submission sheet that he is going to test that dye and later, which is usually after a lapse of 4 to 8 weeks, the United States appraiser advises the importer as to whether the dye marked "test" is competitive or noncompetitive and the United States value or American selling price. The importer checks the information given to him by the United States appraiser on the submission sheet and if he is in agreement and there are no dyes to be tested, he makes customs entry in accordance with this information. If he is not in agreement he makes entry according to his own information and recalls the invoice so he can amend the entry at a later date, after he has made his tests, checks the information given to him by the appraiser and confers with the latter in an endeavor to reach an agreement. If he reaches an agreement and it is different from his original entry he amends the entry accordingly. If he does not reach an agreement, he advises the United States appraiser to appraise, and then he files his appeal for reappraisement, which is sent by the United States collector of customs to the customs court for adjudication.

This has been the procedure on importations of coal-tar products since the enactment by Congress of the Tariff Act of 1922; in other words, 30 years. This practice is pursuant to the provisions of section 487 of the present statute. It has been very satisfactory to importers and domestic manufacturers of coal-tar products, and as a result, there has been comparatively little litigation. I understand that there are approximately 3,000 entries per year at the Port of New York, covering coal-tar products and that the amendments of such entries are approximately 10 percent, or 300 customs entries.

My clients and other importers of coal-tar products are very disturbed over the possibility of the elimination in this bill of the legal right to amend customs entries covering importations of coal-tar products, and further elimination of a satisfactory procedure which has been in effect for 30 years. These importers of coal-tar products object to an elimination of a legal right and the substitution therefor of an administrative practice, subject to the notions, the whims, and the personal feelings of administrative officials.

The proponents of the elimination of the right to amend customs entries have given as their reason the amount of paper work entailed in the amendment of customs entries. As far as coal-tar products are concerned, the paper work at the Port of New York is very small and only amounts to amendments of about 300 customs entries per year.

Frequently, there are importations of coal tar dyes, coal tar intermediates, coal tar auxiliaries and coal tar pharmaceuticals that have never been imported before; so at the time of entry, the importer probably has some knowledge as to whether or not such imported product is competitive or noncompetitive, and if competitive, the American selling price, but this information is insufficient to warrant making customs entry with certainty. He must rely on information obtained from the appraiser and information that he obtains subsequent to importation, pursuant to investigation. In such instances, it is imperative that he have the right to amend customs entries covering importation of such new products.

There is always a risk in the importation of coal-tar products which have been previously regarded as noncompetitive. Frequently it happens that between the date of placement of an order for an importation of a noncompetitive coal-tar product from abroad and the

date of exportation of such product, it has become competitive without knowledge of the importer. The ad valorem rate of duty will then be assessed on the American selling price. The importer had sold the coal-tar product prior to importation at a price which included the lower duty based upon its noncompetitive status. He is forced to pay a higher duty based on the American selling price, and thereby suffers a loss in the transaction.

The denial of the right to amend customs entries covering importations of coal-tar products will probably increase the litigation as to dutiable value on such merchandise before the United States Customs Court and the United States Court of Customs and Patent Appeals. The importation of coal-tar products is a hazardous enterprise. To deny importers the right to amend their customs entries will make the importations more hazardous and create additional difficulties. The elimination of paper work in the amendment of only 300 customs entries per year at the port of New York is an unfair compensation for the additional hazards and difficulties created by the denial to amend entries of such products.

Mr. JENKINS. Thank you very much for your presentation, Mr. Pickrell.

The next witness is Mr. Max Berkowitz. Is Mr. Berkowitz here? All right, Mr. Berkowitz.

STATEMENT OF MAX BERKOWITZ, CODIRECTOR, NATIONAL AUTHORITY FOR THE LADIES' HANDBAG INDUSTRY

Mr. BERKOWITZ. Mr. Chairman and gentlemen, my name is Max Berkowitz. I am a director of the National Authority for the Ladies' Handbag Industry, a national trade association of handbag manufacturers. There are 250 handbag manufacturers in our organization and they produce approximately 70 percent of the total production of handbags in the United States.

We have appeared before this committee on several occasions in the past, and have always received the most considerate and courteous attention, for which I wish to sincerely thank you.

The two major problems confronting the handbag industry, today, and for the past few years, are the 20 percent excise tax on handbags and the importation of handbags from foreign countries. These two problems have been subject to many industrywide meetings, formation of committees, and considerable other activity to combat and eliminate the havoc, unemployment and insolvency that has been wrought by these two problems. We have appeared before congressional committees before, on each of these subjects, separately, and have shown by conclusive facts and figures that each in its own way has contributed to creating a depression in the handbag industry. Together the excise tax and the imports-combined to make an insurmountable obstacle to operating a profitable business. handbag industry has shrunk from 800 firms doing a wholesale volume of $200 million in 1946 to 500 firms doing $135 million in 1952. The firm that shows a profit in the handbag industry is a rarity. This deplorable condition, which is a sad commentary on the American business scene, is directly attributable to the inequitable, unsound, and discriminatory features of the 20 percent excise tax and the reduction of the rate of duty.

The

Last year I appeared before the Senate Finance Committee, in opposition to section 321 of the customs simplification bill, at which time the section called for raising the exemption from $1 to $10. Reducing the $10 to $3 in the current bill does not change a single argument we made at that time. What is wrong here is something basic and fundamental. We are opposed to this section because it constitutes an invitation to foreign producers of handbags to adjust their prices and their method of distribution to flood the country with foreign made handbags. We would have no complaint if this competition was fair and equitable. But this is not the fact when it comes to handbags. Firstly, and very important, is the fact that the domestically made handbags are subject to the 20 percent retail excise tax. Under this section, the foreign made handbag would not be subject to the excise tax. Secondly, and equally important, reptile handbags are subject to a 171⁄2 percent duty and leather handbags a 20 percent duty. This is supposed to represent and offset the difference between the American cost of production and foreign cost. Eliminate this differential on $3 handbags and eliminate the 20 percent excise tax and you create a real and substantial threat to the American handbag industry.

