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I would, however, if I may, take one further moment and offer a suggestion outside of my prepared statement which to me is a situation which is quite serious, and that is that the bill in its present form would vest such wide discretion and would subject so many of the administrative procedures to regulations of the Secretary of the Treasury that we are fearful that if the past interpretations of the constructions be applied to these new provisions, those regulations would be considered to be mandatory and there would be no judicial review left on the merits in any particular situation.

We recommend, accordingly, that there be added to and included in this bill a new provision to provide, and I would like to quote if I may in the record

that the failure to comply with any regulation issued by or upon the authority of the Secretary of the Treasury shall not be deemed to bar an adjudication on the merits of any case by the United States Customs Court or the United States Court of Customs and Patent Appeals in any customs case.

Thank you, Mr. Chairman.

Mr. JENKINS (presiding). We thank you for your appearance and your fine statement.

Any questions, gentlemen? If not, we thank you.

The next on our list is Mr. Bruno, manager, import division, world trade department, Commerce and Industry Association of New York. Do you have a prepared statement?


Mr. BRUNO. Yes, sir; I have.

Mr. JENKINS.. You may proceed.

Mr. BRUNO. Thank you. My name is Vincent J. Bruno. I am the manager of the import division of the Commerce and Industry Association of New York, Inc., which is the chamber of commerce for the New York metropolitan area, and includes within its membership approximately 1,000 business firms directly interested in the importation of goods from abroad.

Since it was organized in 1897, this association has been active in connection with problems affecting United States import trade and consistently has supported improved methods and procedures which, without endangering the revenues, would result in more efficient collection by the Government and reduction of unnecessary expense and inconvenience for importers.

Over a certain period of time certain improvements in the regulations governing the entry of goods and the assessment of customs duties have been achieved by administrative action. However, elimination of many undesirable administrative features of the Tariff Act can be accomplished only by legislative action, and the bill now under consideration by this committee represents an encouraging step toward realizing more equitable and efficient conditions under which customers and importers can function.

The Commerce and Industry Association generally supported prior customs simplification measures introduced in both the 81st and 82d Congresses, although we could not give our unqualified approval to those bills inasmuch as they contained several objectionable provisions.

Their ultimate objectives, however, were the same as those found in the present bill-namely, a simplification of the methods and procedures followed by customs officials responsible for the clearance of imports into the United States, with the emphasis on efficiency and economy of operation.

The principal defects in the earlier customs simplification bills have been removed from the present bill, and, in this connection, we would like to commend the various Government agencies which assisted in drafting H. R. 5106, especially the Treasury Department and the Department of Commerce, for their recognition of the areas of particular hardship for both Government and the import trade, and their realistic proposals to solve the existing problems.

We wish to place considerable emphasis on the need for early enactment of a customs simplification bill inasmuch as it will effect many highly desirable changes in the law. That is not to say that it embodies all possible improvements in the special and administrative provisions of the Tariff Act, or that importers unanimously approve all its provisions. Nevertheless, it is a sound piece of legislation and, rather than delay its enactment further, we endorse the present measure as representing the most practicable solution to existing conditions.

There are several sections of the bill which are major amendments of the present law and of such importance as to justify, on their own merits, prompt and favorable action on H. R. 5106, irrespective of minor features which might be debatable. To emphasize their importance and give them our express endorsement, we will mention them briefly.

Section 12, drawback: The bill proposes to extend two time limitations, in section 313 of the Tariff Act, involving drawback. The time within which imported goods must be used in the production of an article and that article exported from the United States would be extended from 3 to 5 years; and, the time within which a producer may avail himself of the substitution provisions of section 313 would be extended from 1 year to 3 years. This association has long urged these two-time extensions; in fact, H. R. 4612 was introduced at our request in the 81st Congress to accomplish this very result.

Section 15, value: Over the years the liquidation of thousands of customs entries has been delayed because of the inherent complexity of determining the dutiable value of imported merchandise. In the majority of such cases, this delay is caused by the requirement in section 402 of the Tariff Act that the customs appraiser must determine "foreign value" and "export value," and use the higher of the two.

The time-consuming problem facing the appraiser in determing the "foreign value" of an imported article readily can be appreciated when one realizes that such value generally must be determined in the country of exportation and that commercial practices and conditions of sale in the principal markets of that country are factors in ascertaining such value. As a consequence, the determination of dutiable value and the liquidation of the entry may require several years' time.

This Association has urged consistently that the prime basis for dutiable value be the "export value." We are gratified to see that the present bill eliminates "foreign value."


