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STATEMENT OF RUDOLPH OSWALD, DIRECTOR OF RESEARCH, AFL

CIO, ACCOMPANIED BY ELIZABETH JAGER, ECONOMIST Mr. Oswald. Thank you, Mr. Chairman. Accompanying me this morning is Elizabeth Jager, Economists for AFL-CIO.

Senator DECONCINI. We are pleased to have you.

Mr. Oswald. I would like to take this opportunity to express the views of AFL-CIO regarding S. 2857. This bill raises many important questions about the best way to achieve a fair review in the courts of issues related to international trade.

The AFL-CIO shares the concern of the chairman of this subcommittee who noted in introducing S. 2857 that “the importance of international commerce decisions has increased to the point that more and more ordinary citizens are affected.” We also agree that "the statutes affecting the jurisdiction of the courts that handle such litigation have remained relatively unchanged.” We do not agree, however, that S. 2857 will solve that problem.

As labor union representatives, we do not pretend to be customs specialists or legal experts. But our objection to S. 2857 is that it is designed to give international trade issues to the court that is the specialist in import valuation. Title I states that the jurisdiction of the Customs Court will be extended to make sure that citizens have the right to sue on trade matters. Title III, sections 1581 and 1583, gives exclusive jurisdiction over most trade issues to this court with expertise in custom matters. Title V gives jurisdiction to review trade adjustment assistance decisions by the Secretary of Labor or the Secretary of Commerce to the Court of Customs and Patent Appeals. We think that is the wrong approach.

International trade affects U.S. jobs, production, and communities. International trade issues are broader than questions of customs matters on which the custom courts are experts. While they may be firstrate specialists on customs matters, they are not specialists on other aspects of trade that affect the Nation's jobs and business.

Citizens should be able to sue in their respective district courts to get redress for trade problems rather than only in the Customs Court. We are not asking that the special valuation duties of the court be done away with. At present that court is located in New York City and does hold regional hearings at other ports of entry or other places as required, but its primary location is in New York. If Federal district courts handled general trade matters other than customs valuations, fair decisions on trade questions could then depend on general public examination of trade problems.

S. 2857 makes the exercise of the public's right to sue a futile hope.

Section 1584 of S. 2857 retains "exclusive jurisdiction" in the Customs Court for actions on the "appraised value, the classification and the rate as an amount of duties chargeable upon imports." These can be very technical problems. Current law is unfair to everyoneimporters, producers, consumers, and workers. A description of the mixed-up jurisdictional problems is attached in appendix A. This problem of the Customs Service itself should be solved. The issues of how things are classified and how much tariff is charged, however, are not mysterious matters of some theoretical legal science. They can affect every worker and consumer in America in 1978. Appeals should be available even from decisions on issues where customs courts are clearly expert, though Customs should have effective jurisdiction.

Furthermore, sections of S. 2857 take away all rights to appeal. Section 1583 (f) (1) takes away the rights of appeal when the President or his delegate or the Secretary of the Treasury or his delegate make decisions on many trade issues. Thus, instead of granting citizens their right to a day in court, the language of S. 2857 would prevent any appeal from decisions by the President of the United States or his delegate under many circumstances.

There is no need to comment about the concern of the AFL-CIO and much of America about the removal of the right to appeal Presidential decisions. That is what the courts are designed to do in the United States--review executive branch and congressional action for its constitutionality and equity, and to give ordinary citizens the right to redress.

Section 1583 also denies any appeal in any court for rulings or internal decisions by the Secretary of the Treasury and his delegates, in the following language:

(ii) any ruling or internal advice relating to classification, valuation, rate of duty, marking, restricted merchandise, entry requirements, drawback, vessel repairs and the like issued by the Secretary of the Treasury or his or her delegate to members of the public or members of the Customs Service except with respect to section 315(d) of the Tariff Act of 1930, as amended.

