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that is attempted to be smuggled, but the law is so severe that when a violator is detected he receives penalties that he long remembers. Smugglers have said that customs officers seize so much smuggled goods and penalties are so high that smuggling does not pay. If prohibited aliens get into the country, or permissible or prohibited merchandise gets by the customs without the usual formalities, it is still the function of the customs to arrest the persons or to seize the merchandise except in cases coming under the immigration, narcotics, or internal revenue services.
"A recitation of smugglers' tricks of the trade would fill a large book. As fast as customs officers detect and solve one trick, smugglers resort to another. Some smugglers are so resourceful that the thought occurs that they could have made a great success in lawful pursuits" (id., pp. 34-35).
Independent carriers such as railways who transport goods in and out of the country also recognize the vital functions of supervision and inspection. As was noted above, a representative of the Association of Railway Executives observed before the House Ways and Means Committee and also the Senate Finance Committee that
"Inspection is necessary to protect the revenue of the United States by preventing smuggling." (See hearing before Senate Finance Committee, 71st Cong., 1st sess., on Tariff Act of 1929, p. 509.)
And, as has been pointed out also, supra, Congress has long realized the importance to enforcement of the tariff laws of adequate supervision and inspection by customs officials. This is reflected in the many provisions in the tariff laws setting forth requirements of supervision and inspection.
B. ABANDONMENT BY DEGREES OF THE HISTORIC SUPERVISORY FUNCTION OF CUSTOMS OFFICIALS OR ADOPTION OF THE CALCULATED RISK POLICY WOULD JEOPARDIZE SERIOUSLY GENERAL ENFORCEMENT OF THE TARIFF LAWS
Obviously, any relinquishment by degrees of the historic prerogatives of customs officials to inspect or supervise activities of importers or exporters involves very real dangers to effective enforcement of the tariff laws as a whole. An opening wedge having been made it would be only a matter of time until the whole pattern of enforcement changed.
Certainly it would be unwise to allow temporary conditions in one area to influence the permanent conduct of the cutoms officials anywhere within their jurisdiction. This would be especially true where the measure contemplated affects something as fundamental as the duty of the customs service to supervise and inspect. If anything is clear from the history of the tariff acts and customs administration laws it is that the customs service was not to rely on the alleged integrity of importers or exporters to enforce the tariff laws. Inspection and supervision of their activities have always been deemed essential. Even though customs officials temporarily stationed in a certain area have confidence in the reliability of personnel representing certain importing or exporting firms at that time, the law does not contemplate the permanent abandonment by those officials of their historic duty to supervise. Personnel change, both those representing the customs service and those representing private interests subject to their supervision and inspection.
It is dangerous, therefore, to adopt a measure which, although expedient at the moment, might seriously hamper the long-range performance by the customs service of its essential function of protecting the revenue. It is hardly a justification for what would be, in effect, the permanent elimination of adequate supervision by customs officials everywhere of the unlading of oil under a vessel supply statute to say that in one port such a measure now would be desirable because of the small number of customs inspectors presently available, the convenience to oil companies, the fact that the oil companies can thereby avoid certain payments for overtime compensation of customs employees, or the general confidence of the local customs officials in the "integrity" of the oil companies involved.
Mr. JENKINS. Are there any questions? Thank you for being here and giving a fine statement.
Mr. BEITER. Thank you, Mr. Chairman.
The next witness is Mr. Richard White.
STATEMENT OF RICHARD P. WHITE, EXECUTIVE SECRETARY, AMERICAN ASSOCIATION OF NURSERYMEN, WASHINGTON, D. C.
Mr. WHITE. I have a brief statement, Mr. Chairman, that I would like to present and if there are any questions coming up, I would be glad to answer them.
Mr. JENKINS. Did you submit a prepared statement?
Mr. WHITE. Yes. I just delivered them about 10 minutes ago. Mr. JENKINS. Very well. You may proceed.
Mr. WHITE. My name is Richard P. White. I am executive secretary of the American Association of Nurserymen, which is a trade association representing approximately 1,500 nursery firms located in 46 of the 48 States, which combined represent better than 70 percent of the entire industry. Included in this membership are most of the larger nursery mail order firms of the country who do a national business, of which H. R. 5106 is of particular interest.
Last year we submitted a statement raising certain objections to H. R. 5505. This statement appears in the printed record of hearings on that bill on pages 191 to 192.
The bill now under consideration, H. R. 5106, has not taken care of the objections we expressed to the previous customs simplification proposal of the 82d Congress, although it has attempted to compromise the matter.