Section 19, amendment of entries: This association is fully in favor of the amendment of section 489 of the Tariff Act to eliminate penalty duties for undervaluation. This inequitable and needless provision in the law has been a club over the heads of importers for many years and we are pleased to observe that the elimination of section 489 duties, which our association recommended several years ago, will be achieved by means of the present bill.

Section 19 of the bill also amends section 503 of the Tariff Act by eliminating that feature of the present law which establishes a headsyou-win, tails-I-lose condition under which importers have had to operate. The proposed amendment in H. R. 5106 would eliminate the use by the appraiser of the higher of the entered value or final appraised value, and would require, as is only reasonable, that imported merchandise be assessed duty on the basis of its final appraised value.

Two sections in this bill, in our opinion, might well be modified without extensive debate or delay.

Section 17, certified invoices: Under section 484 of the Tariff Act, no merchandise may be imported without the production of a certified invoice, commonly called a consular invoice, except as provided in that section. The Secretary of the Treasury, however, is authorized to make such additional exemptions from that requirement as he deems advisable, and he has taken such action on a number of occasions in the past.

Under this bill, section 484 is amended to provide that the Secretary of the Treasury shall designate the merchandise with respect to which a consular invoice must be produced and the conditions under which such merchandise may be permitted entry without the production of a consular invoice.

In a letter to the Secretary of the Treasury, dated March 12, 1953, a copy of which we would like to have included in the record of these hearings, this association proposed that the customs simplification bill contain a provision eliminating the consular invoice entirely. It is our contention that the consular invoice does not serve any worthwhile purpose to justify its continued use, and that its elimination would result in a saving of time and money to both the Government and the importer.

Mr. JENKINS. Without objection, that may be inserted in the record at this point.

(The letter is as follows:)


Secretary of the Treasury,

United States Treasury Department,

New York 7, N. Y., March 12, 1953.

Washington 25, D. C.

MY DEAR MR. SECRETARY: This association is the recognized service chamber of commerce for the New York metropolitan area and numbers within its membership some 1,000 firms engaged in the importation of foreign goods for distribution and sale throughout the United States.

Over a period of years many import firms have brought to our attention the serious, and we believe unnecessary, hardships caused by the requirement that consular invoices covering their importations from abroad be certified by the American consular officer in the foreign country, pursuant to section 482 of the Tariff Act of 1930. We would like to describe in some detail the conditions behind such complaints, and urge, in the light of these facts, appropriate action to eliminate in its entirety the consular invoice, Foreign Service Form 138, as

well as its certification by the American consul. We believe that this desirable change should be incorporated as part of the customs simplification bill soon to be placed before Congress.

The essence of the consular invoice

The consular invoice contains the same details of the particular transaction which are, or can readily be, shown in the customary commercial invoice of the seller to the buyer, and incorporating, in addition, the signature and seal of the American consul abroad. This consular certification evidences that the $2.50 fee has been paid and that the shipper or seller signing the document is the person he represents himself to be.

Consular invoice only duplicate of commercial invoice

The seller's commercial invoice is the essential document containing details of the particular transaction. In most cases the consular invoice is merely a duplication of the commercial invoice, or an attachment to the commercial invoice. The importance attached to the consular invoice by customs officials is shown by the existence of the "no consul" list, including scores of foreign ports of exportation at which no American consular officer is located and from which merchandise may be imported into the United States without a consular invoice.

Even more illustrative in section 484 (b) of the Tariff Act which grants discretion to the Secretary of the Treasury to allow entry of goods where a consular invoice cannot be presented by the importer at time of entry. Customs regulations in such circumstances allow the importer to make entry upon the execution of a bond to produce the missing document within 6 months' time. Then, recognizing the possibility of conditions precluding compliance with this obligation, the regulations further permit the cancellation of that bond by the payment of $10 if the importer is unable to produce the consular invoice within the prescribed time. The fact that the Treasury Department accepts that small amount as liquidated damages demonstrates the value which the Government itself places on the consular invoice.

As for the necessity of a consular invoice in appraising the value of imported goods, the usual procedure, whenever a question of dutiable value remains unresolved in the mind of the customs examiner, is to request an investigation in the foreign market to permit an independent determination of the true facts, without regard for information disclosed by the consular invoice.