The AFL-CIO and its affiliated unions have had unfortunate experience with such Treasury Department rulings. Most recently, proposed regulations on dumping from Communist countries, and marking of consumer electronic products have caused concern. As the attached letter to the Customs Commissioner shows, the "internal advice" of the Treasury Department on dumping could be quite detrimental to the interest of producers and workers in the United States and the towns and cities in which they live.

Senator DECONCINI. Without objection, that material will be inserted in the record at the present time.

[The material follows:]

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STATEMENT OF DR. RUDOLPH OSWALD, DIRECTOR OF RESEARCH, AFL-CIO My name is Rudy Oswald. I am Research Director of the AFL-CIO. I welcome this opportunity to express the AFL-CIO's views on S. 2857—the Customs Courts Act of 1978. This bill raises many important questions about the best way to achieve a fair review in the courts of issues related to international trade.

The AFL-CIO shares the concern of the chairman of this subcommittee who noted introducing S. 2857 that "the importance of international commerce decisions has increased to the point that more and more ordinary citizens are affected.” We also agree that “the statutes affecting the jurisdiction of the courts that handle such litigation have remained relatively unchanged." We do not agree, however, that S. 2857 will solve that problem.

As labor union representatives, we do not pretend to be customs specialists or legal experts. But our objection to S. 2857 is that it is designed to give international trade issues to the court that is the specialist in import valuation. Title I states that the jurisdiction of the Customs Court will be extended to make sure that citizens have the right to sue on trade matters. Title III, Section 1581 and 1583, gives exclusive jurisdiction over most trade issues to this court with expertise in customs matters. Title V gives jurisdiction to review trade adjustment assistance decisions by the Secretary of Labor or the Secretary of Commerce to the Court of Customs and Patent Appeals. We think that is the wrong approach.

International trade affects U.S. jobs, production, and communities. International trade issues are broader than questions of customs matters on which the customs are experts. While they may be first-rate specialists on customs matters, they are not specialists on other aspects of trade that affect the nation's jobs and business.

Citizens should be able to sue in their respective district courts to get redress for trade problems rather than only in the Customs Court. While there should be a court with the appropriate expertise for customs issues, trade impact issues should be in a more general court. At present, the Customs Court is located in New York City and holds regional hearings at other ports of entry or other places as required. If federal district courts handled general trade matters other than customs valuation, fair decisions on trade questions could then depend on general, public examination of trade problems.

S. 2857 makes the exercise of the public's right to sue a futile hope:

Section 1584 of S. 2857 retains "exclusive jurisdiction" in the Customs Court for actions on the "appraised value, the classification and the rate as an amount of duties chargeable upon imports." These can be very technical problems. Current law is unfair to everyone_importers, producers, consumers and workers. A description of the mixed up jurisdictional problems is attached in Appendix A. This problem of the Customs Service itself should be solved. The issues of how things are classified and how much tariff is charged, however, are not entirely mysterious matters of some theoretical legal science. They can affect every worker and consumer in America in 1978. Appeals should be available even from decisions on issues where customs courts are clearly expert, though Customs should have effective jurisdiction.

Furthermore, sections S. 2857 take away all rights to appeal: Section 1583 (f) (1) takes away the rights of appeal when the President or his delegate or the Secretary of the Treasury or his delegate make decisions on many trade issues. Thus, instead of granting citizens their right to a day in court, the language of S. 2857 would prevent any appeal from decisions by the President of the United States or his delegate under many circumstances. There is no need to comment about the concern of the AFL-CIO and much of America about the removal of the right to appeal Presidential decisions. That is what the courts are designed to do in the United States—review executive branch and congressional action for its constitutionality and equity, and to give ordinary citizens the right to redress.

