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opportunity to institute judicial review of penalty cases himself, primarily to advance their resolution at the administrative level.
AIA fully supports Title II regarding the composition of the Court and the assignment of judges.
AIA strongly urges adoption of proposed sections 1532 and 2643 to grant the court all the powers in law and equity of, or as conferred by statute upon, a district court. The lack of powers in equity and under the Ail Writs Act (28 V.S.C. § 1651 (a)) has been sorely felt.
The following comments suggest some of AIA's problems with specific sections of the bill.
AIA questions whether section 1583 may not be too broad. The jurisdiction to review final agency action of any agency which directly affects imports is not confined to agencies whose mission is trade related. It would seem to include actions of many other regulatory agencies such as the Consumer I'roduct Safety Commission, the Food and Drug Administration, the Environmental Protection Agency, the Federal Trade Commission, and the Department of Agriculture. Many statutes administered by these agencies include specific provisions for regulation of imports; other statutes regulate imports directly but under a single regulatory scheme covering both imports and domestically produced goods. An example of the latter are the product standards of the CPSC for bicycles. Imported bicycles are subject to the same staudards as are domestic bicycles, yet the problems of implementing these standards may be much more difficult for the importerlanguage barriers are only the beginning for him.
Under the Toxic Substances Control Act, importers faced an entirely different and additional set of problems with the promulgation of EPA rules for the compilation of a chemical inventory list. Many of these problents will arguably directly affect imports as TSCA becomes fully activated. Further, EPA is writing a separate set of regulations under TSCA to cover imports of cheniical substances,
The question is this : Do we want the potential to exist for two separate and inconsistent lines of decisions interpreting TSCA or any other regulatory scheme? As we read this bill questions involving imported chemicals will go to the Customs Court; those involving domestic chemicals will go to district court.
The language in section 1586 (a) "imposed on importation" inay not allow review of liquidated damages imposed on the importer when Customs goes. against his bond months after the importation. The section should be clarified.
Judicial review of drawback decisions under section 1587 should be available as soon as the rate is denied. Review should not be delayed until the importer has completed the drawback process and payment is denied.
AIA is opposed to the grant of jurisdiction to render judgment on any set-off, demand, or counterclaim in proposed section 1592. This provision will have a serious chilling effect on importer litigation since it immeasurably increases his risk. At present, the government may introduce a counterclaim as a defense, but the Court cannot enter judgment for more than was at issue prior to the introduction of the counterclaim. This section goes far beyond that. Judicial review is a vehicle to provide a restraint on erroneous government actions. This section is an ill-disguised effort to discourage the public from availing itself of this safeguard. Alternative classifications or valuations are more properly introduced at the administrative level. Unrelated claims should be pursued in other actions. The concept embodied in this section does not parallel the ground rules for review of other agency actions. At the very least this provision should be limited to claims relating to the specific entry before the Court. Certainly the inclusion of claims arising out of expert related transactions should be deleted. Why should the Court be granted jurisdiction over export issues in only these instances?
Proposed section 2631 which allows “any person adversely affected" to bring suit is troublesome largely because its implications are broad and not fully determined. The Subcommittee should give careful attention to the possible effects of this concept. While in some cases it would operate to the benefit of all interests, in other instances it would enable domestic competitors to divert an importer's resources on frivolous grounds. AIA recognizes, however, the principle of justice involved, and the need to hear diverse interests in some cases. We see a further difficulty. While importers must expend resources pursuing their claims through an administrative agency before obtaining judicial review, other adversely affected parties would initiate their actions in the Customs Court. We feel that cases brought under section 2631 should also be filtered through the administrative process where the procedures are less formal and expensive.
We also oppose the elimination of the summons as the means of commencing án action. The summons is a useful vehicle. It does not require an answer from the government and yet often serves as a basis for settlement through stipulation. Many cases involving identical or similar questions of law can be brought to court by summons. All but one may be left dormant and unanswered while the “test” case is decided. After the decision is final, most of the cases still at the summons stage will be settled on the basis of that decision. We strongly support the retention of the present summons procedure.
Proposed section 2635(a) takes away from the importer the right to a notice of denial of a protest which he was given in the 1970 Court Act. Under this bill Customs need not, and indeed may have little incentive, to mail notices of denial since the protest is deemed denied after two years. It seems only equitable for Customs to issue notices—as they are now-rather than to require importers, attorneys and brokers to maintain extensive and long term “tickler” files.
Proposed section 2639(a) should be deleted for all actions. As a principle of administrative law and agency determination is given extra weight, but the principle should not be elevated to the level of establishing a higher burden of proof.
Proposed section 2641 (b) preserves the confidentiality only of information received from certain sources. The provision should be broadened by deleting the words “of a non-party to the action or of a party or information provided to the United States by foreign governments or foreign persons.”
