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take paring or carving knives made of Sheffield steel from England or Henckel steel from Germany. These items are highly sought in this market and their names carry much weight with the purchaser. The same argument applies to French perfume and many other items. On the other hand, let us take the same article from Soviet Russia or Red China. The American purchaser should be furnished with the information that would permit him to avoid the purchase of these items if he desires.
Changes made by recent laws, and the administration of the general marking provision of the present law (sec. 304, Tariff Act of 1930, as amended), have been so liberally construed as to permit, for example, china and earthenware to be marked with a paper label, whereas under the early years of the Tariff Act of 1930, marking by indentation in the mold or by lettering covered by the glaze of the article were required. It is customary for all American pottery manufacturers to mark their products with names or legends that will identify their American origin. A casual inspection of the shelves of any local 5- and 10-cent store will disclose china and pottery with no marking to identify its origin. We need not speculate on its origin for it is almost sure to be foreign made and entered this country marked with paper labels which "accidentally" came off after importation and in the unpacking and handling of the merchandise. Present laws impose a penalty for the removal of the country of origin, but in years I have not heard or read of a penalty being imposed.
Does section 4 simplify customs procedure? The answer to this question depends almost entirely upon the angle from which you approach it. I am representing American producers and my answer is that it simplifies the introduction of foreign-made goods into the American market, as American-made goods.
Again may I suggest that before all of this legislation is repealed your committee refer this section to the White House for study along with H. R. 4294.
Mr. JENKINS. Is the gentleman really serious about that?
Mr. LERCH. I am, sir.
Sections 5 and 6 of the Jenkins bill relate to matters in which my clients have no interest.
American goods returned: Section 7 of this act extends the present provisions for reentry of American goods without duty. While this may benefit American manufacturers, we feel we must call attention to the fact that its administration will complicate, not simplify, the work of the collectors of customs.
Free entry for individuals: Section 8 of the proposed bill provides for the free entry of merchandise being brought back by American tourists. Subparagraph (a) permits one who has remained abroad for a period of not less than 48 hours to bring back with him $200 worth of merchandise. Subsection (b) permits an American citizen who has been abroad for a period of not less than 12 days to bring back $500 worth of merchandise.
While it may seem an altruistic attitude toward our citizens on the part of their government, this provision could very readily work great hardship on some domestic industries. For illustration, English bone china, because of arrangements between England and Canada, sells in Canada at a very reasonable price over that at which it is sold in this country and over comparable merchandise made in this
country. If a traveler to Montreal, let us say, remained there for the 12-day period, he could bring back 4 or 5 bone china dinner sets free of duty under the exemption, and it could develop into a very prosperous industry running these valuable china sets into this country and disposing of them at the prevailing American price to the detriment of the American industry.
While the proposed section provides a penalty for the sale of merchandise brought in by tourists, this provision in practice would be practically meaningless since it would be impossible to check every $500 worth of merchandise brought in by tourists to determine whether it had been sold.
Sections 9, 10, 11, and 12 relate to matters of policy as to which we have no opinion.
Section 13, administrative exemption: May I introduce my remarks on this section by quoting from the explanation which accompanied the Jenkins bill:
It further authorizes him to admit articles free of duty when the expense and inconvenience of collecting the duty or tax would be disproprtionate to the amount of such duty but it limits the amount imported by one person and one day and exempted from the payment of duty under this section to not in excess of $5 in value in the case of articles accompanying and for the personal and household use of, persons arriving in the United States, or $1 in value in any other case. Section 13 would amend section 321 to (1) increase from $1 to $3 the difference between deposited or assessed duties and actual duties; (2) permit free entry of bona fide gifts from persons outside the United States to persons inside the United States up to $10; (3) allow free entry up to $3 in other cases. However, the Secretary would be enabled to reduce these amounts if he finds it necessary to protect the
This section would permit a foreigner to send into the United States every day an article valued at $10 as a gift without the payment of duty. It would also permit the free entry by mail up to $3 in value.
I might say that it is $3 in foreign value, which is so generally misunderstood by those who speak on this section. $3 in Canada or in England displaces about $10 here in most lines of merchandise.