Section 1583 also denies any appeal in any court for rulings or internal decisions by the Secretary of the Treasury and his delegates, in the following language:

“(f) Neither the Customs Court nor any other court shall possess jurisdiction to review :

“(ii) any ruling or internal advice relating to classification, valuation, rate of duty, marking, restricted merchandise, entry requirements, drawback, vessel repairs and the like issued by the Secretary of the Treasury or his or her delegate to members of the public or members of the Customs Service except with respect to section 315(d) of the Tariff Act of 1930, as

amended." The AFL-CIO and its affiliated unions have had unfortunate exeprience with such Treasury Department rulings. Most recently, proposed regulations on dumping from communist countries, and marking of consumer electronic products have caused concern. As the attached letter to the Customs Commissioner shows, the "internal advice” of the Treasury Department on dumping could be quite detrimental to the interest of producers and workers in the U.S. and the towns and cities in which they live. The proposed Treasury ruling would allow the Treasury Department to construct the theoretical value of imported products for assessment. S. 2857 would deny any appeal to the courts of the Treasury determination.

The markings case, brought by the IUE, urged that the country of origin on certain consumer electronic products be marked conspicuously. Treasury had allowed importers to mark these items so that consumers would not necessarily be able to see the marking. Despite many protests, Treasury failed to require importers to clearly mark the country of origin on the imported merchandise.

S. 2857, Section 2639 states: “The decision of the Secretary of the Treasury or his delegate, is presumed to be correct. The burden to prove otherwise shall rest upon the party challenging a decision.”

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Thus even where the right of appeal is granted in S. 2857, however, the burden of proof is on the injured and there is a presumption that he is wrong. Thus the unemployed worker or firm which has been hurt by imports is required to prove a case but the government official who has already decided against him is presumed to be correct. Furthermore, the government official decides what information to release to the injured party so that the case can be proved.

The combination of asking workers to get information that the government refused to collect and need not divulge if it does collect it, is unfair. To add insult to injury by making it a legal presumption that the decision against them is correct is a denial of the fundamental concept on which justice should be founded. In short, this provision makes a mockery of the stated intent of the statute.

Some examples of recent experiences may explain our concern:

The International Brotherhood of Electrical Workers has spent time and effort to call attention to problems for workers in the law's failure to have special classifications for various imported parts. One example of such a classification problem was horns for smoke detectors. IBEW members made these parts. Customs officials have no separate classification for these parts and showed little concern for the issue. The union believes that because the company in the case of these horns decided to help provide import reports, the information was made available and some of the laid-off workers received adjustment assistance. But it is often very difficult for workers to obtain proof necessary for adjustment assistance—particularly if the company that they work for produces the part overseas and their imports then destroy the jobs in the United States.

The Trade Act of 1974 promises relief to workers who lose their jobs because of imports. S. 2857 would give to the Customs Court the jurisdiction for considering appeals under the Trade Act for adjustment assistance.

S. 2857 gives exclusive jurisdiction to the Customs Court to review any decision of the Secretary of Labor or the Secretary of Commerce that certified or refused to certify workers, communities or business as eligible for adjustment assistance under the Trade Act of 1974. (Section 1546 (d))

The Customs Court has no special competence to review the impact of imports on U.S. jobs and production. Yet these are the adjustment assistance issues which S. 2857 would turn over to people whose specialty is the appraisement of imports and their value, not their effect, on communities and towns and business and jobs throughout America.

Section 1583 also raises questions :

“(a) The Customs Court shall possess exclusive jurisdiction, except as otherwise provided by law, to review final agency action of any agency of the United States which directly affects imports into the United States.

“For purposes of this section, the terms 'agency', 'agency action', and 'final agency action'” are utilized in the same manner as those terms are utilized in sections 551 and 704 of title 5, United States Code.

“Nothing in this section shall be construed to create a cause of action, or to permit the maintenance of a suit not otherwise permitted by law.

"Nothing in this section shall affect limitations on judicial review or the power or duty of the court to dismiss any action or to deny relief on any other appropriate legal or equitable grounds."

The United States should be concerned about the impact of imports—not merely the actions of U.S. agencies that could affect imports. The country is concerned with more than the mere protection of importers' concerns. Section 1583 also provides for review of decisions by the International Trade Commission, the Special Trade Representative under 201 and 301 of the Trade Act. These are decisions about impact and procedure—not just about imports.