AIA recognizes that proposed section 2646 restates existing law but feels that a justification must be made for its retention.
A number of significant issues are not included in this bill. For example, the bill does not address a discriminatory procedure in the present law. The importer now has no right to an appeal from a dumping finding—whether on the determi. nation of sales at less than fair value or of injury to the domestic industryparallel to that given domestic manufacturers under section 516. The domestic party may appeal immediately, but the importer must wait until goods are entered and a dumping duty is assessed. The wait is often long; e.g., importers of television receivers have only this spring been able to challenge the antidumping finding of 1970 because entries of merchandise subject to dumping were not liquidated. In the meantime the importer must operate under the threat of dumping duties and must post bonds. Proposed section 2636 (d) does not appear to cure this defect. The analysis would even confine the section to perishable merchandise. This inequity should be corrected.
The bill does not provide standing for foreign exporters. In dumping cases in particular, they are often the real parties in interest and participate directly in the administrative investigation.
We would ask the Subcommitee to reconsider the requirement in present law that all duties be paid as a condition precedent to bringing a case in Customs Court. In cases involving large sums of money, this can operate as an unfair penalty on the importer.
Finally, propose that this Subcommittee consider the creation of a small claims division within the Customs Court. This concept has been casually discussed for years and needs to be aired on a serious level. Members of AIA have cited many examples of cases which are not worth pursuing in a full scale court proceeding because of the time and expense required. While the attorneys who practice before the Court have expressed a willingness to take cases which do not fully pay their way, as a practical matter few of these cases actually are litigated. Because it is a matter of proving what has not been done, we cannot accurately estimate what use would be made of this division, except to say that such cases do exist. The division would hear cases with an amount at issue somewhere between $1000 and $5000.
Its jurisidiction probably should be limited to classification and value cases. Decisions could be issued from the bench or after deliberation. The decisions would not carry precedential value and would not be appealable. A similar division already exists in the U.S. Tax Court and would provide a ready model. (U.S. Tax Court, Rules of Practice and Procedure, Rules 170–179, 183. That division is authorized under 26 U.S.C. 7463.) One objection, which has been debated, is whether a judge would find it possible to objectively decide issues in a full proceeding which he had previously decided in the small claims division. Whether this is a real problem is arguable, certainly. One possible solution is to have a magistrate hear small claims cases under the supervision of a judge as is done in the Tax Court. This would also enable the Customs Service to more readily prevent the potential "grapevine” effects of small claims decisions. The point to remember is that a small claims division would allow importers, both large and small, to obtain access to the court to correct erroneous agency actions without confronting legal expenses greater than the amount of the claim.
In conclusion, AIA feels that this bill serves a useful purpose in generating serious discussion about shortcomings in the availability of judicial review of administrative actions affecting international trade. The bill, however, has serious defects—some of which we have mentioned. Much work remains to be done. AIA is willing to do all it can to assist this Subcommittee in its task.
Mr. Katz. My name is Simon Katz. I am executive vice president of New York Merchandise Co. which was established in 1906 and is one of the largest importers of general merchandise. I have served for the past several years on the Presidential Advisory Committee for Trade Negotiations under Ambassador Robert Strauss. I appear here in my capacity as chairman of the American Importers Association, or AIA, committee which is studying the legislation under consideration today. I am also a past president and director of the AIA. I am accompanied by Barry Nemmers, staff attorney for AIA.
The American Importers Association is a nonprofit organization formed in 1921 to represent the common interests of the U.S. importing community: AIA is the only association of national scope not limited to specific commodities or product lines. As such, it is the recognized spokesman for American companies engaged in the import trade.
At present, AIA is composed of nearly 1,300 American firms directly or indirectly involved with the importation and distribution of goods produced outside the United States. Its membership includes importers, exporters, import agents, brokers, retailers, domestic manufacturers, customs brokers, attorneys, banks, steamship lines, insurance companies, and others connected with foreign trade.
We welcome this opportunity to present our views on the Customs Court Act of 1978.
Mr. Chairman, I would like to approach this bill today from a different direction than our written statement does. Our statement was written more from an attorney's point of view. I am an importer, but not an attorney and I want to speak from an importer's perspective. This is appropriate not only because AIA has importer and attorney members but also because the bill should be examined from both perspectives.
I will begin with general comments on the way importers view the courts and what role thev play for importers. Later, I will try to tie these perceptions in with what this bill should do.
Importers generally have little contact with Customs Court or the Court of Customs and Patent Appeals. They will rarely, if ever, see them in action whereas they do have constant contact with the Customs Service. When they think of the Government in connection with their business, they usually think of Customs as the predominant regulatory agency. Yet, when pressed to consider the courts, they would not deny their need for an adequate system of judicial review. More and more, however, they are finding the court to be an essential element in connection with their business.
