the Senate for advice and consent and that its provisions become effective in the United States only at the time specified by appropriate legislation. As July 1, 1968 is the date set for the International Antidumping Code to go into effect, there is only a very short time left to avoid the confusion bordering on chaos which would result from the conflict between the Antidumping Act of 1921 and the International Antidumping Code. TOM VAIL, NATIONAL MILK PRODUCERS FEDERATION, Chief Counsel, Committee on Finance, U.S. Senate, New Senate Office Building, Washington, D.C. DEAR MR. VAIL: We shall greatly appreciate it if you will call to the attention of the Committee, and place in the record of the hearing of June 27, 1968, this letter opposing any relaxation of our antidumping laws and regulations. The National Milk Producers Federation represents American dairy farmers and the cooperative dairy associations which they own and operate. Dairy production in this country is in surplus supply, and the Commodity Credit Corporation is removing domestic dairy products from the market to maintain prices for milk to farmers at 90 percent of parity. The importation of unneeded dairy products is adding millions of dollars of unnecessary cost to the support program. It is also adding millions of dollars of unnecessary dollar drain to our difficult balance of payments position. In testimony submitted to the House Ways and Means Committee, March 1, 1968, we included figures showing an unnecessary dollar drain for 1966 of $70.5 million and for 1967, $73.7 million. The dollar drain for 1968 was estimated at $36.8 million. In the same testimony, we estimated that the added cost to the support program from these unneeded imports was $29.2 million in 1966 and $131.2 million in 1967. The added cost of unneeded imports in 1968 was estimated at $48 million. These exports to the United States are heavily subsidized, the subsidy in some cases being as much as 2 or 3 times the foreign selling price. For example, France has been exporting butter for 13-292 cents per pound with an internal wholesale price of about 80 cents per pound. The following quotation from the Dairy Situation, U.S.D.A., March, 1968, is in point: "A major factor in the deterioration of world dairy product prices is the subsidization of dairy product exports by European countries in an effort to reduce internal stocks of dairy products. For example, with an average internal wholesale butter price of about 80 cents per pound, France is reported to be exporting butter at 292 cents and selling storage butter in export outlets as low as 13-16 cents. Exporters in the Netherlands are delivering fresh butter at 25 cents per pound and storage butter at 15 cents, while their internal wholesale butter price is about 72 cents. Nonfat dry milk exports also are being subsidized. With an internal nonfat dry milk wholesale price of about 21 cents per pound, France is delivering nonfat dry milk to Lima, Peru, for 16 cents and to Bern, Switzerland, for 12 cents. Faced with prices of 10-12 cents per pound from Canada, the Netherlands, and France, Switzerland increased its import duty to raise the cost of imported dry skim milk powder above its 21-cent domestic price. Switzerland also has large stocks of butter and nonfat dry milk." By comparison the Government support price for butter in this country is 67.25 cents per pound in New York, and nonfat milk is supported at 23.10 cents per pound. The Secretary of Agriculture in a letter to the President dated June 4, 1968, reported evaporated milk imports being offered in New York delivered and duty paid for $5.60 per case with comparable U.S. prices ranging from $6.90 to $7.85. Export subsidies on this product paid by foreign nations run about $2.00 per case. The same letter reports sweetened condensed milk imports being offered in Chicago, duty paid, for $7.34 per case, compared with a comparable U.S. price of $14.00. Export subsidies being paid on this product by foreign countries run from $1.97 to $5.37 per case. This condition has continued for about 2 years, and there is no indication foreign nations intend to discontinue it unless they are forced to do so. It is most important that immediate and serious consideration be given by Congress to strengthening the antidumping laws and that no action be taken to weaken either the laws or regulations. Sincerely, E. M. NORTON, Secretary, National Milk Producers Federation. MANUFACTURING CHEMISTS' ASSOCIATION, INC., TOM VAIL, Chief Counsel, Committee on Finance, New Senate Office Building, Washington, D.C. DEAR MR. VAIL: On behalf of the Manufacturing Chemists Association, a nonprofit trade association of 180 United States and 12 Canadian company members representing more than 90 percent of the production capacity of basic industrial chemicals within these countries, I wish to submit the following comments for inclusion in the record of the public hearings on the International Dumping Code, conducted by the Committee on Finance. On March 13, 1968, the Senate Finance Committee published the report of the United States Tariff Commission on S. Con. Res. 38 regarding the International Antidumping Code which raised some serious questions as to its legal