Let me note that it is especially disturbing to the AFL-CIO and to others who are interested in the costs as well as the benefits of international trade that working people are usually ignored in customs discussions. Merely giving labor the right to sue will not cure this problem.

An article by Peter Gerhart, “Judicial Review of Customs Service Actions”, published last year in "Law and Policy in International Business," illustrates this lack of concern. The article devoted over 80 pages to this subject without emphasizing the existence of labor or the impact of imports on American jobs. The author recognizes rights of some “persons who buy merchandise from importers: manufacturers, wholesalers, retailers and consumers.” He is properly concerned because “such persons are not authorized to file a protest or petition or otherwise challenge a Customs action despite the fact that they may be injured by the actions. . . For example, decisions concerning duties directly affect the price of merchandise and decisions to exclude merchandise directly affect both availability and price."

We also agree with concern about the failure of the courts to review a protest by Consumers Union against the textile quotas:

"In Consumers Union of the United States, Inc. v. Comm. for the Implementation of Textile Agreements, for example, Consumers Union brought suit in a district court to challenge textile quotas imposed by the President under Section 204 of the Agricultural Act of 1956. After questioning the plaintiff's standing to sue in federal court, the Court of Appeals directed dismissal of the case because the subject matter-exclusion of merchandise under a customs law-was within the exclusive jurisdiction of the Customs Court. However, the Customs Court may not be able to hear the case. If Consumers Union itself does not import the textiles subject to a quota, it may not file a protest against the exclusion of the textiles, and therefore, may not seek review of the exclusion in the Customs Court. Under these circumstances, there may be no court available to adjudicate the claim made by Consumers Union.”

Mr. Chairman, we agree that everyone should have a chance in court. But the objective of government and courts should be to protect citizens, not just imports. Imports can cost jobs. Imports do not necessarily reduce prices. Imports can destroy an industry and then allow foreign monopolies to establish monopolistic prices. This can be inflational. Devaluation of the dollar is inflationary and makes all imports more expensive. It is time to dismiss the obsolete belief that the consumer is automatically benefited by imports regardless of other factors. We urge this subcommittee to make sure that statutes of this nation recognize that most citizens would like to have a job to go to and that there are many complex problems that go beyond the expertise of customs specialists.

Until the Congress and the courts of the United States begin to recognize that international trade now affects all parts of this nation and creates both costs and benefits, proposed changes in judicial machinery will not be for the benefit of ordinary citizens. No statute that reduces the right of appeal will benefit them.

Jobs of United States citizens, the tax base of the cities where they live, the productive well-being of the U.S. economy and the future of American technology-all are affected by international trade. We urge this subcommittee to recognize this reality and to include the following concepts in any legislation to cure and prevent injustices : In summary, AFL-CIO believes :

(1) International trade should be viewed as a question affecting labor, business and the public. Imports affect far more than importers, foreign governments and “consumer" interests. They affect the nation and its work force and small business. The impact of imports and trade are properly the subject for courts of broad jurisdiction.

(2) Unfair practices now carried out in the customs service should be changed. There should be a chance for fair treatment to importers, producers and workers, with fair rules of procedure and the right to a day in court. Customs valuation should be carried on by those best qualified to handle it.

(3) Decisions by the Executive Branch-the President, his delegates and the Secretary of the Treasury and his delegate should be subject to court review.

(4) Decisions by government agencies about trade issues should be appealable in the courts—not merely in Customs Courts. We call the subcommittee's attention to other customs issues now affecting this and other bills :

Other customs laws should be meshed with changes in the judicial machinery. The Customs Procedural Reform Act has now been passed in bo Houses and is in conference. The problem of enlarging the power and rights of Customs and Treasury Department officials needs careful review. Adequate review machinery is even more serious now. Customs Courts should handle matters where their expertise is necessary but not other trade issues.

While international negotiations on customs valuation and other procedures for U.S. international trade are going forward, changes in the U.S. customs jurisdiction might be regarded as giving special rights to importers-rights that amount to concessions to foreign producers. Changes should await the end of negotiations.

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