CUSTOMS SIMPLIFICATION ACT MONDAY, APRIL 28, 1952 UNITED STATES SENATE, The committee met, pursuant to adjournment, at 10 a. m. in room 312, Senate Office Building, Senator Walter F. George (chairman) presiding. Present, Senators George, Johnson of Colorado, and Butler. Also present, Elizabeth B. Springer, chief clerk; and Serge N. Benson, professional staff member. The CHAIRMAN. The committee will come to order. Before we begin with the first witness, there will be inserted in the record the statement of Richard P. White, executive secretary, American Association of Nurserymen, Inc. (The statement of Richard P. White is as follows:) STATEMENT OF RICHARD P. WHITE, EXECUTIVE SECRETARY, AMERICAN ASSOCIATION OF NURSERYMEN, INC., WASHINGTON, D. C., ON H. R. 5505 My name is Richard P. White, executive secretary of the American Association of Nurserymen, Inc., 635 Southern Building, Washington 5, D. C. I appear before this committee to present a viewpoint in regard to section 11 of H. R. 5505, a proposal "to amend certain administrative provisions of the Tariff Act of 1930 and related laws, and for other purposes." Section 11 proposes certain amendments to section 321 of the Tariff Act of 1930. My testimony is directed specifically to section 321 (b) (2). This subsection proposes to exempt articles from duty provided the aggregate value of all articles in a shipment does not exceed $10, and provided the articles are intended for personal or household use of the consumer and are not for sale. The purpose of this section is obviously, and as the amendment states, to avoid expense and inconvenience to the Government disproportionate to the amount of revenue collected. The objective to be sought is a commendable one, but there are certain consideration which must be given to the proposal in view of the plant quarantine regulations of the United States Department of Agriculture under the Plant Quarantine Act of 1912, International Plant Quarantine 37, and the regulations issued pertinent thereto. I understand that this bill, H. R. 5505, has not been submitted to the Department of Agriculture for consideration and report. In our view, it should be submitted to the Department of Agriculture for a report at least upon this section. The United States Department of Agriculture has now established a system whereby certain types of living plant materials are inspected by United States Government inspectors in foreign lands for determination of their apparent freedom from plant pests. This does not preclude the possibility of reinspection at ports of entry in the United States, as well as fumigation of the plant material as a precautionary measure against the introduction of plant pests not now present or widely distributed within the United States. It is true that the regulations under Plant Quarantine 37 require certain external evidences placed upon containers which include plant materials subject to port-of-entry inspection and fumigation. The practical effect of the exemption proposed in section 11 of H. R. 5505 starting on page 15, line 18 of the proposal would be to permit large quanties of shipments of plant materials from foreign countries direct to the consumer in this country via international parcel post and by both air and ship. The result would be that the United States Department of Agriculture would fail to intercept large numbers of these very small shipments, and if they did intercept them all, the personnel would not be adequate to take care of the task involved in inspection and fumigation at the ports of entry. This would result, we feel, in reducing the effectiveness of our international plant-quarantine procedure and would eventually result in the introduction and establishment of plant pests, both insects and diseases, not now known to exist or not widely distributed in the United States. When such establishments were discovered, Congress would be requested to appropriate considerable sums of money either for eradication purposes or for control purposes under the system of domestic plant quarantines. In addition to that, various nursery cultures in this country would be jeopardized with heavy losses of both plant material and operating capital due to the domestic quarantines which would be used as a method of prevention of spread, cost of control procedures, etc. It is my understanding as indicated above that this proposed legislation has not been submitted to the Department of Agriculture for their consideration and we feel very strongly that it should be on account of the above situation which would be permitted. We would like to suggest, therefore, that H. R. 5505 be submitted to the Department of Agriculture for their consideration before action is taken on it by the Senate Finance Committee. The CHAIRMAN. There will be inserted in the record the letter, dated April 25, 1952, from the National Federation of American Shipping, Inc. (The letter from National Federation of American Shipping, Inc., is as follows:) Hon. WALTER F. GEORGE, NATIONAL FEDERATION OF AMERICAN SHIPPING, INC., Chairman, Committee on Finance, United States Senate, Washington 25, D. C. DEAR SENATOR GEORGE: The National Federation of American Shipping, an organization representing a substantial majority of all deep-water American flag shipping, desires to submit the following comments and recommendations with respect to H. R. 5505, a bill to amend certain provisions of the Tariff Act of 1930 and related laws, which is the subject of hearings by your committee. Section 9 of H. R. 5505 would extend to foreign-flag vessels the privilege now enjoyed by foreign-flag aircraft of withdrawing equipment and repair parts for installation free of duty from a bonded