My testimony is directed solely to section 13 of H. R. 5106.
Section 13 proposes to amend section 321 of the Tariff Act of 1930, so as to admit duty-free, shipments of merchandise with a value of $3 or less, imported by one person on any one day, except that the benefit of this section cannot be assured in those cases where the merchandise covered by a single order is forwarded in separate lots. It is our view that
1. The suggested increase from $1 to $3 in duty-free imports constitutes a change in the tariff and that any modifications in tariff should be considered as such and not as a simplification of customs procedure. To reduce the proposal to an absurdity, it could be argued that the $10 duty-free limit of H. R. 5505 of the 82d Congress would result in a greater simplification of customs procedure than the current $3 proposal. A $15 duty-free limit would effect even greater simplification since such a proposal, if adopted, would automatically clear through customs an increased number of individual shipments on which duty would not have to be calculated and collected. Where to safely draw the line would not be uniform for various commodities; $3 might be a satisfactory limit for certain items, but it would be highly disadvantageous to the nursery mail-order business firms of the United States.
Mr. JENKINS. I take it you stand for the $1 limitation?
2. The final paragraph of this section, prohibiting the benefits of the increased duty-free limit in any case in which merchandise covered by a single order is forwarded in separate lots to secure the benefits of the subsection, is unenforceable.
Let us assume a typical American home-owning family of four, typically garden-minded. A collection of 2 year nursery grown shrubs is offered in the garden sections of our daily and Sunday newspapers
at $2.98 shipped direct to the homeowner from some foreign country. One collection is not enough for the planting the homeowner has in mind. He collects 3 more advertisements from his neighbors, sends in 4 orders; 1 addressed to himself; 1 to his wife and 1 for each of his 2 children—all separate orders with separate remittances. The orders would undoubtedly clear through a New York agent so that checks could be written on an American bank and cashed in New York without the added expense of foreign money orders. All four shipments would be duty-free.
This is not an impossible situation. At the present time, 2-year-old nursery grown shrubs from Holland are being laid down in Boston at 25 cents wholesale, including a 12% percent ad valorem tariff. The average wholesale American price for 2-year-old nursery grown shrubs comparable to those imported is 49.7 cents. This is not an inflated price.
An analysis of wholesale prices of common 2-year-old nurserygrown shrubs covering the past 30 years shows the price today almost comparable to that of 30 years ago. From 1921 to 1951, the farm prices of deciduous shrubs has increased only 14 percent. With high labor costs and high costs of operating supplies, and higher and higher distribution costs, the American grower is not in economic position which would enable him to compete with the flood of foreigngrown nursery stock, which we are certain would be offered direct to the consumers of this country by foreign mail-order concerns. cannot speak for the bulb growers of this country, but the situation could be even more serious for them than for the nurserymen.
Last year I pointed out the problem which would be raised by having importations of plant materials in small packages in meeting the requirements of the Plant Quarantine Act of 1912 and the Nursery Stock, Seed and Plant Quarantine regulations of the United States Department of Agriculture. I would again call this danger to the committee's attention.
Raising the duty-free limit from $1 to $3 would permit the economic shipment of dormant plants of many kinds, bulbs, and forms to this country in small orders direct to the customer. These shipments would be subject to the regulations of International Plant Quarantine No. 37, insofar as inspection and fumigation at our ports of entry are concerned. It was maintained a year ago and reiterated here that the personnel at our ports of entry is not adequate to cope with any additional inspection and fumigation load. Serious delays in inspection and fumigation of importations were experienced this spring at Hoboken, N. J., our major port of entry on the east coast.
The House, in action last week on the United States Department of Agriculture appropriations bill, has reduced appropriations for this work $100,000 for fiscal 1954. We can safely assume, therefore, that the USDA will be even less able to inspect, fumigate, and clear shipments of imported plant material after June 30, 1953, than they were during this past fiscal year.
It is our judgment that a large percentage of these duty-free packages containing plant materials would never be intercepted by the port-of-entry inspectors for inspection and fumigation. The result would be inevitably the virtual revocation of the international nursery stock, seed, and plant quarantine to the eventual disadvantage of American agriculture, horticulture and forestry.
We have introduced many plant pests from foreign lands in spite of our quarantine service, but there are still many more serious pests abroad that have not found their way to our shores up to this time. A casual examination of the past-interception records of the United States Department of Agriculture is proof of this.
