnish at the outset information indicating that it is being injured, or is likely to be injured, by the dumping. AISI members have spent months in securing evidence of dumping, naturally difficult to obtain. To be required to anticipate the material the Secretary would require as satisfactory evidence of injury at the time of filing the complaint without opportunity for hearing is an unreasonable burden upon domestic producers. Finally, at least two recurring suggestions offered by the domestic industry have been disregarded. Proof of sales below fair value is difficult to secure as noted above, particularly as to foreign market value. AISI members believe that Treasury should not rely on unverified assertions by foreign exporters. The domestic industry has sought the right to cross examine representatives of exporters as to the accuracy of the material they furnish. Proposed Sections 53.33 and 53.38 do not grant this right. In addition, AISI takes the position that where foreign exporters refuse to respond fully to Treasury's requests for information, any assertions of exporters and importers based upon the information withheld should be disregarded. This letter enumerates only certain of the major areas in which the International Anti-Dumping Code and the proposed revisions of the Regulations are in conflict with the Antidumping Act of 1921. We have given these examples to support our position that the International Anti-Dumping Code should not be recognized and the Regulations not revised. There are, of course, other conflicts between the International Anti-Dumping Code and the Antidumping Act of 1921 which have not been enumerated herein. AISI urges that the International Anti-Dumping Code should not be made effective until reviewed and approved by Congress and that the Treasury Department should not revise any of its Customs Regulations to give effect to the provisions of the International AntiDumping Code until so reviewed and approved. Should the Treasury hold hearings on the proposed amendments, representatives of the domestic iron and steel industry would welcome the opportunity to more fully develop the comments made above and to offer additional comments and material. Very truly yours, 1 Emphasis added. JOHN P. ROCHE, President. Mr. ROCHE. As part of our paper, we list some of the inconsistencies and the only one that I will point to is the one that Commissioner Clubb mentioned earlier today as the most significant one; namely, that the Code requires that dumped imports be found to be demonstrably the principal cause of material injury before antidumping duties may be assessed and requires the authority to weigh on the one hand, the effect of the dumping, and on the other hand, all of the factors taken together which may be adversely affecting the industry. This requirement places a tremendous additional burden on any domestic industry. The Antidumping Act grants discretion to the Tariff Commission in the determination of injury. It does not require, as does the Code, a determination that dumped imports adversely affect an industry to a greater degree than any one of a combination of other factors. We move over to the next page, where we comment that the Code provides that a dumping investigation shall be initiated only when there is evidence of both sales at dumping prices and injury to a domestic industry. The Antidumping Act, on the other hand, states specifically that the injury determination shall be undertaken only after the Treasury Department has determined that sales have been at less than fair value. This is an important conflict inasmuch as it will tend to transfer to the Treasury, at least initially, the present role of the Tariff Commission in making the injury investigations required under the act. I think, Senator Hartke, you brought that point out very well in your exchanges with the representatives of Ambassador Roth's group this morning. Turning to page 5, we comment that the domestic steel industry today is facing an extremely serious situation as a result of increasing imports of low-cost foreign steel. This committee is familiar with the dimensions of the problem as a result of the study by its own staff, to which you have already referred, Mr. Chairman, but I do want to comment that imports of steel have increased from 1.2 million tons in 1957 to 11.5 millions in 1967. Those factors create a competitive situation in the U.S. market too pervasive to be dealt with effectively by antidumping measures. That is why the steel industry supports the adoption of S. 2537, which would place flexible quantitative limits on future steel imports. Nevertheless, in its effort to prevent further erosion of its markets, the domestic steel industry has initiated various antidumping proceedings. In only two of the approximately 15 proceedings did the industry prevail. And I think we can say here, as the group did which preceded us here today, Mr. Chairman, that on those two cases where we did prevail, that under the code we are convinced we would not have prevailed. The International Antidumping Code, as the Treasury proposed to implement it, would weaken an already inadequate law. While even a vigorous enforced Antidumping Act would not solve the steel industry's competitive plight, the institute believes that the act's position as a law of the United States designed to prevent one type of unfair trade practice should not be made even less effective. You mentioned, Mr. Chairman, earlier by your reference to the balance-of-payments deficit that you thought this was a significant part of this overall problem, and we agree. And I would like to comment that in 1967 the deficit in the steel account, trade account, was some $877 million, and it is estimated that this year the deficit in the steel trade account very well may be $1.3 billion. We appreciate the opportunity to make this statement, Mr. Chairman, and we believe the record is so well documented here today that we will close with these brief comments, unless there are some questions. The CHAIRMAN. Senator Hartke? Senator HARTKE. I have no questions but I do want to make a comment concerning a matter which I brought to the attention of the committee yesterday. When the Secretary of the Treasury was here testifying upon balance-of-payments, I brought forward the fact that it was proposed by France to impose quotas, and at that