status and the administrative problems which it presented. The Tariff Commission, very properly, confined their remarks strictly to the provisions of the new Code. The report speaks for itself and need not be reviewed here. On June 1, 1968, the Treasury Department published revised Customs Regulations setting forth new rules and administrative procedures designed to implement the commitments assumed by the United States in accepting the new Code. Our remarks here are directed to some areas of particular concern which the new Regulations bring into focus. With respect to the simultaneous investigation of dumping and injury, we call attention to the fact that responsibility for injury determination was transferred from the Treasury Department to the Tariff Commission in 1954. However, Subpart 53.27 (e) of the Regulations requires that dumping complaints filed with the Treasury Department must include information indicating that an industry in the United States is being injured, or is likely to be injured, or prevented from being established. We have no objection to a requirement that a dumping complaint contain enough information to indicate that the complaint has reasonable substance. It should be sufficient for the complainant to supply such trade information and import data as may be available. It is not reasonable to expect a domestic producer to go beyond his own market problems to investigate either inqury or threat of injury to an industry. The requirement as it is written impinges on the function of the Tariff Commission and has no place in the dumping complaint. The Treasury Department Investigation is a cumbersome and lengthy operation divided into three main stages as indicated by the following summary: Part 53.29 of the Regulations provides that when a complaint has been filed, the Commissioner shall conduct a summary investigation which may result in the complaint being rejected. It should be noted here, that the Embassy of the foreign country involved is promptly notified of antidumping actions. Part 43.30 provides that if the case has not been closed under Part 53.29, an Antidumping Proceeding Notice is to be published in the Federal Register, and 53.31 provides that the Commissioner of Customs shall then proceed to make a full scale investigation. Following this investigation, the Secretary may publish a Notice of Tentative Negative Determination which is followed later by a final determination which is also published. If the case is not terminated at this point, the Secretary will publish (Part 53.34), a Notice of Withheld Appraisement, which will be effective for no more than three months unless a longer period has been requested by both the importer and exporter. The procedures outlined above may take a year or more during which time the foreign exporter and the domestic importer are completely free to continue a dumping operation without fear of any penalty. Part 53.48 provides that withheld appraisement shall be applied "to such merchandise entered or withdrawn from warehouse, for consumption, after the date of publication of the "Withholding of Appraisement Notice." It is this quoted provision that provides a guarantee of no dumping duty assessment on imports entered up to that date. In addition, there is a further guarantee that the period of withheld appraisement, in accordance with the provisions of Part 53.34, will be limited to a period of three months. It is at this stage that the case is referred to the Tariff Commission which has by law only 90 days in which to complete the injury determination. Even after that, the provisions of Part 53.39 reserve to the Secretary the right to revoke his determination of sales at less than fair value if further information persuades him that his initial determination was in error. Thus, the Tariff Commission can be left in the position of trying to determine injury attributable to dumping prices before the Secretary has finally determined the facts. As noted above, the Antidumping Act does not prescribe a time limit for the dumping investigation, but the Act does prescribe that when the Secretary makes public a dumping finding he "shall authorize the withholding of appraisement reports as to such merchandise entered, or withdrawn from warehouse, for consumption, not more than 120 days before the question of dumping has been raised by or presented to him-." (Emphasis added.) There is no basis in the law for the 90-day limitation on the period of withheld appraisement and the law clearly provides that withheld appraisement shall be applied retroactively to at least the date of the complaint. The net effect is an open invitation to wholesale dumping for extended periods during which time irreparable injury may be done to domestic producers. If the Regulations accurately reflect our obligations with respect to the new International Dumping Code, we can only conclude that these commitments cannot be implemented within the framework of the Antidumping Act and they should be sent to Congress for legislative action. I trust that these views will be helpful to the Committee in its deliberations. Sincerely, G. H. DECKER. WASHINGTON, D.C. COMMITTEE ON FINANCE, In reference to your June 21st release of hearings June 