There are several reasons for this growing awareness of the potential for dispute settlement in the courts. First is the increasing amount of Government regulation. Since the Trade Act of 1974, particularly, regulation has greatly increased from the international trade agencies. The number of escape clause investigations, antidumping duty and countervailing duty petitions has mushroomed. Section 337—the so-called unfair import practices section-has been applied in new ways. The number of restrictive trade agreements has increased; there are more quotas as a result of the orderly marketing agreements established by the STR.
There has been an increase in the regulation of agencies which we think of as domestically oriented. The CPSC, EPA, FDA, the Fish and Wildlife Service, and others are deeply involved in enforcing regulations or standards in the import trade.
A second reason for growing use of the courts is the increasing complexity of imported merchandise. In 20 vears we have gone far beyond importing trinkets from the Far East. Imports now include sophisticated electronic and optical equipment, heavy machinery, complex chemicals, an occasional floating dry dock or even an entire bridge. The initial step in making an entry--the assignment of a tariff classification—often requires much expertise. Obviously, the more complex the questions become, the more opportunity for differences of opinion and disagreement.
Third, the courts are in the news more often today because international trade, which formerly was a relatively unimportant national question, has become a central issue in our national economy and social structure. We depend on international trade not only to supply a growing volume of previously imported products but also for an increasingly diverse range of articles and commodities.
Because of these elements—the expansion of regulation, increasing complexities, and a rise in the significance of international tradethe courts, both customs and district-have become important to the importer.
If the courts are important to an importer, what does he need from them? Importers have at least five fundamental requirements: First, and foremost, we need the assurance that any appropriate question will be heard by a court and that an effective remedy can be applied.
Second, we need an impartial body with the expertise and experience to understand the issues and the intricacies of customs practice and procedure on an administrative level. This body should also possess an awareness of the details of the business of international trade and its differences from purely domestic trade.
Third, we need a court which is familiar with the practical relationship between U.S. law and international conventions and treaties.
Fourth, we need ready access to a court which can act quickly and effectively on questions involving perishable, or seasonal, or fashionable merchandise.
Fifth, we need a system to settle issues involving small dollar amounts, whether in a full court proceeding or a small claims division or a system of arbitration.
To a great extent the courts, customs and district, now satisfy these needs. To the degree the Congress can tailor the judicial system to better meet these needs, you will have improved the system. Once these needs are met, in this or any other bill, the remaining issues and provisions are tactical-provisions of concern for the attorneys protecting the importer's rights and interests.
Although it was not cast in those terms, S. 2857 basically is an examination of whether the importer's judicial review needs are being met, and if not, how best to meet them.
We applaud the purposes of this bill; they directly address our needs. We question, however, whether these purposes have been carried out by the provisions of the bill. We believe that the bill has raised as many questions as it has answered. For example, is the appropriate method of providing for a comprehensive system of judicial review of import issues to place these issues in one specialized court?
I stated earlier that international trade has become a central national issue closely tied to many issues of domestic policy. Would these issues be viewed more realistically by a court familiar with the problems of corporate taxation, with problems of product liability, and with the relationship between retailer and consumer?
Historically, this Nation has favored courts with generalized experience. Is it appropriate to isolate international trade cases? Do we want to separate the judicial review of regulation of imported chemicals from review of regulation of domestically produced chemicals? Do we want to confine the Customs Court to its historic role of deciding the numerous cases involving classification and value? Does the general experience and expertise of the district courts provide a better perspective for decisions in such a crucial area? I do not know the answers to these questions.
This bill assumes the answers to these questions. We don't believe, however, that these questions have been given adequate consideration inasmuch as the trade community itself has not been brought into any such discussion.
The subcommittee should also ask whether the Customs Court should not also review questions concerning exports. This has been raised previously. Are these issues so different from import issues that they should not go to the Customs Court? In an action challenging a denial of an export license based on conflicting readings of schedule B, the classification schedule for exports—which now is very similar to the tariff schedules for imports—who is better qualified to answer the questions than the Customs Court?
We have many other problems with the way the bill's purposes are to be implemented. The bill properly grants equity powers to the court and we support this provision. Yet, because the court is national and is situated in New York, it will be difficult for parties beyond that area to make full use of that new power. An importer's attorney in California will not be in a position to have that power as quickly applied to perishable merchandise as will an importer's attorney in New York.
There is a provision in the bill which allows a defendant in a penalty case under section 592 of the Tariff Act of 1930 to request transfer of his case to the Customs Court. In the process, however, he loses his right to de novo review and must accept only a review for abuse of discretion. That condition effectively negates any benefits of transfer; few importers would use that provision as it is now written.