The Federal expenditures alone for the attempted eradication or control of only 14 of these introduced pests, including such important pests as the Japanese beetle, the European cornborer, the white pine blister rust, the Dutch elm disease, citrus canker, and others, have amounted to $239,904,214. We cannot take a chance of introducing more of these foreign pests in duty-free uninspected and nonfumigated mail order parcels from abroad, which would be broadcast over the entire country. It is our opinion, too, that the 48 State departments of agriculture, which are charged with the obligation of protecting their agricultural resources from introduced pests, would be much concerned about this proposal. They already have difficulty in intercepting and inspecting at destination or post office terminals, small mail order packages of nursery stock originating in the United States.
Instead of saving money, section 13 of H. R. 5106 might well result in permanent losses to our natural resources. We believe importations of living plant materials should be reduced rather than encouraged if we wish to protect our forests and our agriculture from introduced plant pests.
Section 13 of H. R. 5106, we believe, would result in a flood of small package shipments of plants which would escape inspection and fumigation as required by quarantine number 37, thus destroying in large degree the protection now afforded by a strict enforcement of this quarantine.
For these reasons, Mr. Chairman, we would register our opposition to section 13 of the pending proposal as now written.
We would recommend its elimination from the bill or if not that, then an amendment which clearly eliminates from consideration, importations of plants or plant parts capable of propagation.
That concludes my statement, Mr. Chairman.
Mr. JENKINS. I take it you are engaged, no doubt, or you are representing the nursery people of the country, and your problem is one that comes from the importation of herbs and plants and seeds, and things of that sort?
Mr. WHITE. Not seeds so much as the nursery plants, fruit trees,
We have none. Thank you very much, Mr. White.
Mr. JENKINS. Do you have anything additional you would like to have inserted into the record?
Mr. WHITE. Not unless there is some data that you wish me to insert into the record to support these statements.
Mr. JENKINS. They may be inserted if you desire so.
Mr. WHITE. Thank you very much.
Mr. JENKINS. The next gentleman is Mr. Burnstine, who represents the National Jewelers Association.
STATEMENT OF B. N. BURNSTINE, OF BURNSTINE'S INC., WASHINGTON, D. C., REPRESENTING NATIONAL JEWELERS ASSOCIATION
Mr. BURNSTINE. My name is B. N. Burnstine. I am a Washington jeweler, and I represent the National Jewelers Association. I have a statement referring particularly to section 321, the administrative exemptions. The association has a membership of 1,800 jewelers, located in all sections of the United States. It is the considered opinion of our membership that raising tariff exemption to $3 on the myriad of imported consumer goods items would not result in a demonstrable savings to the Government, but would actually provide a net revenue loss.
Mr. JENKINS. Let me ask you a question there. I do not suppose you have any figures to tell us as to what you think the loss would be, have you?
Mr. BURNSTINE. No; but in this statement I cite one particular
The exemption of tariff on articles in our industry, such as jewelry, watches, silverware, and kindred articles, and on which there is in existence a high retail excise tax, lowers the price at the consumer level to such an extent that foreign exporters, in competition with domestic industry, could build a lucrative business in the United States with small sales, direct to the consumer, with telling effects on our industry. An article of jewelry costing $3 in the country of origin, could be imported by an individual duty free. That same article imported in quantity by a businessman would carry a duty of $1.05, making the landed cost $4.05. Without figuring wholesale and retail distribution costs, this article would carry a retail excise tax of $0.81, selling to the consumer at a total cost of $4.86. The minimum loss to the Government would be $1.86. This figure will be theoretically much higher if you give consideration to distributor costs and profits, with added loss of tax from business profits, et cetera.
It is impossible to estimate the loss to the jewelry business that the raising of the exemption would cause, but it would prove substantial in terms of lost production, employment, sales, income, income tax, and excise tax.
The lure of direct foreign imports, duty free, is captivating. Imagine advertisements featuring: Cutlery and silver giftware from Sheffield, England; Paris creations in costume jewelry; low priced watches from Switzerland; silver jewelry from Mexico and the innumerable articles from Japan.
Our nationally circulated periodicals would be full of advertisements of foreign exporters telling the American consumer how he can buy more cheaply than from American businessmen, without paying their share of tariffs and taxes.
Further, we believe that that part of the proposed Customs Simplification Act that raises the exemption, would in actuality be a tariff measure and as such has no place in an "administrative" bill. The National Jewelers Association asks that the tariff exemption remain at $1.
Mr. JENKINS. I presume that this change would affect your business about as much as any business in the country.