27th on the "International Dumping Code" as "agreed to" (sic) during the Kennedy Round"-becoming effective July 1, 1968, I submit the following paper. It is an excerpt from my papers which appears in your 931 page 2-volume "Compendium on Legislative Oversight" of February 7, 1968. Only its pages, 722-5 (written by me) go into analyses of foreign devaluations. Since 1940 there has been 101 devaluations of foreign currencies, 26 of them during the Kennedy Round! (The paper follows:) Devaluation of foreign currencies There are about 140 currencies on our planet, all used in world trade, which is business. Each nation fixes the "value" of its own currency, and can alter that "value" again and again and again; and almost all changes in the "value" of a currency are downward, i.e., devaluation. (The European guilder and the deutschemark were upvalued, but by only a tiny fraction of their prior devaluations. I know of no other up-valuation.) The International Monetary Fund, a non-U.S. agency, attempts to monitor devaluation, with incomplete success. For I have a list [should be published] of 99 devaluations since 1940, 25 of them in 1966 alone (that is, during the Kennedy round trade negotiations). All these devaluations were made on the advice of the devaluing countries' trade experts, i.e., not on whims. All aimed at (1) increasing the devaluing country's sales of its goods and services (tourism, etc.); and (2) decreasing the devaluing country's purchases of its imports of goods and services (tourism, etc.) Both objectives were usually aimed mainly at the United States of America. (Two examples: Canada's devaluation of its dollar on May 2, 1962; and Mexico's four devaluations of its peso which was worth 0.20% U.S. cent in 1946, but since 1954, has been worth only 0.08 U.S. cent. Both these two countries have pronounced their respective devaluations a "success," thus implying, perhaps, future devaluations, an implication which I read into President (of Mexico) Gustavo Díaz Ordaz's address to our Congress on October 27, 1967, using the original version in Spanish.) A devaluation "lasts" about a decade. All its impacts are not implemented the next day, as some U.S. experts seem to me to think. After its trading partners have "adjusted" to one of its devaluations, a devaluing country can devalue-again. Devaluation is, now, recurrent trade strategy. The most important part of this paper Items 3 and 5 of section 8 (powers of Congress) of article I of the Constitution of the United States read: The Congress shall have power 3. To regulate commerce with foreign nations* ** 5. To coin money, regulate the value thereof and of foreign coin *** But, the powers of the U.S. Congress are limited to the one fifty-fourth of our planet's surface; i.e., to one-sixteenth of earth's land which is the geographical United States, which insignificance is emphasized by noting that our country is but one of our planet's 140 "nations." The planet's other 139 nations have, only since 1940, devalued their currencies at least 101 times. In so doing they have up-valued our U.S. dollar in their markets, a de facto change in its value which our Congress cannot control. It is, therefore, in order for an American to denounce those devaluations as "unconstitutional." I beg that the Senate Finance Committee take a position on this point. Illustration of the above: If your neighbor removes-say-2 feet of topsoil from his plot, he has done two things, viz: (1) He has made his plot lower than yours, but, (2) he has made your plot higher than his. Shocking: There is no study of the impacts of foreign devaluations in the U.S. socioeconomy. In 2 years of search I have been unable to find one in any U.S. agency and in any U.S. college. Worse: Two employees in Federal Reserve, one in Export-Import Bank, a staff member of the Joint Economic Committee, a member of Brookings Institution, and the Bureau of International Commerce, U.S. Department of Commerce, in official letters in 1965 and in 1967, all confirm that "no official U.S. Government study has been prepared on this subject" of the "effects of foreign devaluations on the U.S. balance of payments and the U.S. balance of trade." No denunciation of the above bureaucratic stupidity/negligence can possibly be too strong. Conclusion: U.S. nonrealism in (1) the official U.S. arithmetic of U.S. foreign trade (this is not payments) and in (2) the manipulated "values" of non-U.S. currencies vis-à-vis our U.S. dollar has made U.S. foreign trade policies catastrophically harmful to both the U.S. socioeconomy and to the socioeconomies of the other 139 nations on our planet. How? By generating synthetic "comparative advantages" which drive a nation's industries into wrong areas of production for generations. (This subject is better discussed with trade experts in the fifteen-sixteenths of our planet's peoples outside our country than with their counterparts inside the United States, only one-sixteenth of our planet's peoples.) Addendum of incredible oddities applicable because all are true, to assertions in the above "paper." The devaluation of the U.S. dollar in 1934 made Our goods and services cost foreigners 40 percent less. Our purchases of foreign goods and services cost us 69 percent more. When Canada devalued (May 2, 1962), a U.S. broker supplied a list of seven Canadian industries which would benefit-one being International Nickeland, contrariwise, (a) the mayor of a Connecticut town wrote to me about the harm done industry in his commuity, (b) GM and Mead Johnson suffered, etc., etc. Devaluation equates technical know-how! In one of its publications available in both our language and Spanish, the International Monetary Fund reports that the British pound was devalued to equate $2.80 simply because, at its previous "value" of $4.03, the British could not meet U.S. competition in third countries! NOTE.