Cost to Government and importers

Considerable expense is caused the Government by the consular invoice requirement. Obviously, thousands of consular invoices must be processed annually by American consuls abroad; copies must be mailed to the various collectors of customs at the ports of entry in this country; filing, comparison checking, and then consolidation with the original consular invoice, submitted by the importer at time of entry, must be accomplished. In addition, in view of the provisions made for presentation of the consular invoice within 6 months of entry under the missing document bond procedure, such bonds must be handled, filed, and followed up for timely compliance by the importer. At New York, this situation has reached such proportions as to require the establishment of a missing documents desk, with a customs clerk assigned full time to handling such bonds and subsequently filed consular invoices.

Delays caused by the consular invoice

The consular invoice was initiated many years ago when import volume was much smaller, transportation slower, and the time element of less importance. Nowadays, when freight is shipped by fast steamer, merchandise frequently reaches port before the consular invoice has been received by the importer. This situation is even more acute for airfreight shipments, where the foreign exporter dispatches the shipment 1 or 2 days before he can obtain the consular invoice certification. Thus, the importer must forego the advantages of prompt shipment by air and withhold making entry until the consular invoice is received or accept the added expense and inconvenience of the alternative bond procedure. Other studies recommending eiimination

Numerous organizations and individuals, in both Government and private trade, -have urged the elimination of the consular invoice. One persuasive argument was presented several years ago when McKinsey & Co. was commissioned by Congress to study the Bureau of Customs and the operations of customs personnel to eliminate duplication of work, improve the efficiency of administration, and reduce expenditures. During the course of that study, representatives of this

association participated in discussions on various phases of the problems and it is our understanding, although the report never was made public, that one of the final recommendations made in that study was for the complete elimination of the consular invoice. The workload created for the Government by the consular invoice is entirely disproportionate to its dubious value in the administration of customs laws, and it is clearly burdensome and unnecessary. The reasoning behind such recommended elimination of that document is even more cogent and convincing nowadays, in the light of the new administration's pledge to minimize governmental expenses and direct every effort toward the simplification of administrative procedures.

Effects on export trade

The consular-invoice requirement is merely another irritating burden on international trade. As often occurs in such circumstances, this requirement has ramifications in other fields which often are not fully appreciated. In fact, our country's export trade is adversely affected by this documentary requirement.

Over a period of years this association has urged various foreign governments to eliminate consular-invoice requirements. Our exporters have constantly complained of the added cost and workload created by the required preparation and legalization of foreign consular invoices covering shipments abroad, and this association has been instrumental in inducing at least two countries to abolish this document and, to that extent, simplify their documentary requirements.

A number of Latin-American countries, including Chile, Costa Rica, Mexico, and El Salvador, have modified their regulations to eliminate consular invoices which the other countries in that area still require. This program, however, has had only limited success, inasmuch as the all-too-frequent reaction expressed by foreign governments called upon to effect such relaxation of their requirements has been to point directly to the United States customs regulations and the burdens caused their exporters by our consular-invoice requirement.

The fact is that the ultimate success of such efforts in behalf of American exporters is basically dependent upon what action this country takes in respect of its own consular invoice. The State Department, in commenting on our proposals for the elimination of foreign consular invoices, stated that, "The probability of obtaining favorable consideration of this proposal by foreign governments would be considerably increased *** if the United States were prepared to take parallel action."


The United States has endorsed a policy of reducing customs formalities and hampering barriers to the free flow of international commerce. This is evident in our support of a proposal to that effect approved during the Seventh Session of the General Agreement on Tariffs and Trade signatories in October 1952. As a practical matter, however, our government's participation towards this objective has stalled, thus blocking the hope of reciprocal action by foreign governments. We believe that the United States consular invoice is a greater handicap than is apparent on the surface. This document, which is not essential to the Government or the importer, is just another annoying barrier to the sound development of trade in line with current enlightened thinking. Elimination of the United States consular invoice requirement will be interpreted by all, and with just cause, as indicative of the sincerity of our pledges to cooperate towards increased world trade.

We recognize that the Treasury Department has done much by regulation to reduce the number of situations where a consular invoice is required, but this is not enough. The only solution to the problem rests in a change in the customs laws, and the time has never been more appropriate for such change, which should be incorporated in the customs simplification bill now being drafted by your Department.

Assuring you of our desire to cooperate with your office, if we can be of assistance in this connection, we wish to remain

Very truly yours,


Mr. BRUNO. The amendment proposed in the present bill is constructive insofar as it tends to liberalize the consular invoice requirements. However, we believe that the complete elimination of this document would be much more effective in producing a simplification of customs procedures and, at the same time, would be an effective example for other countries to follow.

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