Is it the purpose of this bill to turn over to the foreign mail order houses much of the business of our small manufacturers? Can anyone visualize the hundreds of items that are sold in our retail stores at a value of $10 or less? Our neighbor, Canada, imports from England free of duty items of this character which were made at much less than the Canadian or American cost. Let us take for example an English doll which was advertised in the New York papers for $5 delivered by mail in the United States which would talk, walk and do everything that mechanical devices could effect. I am advised by doll manufacturers in New York that a comparable American made doll without all of the accomplishments of her English sister could not be made to sell for less than $15 at retail. Similar illustrations I could give you would be endless.
While the $10 exemption is limited to gifts, this section also permits the importation by mail, duty free, any merchandise valued up to $3. With labor in England about one fourth of that paid in the United States or Canada and with the free entry of English made merchandise into Canada, this provision should give to the Canadaian mail order houses the greatest business they have ever known. But we need not limit its application to Canada since it applies to importations from Mexico and all foreign countries. To review the effects of this section:
It will permit the importation by mail, free of duty, of articles valued to $3. If you cannot bring your desired importation within this provision, you may have an acquaintance abroad mail it to you as a gift if its export value is not over $10.
But if you want to make a real saving under this section, provided you live within a reasonable distance from our border, you may drive across the border, stay at a cheap lodging house, enjoy 12 days vacation and bring in $500 worth of merchandise at the wholesale export value.
I can assure you that this provision will annually make simple the free importation of millions of dollars worth of merchandise to the displacement of many times that value of American made merchandise. Section 14 of the Jenkins bill relates to administrative policy as to which my clients have no opinion.
Section 15, value: Section 15, which abolishes the forms of value which have been the basis of all ad valorem rates of duty for over half a century, replacing them with entirely new forms of value which will foster another 50 years of litigation, assuming litigation is permitted, before their terms will be as well understood as the present forms of value. The present provisions of section 402 of the Tariff Act of 1930 are factual (describing a set of facts in each instance), while the new provisions of section 15 of the Jenkins bill attempt to define new bases of value, each of which vest the appraiser with discretionary power. The Jenkins bill still exacts of an importer the obligation of declaring the correct dutiable value of his merchandise on entry, although it removes the additional duty exact under existing law for failure to do so.
This presents a non sequitur. Why not abolish any obligation on the part of the importer to declare the value of his merchandise. The provision of the value section of this bill ascribes to the importer the powers of a clairvoyant since the final arbiter of value, the appraiser, is directed by this bill to "ascertain and estimate" the value of his merchandise.
As I stated in my previous appearance on the companion bill in the last Congress, the Supreme Court of the United States in its early existence decided that no Federal court had power to review a discretionary act vested by Congress in a Federal officer or agency. It follows, therefor, that while this bill does not repeal section 501 of the Tariff Act of 1930, giving a right of appeal to the United States Customs Court in questions of value, this is but an empty gesture since, while an appeal is permitted by statute, a review is precluded by law.
This was called to the attention of this committee when this section was before it at the last session of Congress, and undoubtedly led to the insertion in section 15(d) of the proposed bill defining "comparative value," that is
shall be the equivalent of the export value as nearly as such equivalent may be ascertained or estimated by the appraiser or proper court.
It is significant that the court is not mentioned in any of the other subdivisions of section 15, although they all involve discretionary
This fact alone would tend to confirm the statement I made on my previous appearance that the "comparative value" definition would
form the basis of the bulk of ad valorem duty importations, and the authors of this bill attempted to guarantee review by the "proper court". There is only one "proper court" and that is the United States Customs Court.
Many years ago, when this court was known as "The Board of United States General Appraisers", it had such inquisitorial jurisdiction in value cases, and anyone that has been in this practice as long as I have, and has experienced the confusion of that day, will join me in petitioning Congress to avert the retrogression or reversion to practices that many of us have worked hard to eliminate on the ground that they were arbitrary, uncertain, inquisitorial, and unjudicial.
From the point of logic or reason, how can it be said, with appraisers all over the country selecting "comparable merchandise" upon which to appraise the same imported product "with appropriate adjustment for differences in size, material, construction, texture, or other differences," and a court making the final arbitrary guess, that an importer would ever know upon what value he would pay duty on his imported product. Yet, the only explanation given for this radical departure from established practice by the proponents of the Jenkins bill is the simplification of customs practice.