In the last few years there has been a great influx of straw, bamboo, willo, and wooden bags coming from Italy, Japan, and South America. The straw bags are subject to a 25 percent rate of duty and wood to 50 percent. Because Government statistics prepared by the United States Tariff Commission and the Bureau of Customs combine baskets and bags made of straw, bamboo, willow, and wood, we have no way of determining accurately how many of those baskets and bags are handbags. We do know, however, the amount is very substantial.

There was a time in the handbag industry when we made and sold white handbags and pastel shades of leather and fabric for summer selling. This business has been completely lost due to the importation of these straw bags. Today, a little flower or posie is attached to a straw basket or bag and it is sold as a summer handbag. This has caused the American handbag factory to close for two to three months every year and make thousands of employees idle.

In 1952, United States imported over 20 million baskets and bags made from bamboo, straw, willow and wood, at a dollar value of approximately $4 million. While all of these baskets and bags were not all handbags, we do know a very substantial amount were. We estimate that approximately 50 percent were handbags or converted into handbags by adding flowers or decorations to the basket or bag. Almost all of these bags and baskets which eventually sold as handbags. cost from fifty cents to $1.50. While the American retailer may be selling these handbags, the American manufacturer is not producing them. Passage of section 321 will increase this volume and aggravate a presently bad condition.

We don't know what the quantities and what the dollar value is of the handbags that are imported free of duty as passengers' baggage. We believe that is is very considerable and represents a very serious inroad to the American handbag industry. Although our product is at a disadvantage, as compared to other commodities, because of the excise tax burden, we have felt there is little that could be done in this regard. Travelers abroad, and to South America, will always buy

souvenirs, and other commodities, competitively priced, and bring them into the country duty-free within the limitations provided.

However, raising the exemption from $1 to $3 on articles imported otherwise than on the person or in the accompanying baggage of an individual arriving in the United States will be an open invitation to circumvent the present $500 limitation on articles brought in on the person. When the limitation is $1, a woman would not consider the purchase of a handbag for mailing into the country. Raising it to $3 makes it practical, feasible, and worthwhile, particularly as to handbags.

Multiply this situation by the great number of other commodities that are sold for more than $1 and less than $3 and you have a condition that, to a great extent, will nullify the Government's intention of limiting articles brought in on the person up to $500 duty free.

Under subheading (c) of section 321, the Secretary of Treasury is authorized to diminish the $3 to a lesser amount whenever there is an abuse of this privilege. This is what I would call a little escape clause. All of you are familiar with the extreme features of the escape clause under the General Agreement on Tariffs and Trade and know that it is most difficult, to put it mildly, to have the escape clause invoked under the General Agreement. The escape clause in this bill will be just as difficult and impractical after the damage has been done.

The handbag industry is a small-business industry. There are no defense contracts in the industry. Congress has declared it to be in the national interest that small business be preserved as a vital force and basic element of the national economy. The excise tax, imports, and bad business generally in the soft-goods industries, have been whittling the handbag industry and gnawing at its vitals. While raising the limitation from $1 to $3 is not a momentous thing in itself, it is an important factor to a distressed industry. It portends greater instability and chaos.

I have given you the handbag manufacturers' views on this matter. I cannot believe it is sound policy to simplify things, at the sacrifice of an American industry.

We are confident that this committee will not force these undesirable

results to come to pass. We respectfully urge that the current $1 limitation on duty-free shipmets remain untouched.

Mr. UTT. That concludes your statement, Mr. Berkowitz?
Mr. BERKOWITZ. Yes, sir.

Mr. UTT. Mr. Simpson was going to inquire, but he was called to the phone and I do not know whether he will return in time to inquire. I simply wanted to ask you if you feel that the raising of the limit from $1 to $3 would start mail-order houses, foreign mail-order houses, or mail-order houses in free zones, in America, which would be injurious to the retail business?

Mr. BERKOWITZ. Positively, sir.

Before the last hearing of the Senate Finance Committee, several mail-order houses have established themselves in Mexico, immediately thinking that they will take advantage, and we know that in Paris, France, several American firms went down there to establish that.

Mr. UTT. You have directed most of your testimony to the raise from the $1 to $3. Do you have any comment to make about the valuation clauses in the bill?

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Mr. BERKOWITZ. No, sir. Of course, 2 years ago I made a survey of the handbag industry in South America, and I spent 5 weeks in every country where they make handbags, from here to Argentina. I was surprised to see them going there and paying all kinds of money for a bunch of junk, when they could buy better bags in this country for a whole lot less.

But, it seems to me when people go abroad, they have to buy something, and apparently getting handbags, and belts for their husbands, were the most attractive thing to buy. And that created in this country a tremendous amount of repairs. More people started into the repair business in order to fix up the bags which had fallen apart, in pieces.

Mr. UTT. As to the total imports by reason of travel, do you not think that is comparatively small as compared with the total amount of business in the country?

Mr. BERKOWITZ. Well, it is not, sir. The importation of in 1952, I think, is about $5 million. To a small industry like ours, $5 million worth of importation is quite an amount. We used to export $10 million. We lost all those markets.

Last year, in 1952, I think we exported about $200,000 worth; and as to the South African trade and the Canadian and all that, we have lost that trade.

Mr. JENKINS. We thank you for your presentation, Mr. Berkowitz. The committee will adjourn until tomorrow at 10 o'clock.

(Whereupon, at 2:05 p. m., a recess was taken until 10 a. m. Friday, May 29, 1953.)