time there was no recognition of that fact, which has since been revealed. I think news stories today note that imposition has gone into effect. And I notice that our Government is going to give it thorough consideration, whatever that may be. The CHAIRMAN. What did you say France did? They imposed— Senator HARTKE. France imposed quotas on practically everything across the board because of their severe balance-of-payments problem, and they have done it quite legally, I think. I don't think there is any question about the legality of what they have done, but I just note the difference in approach of the administration towards the actual action by the French as compared by the action proposed by us in the Congress. They are quick to condemn those of us who see a real problem here in America concerning our balance of payments and condemn the temporary relief that we are seeking for the sharp increases in imports; but they don't offer that same criticism of France. I am not interested in criticizing; but I just point out that when it becomes necessary for other countries to provide for the interests of their own people, they look out for them, which I think is a proper role of government. I just wish our people would do the same sometimes. Mr. Chairman, could we have three articles from the Wall Street Journal, describing the French action, printed in the record? The CHAIRMAN. Without objection. (The articles referred to follow :) [From the Wall Street Journal, June 27, 1968] FRANCE PLANS TRADE QUOTAS ON SOME ITEMS TO PROTECT PARIS.-France disclosed plans to impose trade quotas on automobiles, appliances, certain textiles and steel to protect its balance-of-payments position, but it may face opposition from its trading partners. The commission of the European Economic Community, which has been studying the French moves for two days, is expected to give its opinion today or tomorrow. France also has consulted with the secretariat of the General Agreement on Tariffs and Trade in Geneva on the protectionist measures it desires. There are possibilities that it will comment on problems both in the EEC and GATT, which is the agency through which international trade agreements are negotiated. Under Article 109 of the Treaty of Rome, which set up the Common Market (comprised of the Netherlands, Belgium, Luxemburg, Italy, France and West Germany), a member state that runs into a sudden crisis in its balance of payments may take "provisional" measures to safeguard itself if it notifies the commission and other member states in advance. The commission then gives its opinion to a council of ministers of the six member nations. The ministers can decide, by a qualified majority vote, to either support the safeguards taken or amend, suspend or abolish them. [France's special trade measures included moves to bolster exports as well as restrict imports, the Associated Press reported. [The export measures reduced the cost of loans to French exporters through the end of 1968 and broadened the French system of contingent export subsidies. This system guarantees subsidies to exporters to compensate them in the event of rises in production costs.] France said it was putting the quotas into effect for only a few months, perhaps until the end of the year. It also said it won't hold imports below a "normal" level. It simply wants to protect against sudden increases in imports of the products in question. It justifies the moves because of the economic dislocations brought on by its two-week general strike. But some Common Market sources interpret the Treaty of Rome's permission for provisional measures to mean that such measures can last only a few days, until the commission and ministers can act, and not for several months. This question will be no doubt have to be thrashed out between France and its partners. France's overtures to GATT were presented by Jean Chappelle, a representative of finance. Although details of his discussion aren't known, they presumably deal with the quotas, since they affect other nations as well as those in the Common Market. Although there was speculation in Geneva that other nations would oppose the French moves, few immediate statements were forthcoming. The British Board of Trade said it will probably have something to say today. An official of Italy's Foreign Trade Ministry said a "certain amount of sympathy should be shown for France's plight." Last night, Couve de Murville, French Finance Minister, confirmed that France had recently sold gold to other central banks. Although he gave no details, the sales have been estimated at about $121 million. [From the Wall Street Journal, June 27, 1968] U.S. POSITION ON FRENCH RULES WASHINGTON.-The U.S. will take "appropriate steps" under U.S. laws and within the General Agreement on Tariffs and Trade if the French government's export subsidies and import restrictions jeopardize U.S. trade, a U.S. official said. William M. Roth, President Johnson's international trade negotiator, said the French government's export subsidies, announced yesterday, "could affect the bulk of French exports to this country." In contrast, he said the import quotas imposed as a temporary measure by France apparently will affect primarily France's trading partners in Europe. Mr. Roth said "our laws and the GATT provide for the use of countervailing duties to offset export subsidies by others. They also provide redress if import quotas impair our trade." He added, "Once we have all of the provisions of the French regulations, we will, of course, take the appropriate steps under our laws and GATT to protect our interests." [From the Wall Street Journal, June 28, 1968] FADING EUROPE UNITY-FRENCH PROTECTIONISM UNDERSCORES DIVISIONS IN THE COMMON MARKET NATIONALIST SENTIMENT DIMS HOPES FOR REAL ECONOMIC UNION, NUCLEAR COOPERATION-A BATTLE OVER BUTTER PRICES By Ray Vicker BRUSSELS.-On Monday, the Common Market is officially scheduled to become, at long last, what its name implies—a 449,000-square-mile market of 185 million consumers where goods move freely among the six member nations. Yet the Common Market is in serious trouble. Right now it seems to be facing more problems than at any time during its 10 years of existence. The most immediate problem stems from France's efforts to protect its industries as the adjust to the big wage boosts that followed the recent industrial and |