-The British are fond of, and adept at, the strategy of devaluation, and are now, the press of November 15, 1967, reports, probably "forced" to devalue their pound again. The British pound has equated: $8.23, $4.87, $4.03, $2.80 (the current rate), and only $2.43 if Britain's 15-percent surcharge on imports (of October 1964, and since rescinded) is computed as one more devaluation of it. Make your own appraisals of what happened in world trade. There were 25 devaluations in 1966, i.e., during the Kennedy round in Geneva, yet I am informed by a staff member of the President's Special Representative for Trade Negotiations that “* * * devaluations were not up for consideration," which is as fantastic as saying that the designs of a transatlantic liner ignore the water! In its press release of October 12, 1967, the Embassy of Finland reports the devaluation of its markka, making imports cost Finnish purchasers 31.25 percent more, but making Finnish goods and services (tourism) cost foreign purchasers of them 23.81 percent less. On pages 65-70 of its "General Summary" (undated; I received it August 25, 1967) the office of the Special Representative for Trade Negotiations reports on the Kennedy round negotiations with Finland-but the devaluation of the markka, taking place after those negotiations, has completely vitiated their impacts upon the socioeconomies of both the United States and Finland! Uruguay devalued, again, on November 6, 1967. Devaluations are currently normal world trade strategy. Etc., etc.-That U.S. experts on international trade ignore devaluations reflects on them adversely to the nth degree. The import/export impacts of the Finnish markka's devaluation, in F-5, are official, i.e., the 31.25 percent more and the 23.81 percent less. As given in F-1, the corresponding figures for the U.S. dollar's devaluation (in 1934) are 69 percent more and 40 percent less, according to authorities. It is incredible that no U.S. agency will compute-and publish the corresponding percentages for the 101 devaluations that I list, or for any of them, from United Kingdom's repeated devaluations of its pound to, say, Italy's devaluation of its lira. (The U.S. dollar once brought 5 lira; today it buys 6251 lira!) Any mathematician can make the required computations, but they should be made, and published officially by the authorities in the U.S. Government (Treasury, Federal Reserve, etc., etc.) so that they may be quoted. It would be of great help if Senate Finance could insist upon these devaluation percentages. Because of the fact that U.S. giveaways and U.S. subsidized exports are tabulated as "commercial exports," it is possible for the United States to (1) "up" its "trade surplus" to any figure, merely by, say, giving more wheat to India, etc., etc.; (2) meaning that U.S. trade deficits are easily eliminated, merely by using U.S. taxpayers' money to buy U.S. "exports"! Ecology of our Nation's Capital: Were our U.S. capital a commercial center, like Pittsburgh, Bonn, London, Berne, Paris, Tokyo, Amsterdam, etc., etc., U.S. official trade negotiators would live intimately, for years, with U.S. industries, experiencing as their neighbors the harmful or helpful impacts of imports. This "education" is standard for all the foreign negotiators!-but not for the U.S. bureaucrats who confront those talented foreigners in trade negotiations. All our planet's 140 nations, having exploding populations, require more jobs. There are only two ways by which any nation can generate its jobs. viz: its internal commerce and its foreign trade. It is now in "style" to stress the latter rather than the former, but this solution cannot be final, since our planet, as a whole, has to be self-sufficient. It cannot export to or import from other planets. C. A. CASTLE, (Submitted on behalf of the National Footwear Manufacturers Association and its affiliate, the New England Footwear Association) TOM VAIL, COLLIER, SHANNON & RILL, Washington, D.C., June 27, 1698. Chief Counsel, Committee on Finance, DEAR MR. VAIL: The National Footwear Manufacturers Association and its affiliate, the New England Footwear Association, hereby submit for the record their comments on the International Antidumping Code. These associations represent over 90 percent of the footwear production of the United States. With shipments of footwear increasing from iron curtain countries and likely to increase in the future, the industry has become increasingly concerned over 1 Meaning, in reverse that an Italian must now assemble 625 lira to buy $1 worth of U.S. goods and services. He can't do it! |