To one familiar with customs practice, simplification of customs is not the motive for the introduction of a section as radical and retrogressive as section 15 of this bill. Some other motive must be ascribed to it. The authors of this bill have not said, and I am sure I cannot find it. In the copy that I received of Mr. Jenkins' explanation of section 15, he simply enumerates what is done by the section without giving reasons therefor. In my judgment it would take powers far beyond the scope of the average human mind to furnish a logical reason for this change. Maybe that is why no reason was given.
I think I have shown the committee why section 15 should be deleted from the bill; but, if the committee desires, I could analyze in detail each subsection and definition to show its vicious potentiality.
Mr. JENKINS. From that text, Mr. Lerch, I want to take it upon myself to invite you to do that. I know how you feel about section 15, and I am sure that the members of the committee would be glad to have your explanation in detail with reference to that. Without objection, you may have permission to extend your remarks to that
Mr. LERCH. I will be glad to. In other words, may I file an additional explanation later?
Mr. JENKINS. Yes.
Mr. LERCH. I do have some more remarks that I want to make about it here.
Mr. JENKINS. Yes. You do not have to do that today, but I would appreciate your doing that. I know your position on it, and I would like to know just what you suggest in place of it.
Mr. LERCH. I can tell you now my suggestion in place of it—to leave section 402 as is.
Mr. JENKINS. You can go in more detail on your objections to these changes.
(The information is as follows:)
Re H. R. 5106, Customs Simplification Act.
House of Representatives, Washington, D. C.
LAMB & LERCH,
New York, N. Y., June 3, 1953.
GENTLEMEN: When I appeared before your committee on May 27, 1953, I offered to analyze, more fully than I had done, the provisions of section 15 of H. R. 5106. The chairman requested me to file a brief extending my remarks on this bill for the record. It is in response to this request that I file this brief asking it to be printed as part of my testimony of May 27, 1953.
Let us place in juxtaposition the opening of section 402 of the Tariff Act of 1930 and that of the section as it appears in the proposed bill:
Basis. For the purposes of this Act the value of imported merchandise shall be
H. R. 5106
Basis. Except as otherwise specifically provided for, the value of imported merchandise for the purposes of this Act shall be
It is a well-settled principle of law that where Congress makes a change in existing language of a statute a reviewing court will give to that change a different meaning than had the previous statute, or it would impute to Congress an idle gesture. Under the new provision, where and how has Congress "otherwise * * * provided"? As far as I know, no explanation has been offered by the proponents of this bill. In order to remove any doubt of the meaning of this change, the bill should read "Except as provided in ***," followed by numbered sections. Since the provision is ambiguous, it will require legal construction and involve uncertainty and delay.
I concur in the elimination of "foreign value" as a basis of assessing ad valorem duties. When this value was established a century ago, "foreign value," or the price at which an exporter would sell his merchandise in his own market, was a true index to its real value. As the United States progressed industrially and our standard of living outstripped other countries, more and more it became profitable to have merchandise made abroad for the exclusive use of the United States importer, thus avoiding the application of "export value" in order to secure appraisement on "foreign value," the value the exporter freely sold in his market. Since the volume consumed in the country of exportation of merchandise made for the United States markets is not often a large percentage of total foreign production, every incentive is offered to sell in the foreign market freely at a low value and to erect restrictions on export sale to insure the rejection of "export value" as a basis of appraisement of ad valorem merchandise.
In ascertaining "foreign value" under existing law, affidavits are admissible. Many of these were self-serving declarations. In order for the appraiser or the reviewing court to be accurately informed, an investigation has to be made by a Treasury attaché or some other Government officer, which many times proved impossible because of the foreign producer's refusal to permit an inspection of his books.
Experience has shown that "foreign value” as the basis for ad valorem duties, when manipulated by a skilled importer, could result in greatly reducing the amount of duty paid upon merchandise bearing an ad valorem rate.
I endorse the elimination of "foreign value" as a basis of appraisement.
REVIEW OF APPRAISER'S DECISION, SECTION 402 (B), TARIFF ACT OF 1930 Section 402 (b) of the Tariff Act of 1930 guaranteed a judicial review of all elements entering the appraiser's decision as to the value of imported merchandise. This section has been omitted from section 15 of the proposed bill. By the same analogy to that I have previously expressed an omission of a provision of existing law imputes an intent on the part of Congress to effect a change in existing practice it follows, the omission of this section, when considered in the light of the new wide discretionary powers conferred upon the appraiser, will effectively abridge, if not remove, the jurisdiction of the United States Customs Court over appraisements.