warehouse or continuous customs custody, and of treating such withdrawal as an exportation for purposes of the tax drawback laws. Section 9 would also permit similar withdrawal free of duty and taxes on import for ground equipment to be used by foreign-flag aircraft. The privileges granted in the case of aircraft are conditioned upon reciprocal privileges being accorded to aircraft of the United States when in foreign countries. The federation agrees that this discrimination against the shipping industry should be removed. However, it believes that the privileges to be extended by section 9 to foreign-flag vessels should be granted only when reciprocal privileges are accorded to vessels of the United States. The Federation urges, therefore, that section 9 (a) of H. R. 5505 also amend section 309 (d) of the Tariff Act of 1930, as amended (N. S. C., 1946 ed., title 19, sec. 1309 (d)), by inserting the words "and vessels" immediately after the word "aircraft" wherever such word appears in section 309 (d). Section 22 of H. R. 5505 would convert the excise tax imposed by section 2470 of the Internal Revenue Code on the first domestic processing of coconut oil into an import tax on the oil content of copra. Enactment of this section would mean that a copra importer would have to pay an import tax of approximately $42 per long ton of copra. The result would be a further reduction in the importation of copra, which has already been sharply reduced since World War II. At the present time only about 40 percent of the Philippine copra production is being shipped to the United States, whereas approximately 90 percent of such production was being imported prior to World War II. Copra is an important home-bound commodity for steamship companies engaged in the trans-Pacific trade. They are, therefore, greatly concerned about anything which would interfere with, or hinder in any manner, the importation of copra. Since the enactment of section 22 of H. R. 5505 would greatly reduce the amount of copra to be imported into the United States, the federation urges that this section be deleted from the bill. We respectfully request that this letter be incorporated in the record of the hearings which are being held on H. R. 5505. Very truly yours, A. U. KREBS, Counsel. The CHAIRMAN. Mr. Radcliffe, you are first on the list. I have not been back in town long enough to make a check on the committee. So far as I know there may be one or two other members coming in in a few minutes, but we will proceed, if it is agreeable to you. STATEMENT OF HARRY S. RADCLIFFE, EXECUTIVE VICE PRESIDENT, NATIONAL COUNCIL OF AMERICAN IMPORTERS, INC. Mr. RADCLIFFE. My name is Harry S. Radcliffe, executive vice president, National Council of American Importers, Inc. Our address is 45 East Seventeenth Street, New York City. The CHAIRMAN. All right, Mr. Radcliffe, we will be glad to hear from you, sir. Mr. RADCLIFFE. Mr. Chairman, I have a prepared statement which I shall file with the committee, and I understand that it will be reproduced in the record. I do not intend to read it. The CHAIRMAN. You inay file your complete statement in the record, and if you wish to, you may speak of it briefly. Mr. RADCLIFFE. Yes; I would just like to briefly outline our position on the simplification bill. The CHAIRMAN. Yes, sir; you may do that. Mr. RADCLIFFE. Our primary position is that we urge prompt passage of this bill at the present session of the Congress, with such improvements as can be quickly made. We also advocate additional measures in the direction of customs simplification and we hope that the Congress, possibly in 1953, will be willing to consider a second package, as we might call it, on customs improvement. This bill is essentially a Treasury bill based in a great degree on a management study made by McKinsey & Co. over a period of years under special authority of the Congress, and it covers a number of highly essential reforms in our customs administrative laws that should result in efficiency in customs operation. The Committee on Ways and Means in its report stated that they believed the bill gives the importing public improved service at a lesser cost to the taxpayer. We agree with that, but we would like to have more of the same thing. This bill is a big step forward, and I think most everyone agrees on that, and I do not believe that the bill should be regarded as controversial in any sense. In making suggestions and criticizing some of the provisions of the bill, we are motivated by a desire to make the simplification measure equitable and practicable to the Government and to the importing businessman. As I have read the press accounts of these hearings, I feel that perhaps an incorrect impression has been created. It is something like a person who is buying a house or renting an apartment. The fact that he does not care for the wallpaper in the living room does not mean that he objects to the floor plan or the closet space. We, too, would prefer some slight changes that the architects of the bill, having once drawn the plan and arranged the color scheme, have not seemed ready to adopt. As I understand the situation, the very purpose of these hearings. is to give the committee an oportunity to have the constructive suggestions made by the non-Government organizations and witnesses. We are all, I think, working in the same direction of genuine and workable customs service improvement. As the national import organization, we are advocating seven specific amendments to the bill, and those are set forth in my statement in some detail, with the exact page number and line that we would like to have amended. The first one relates to section 13 on valuation. We feel that there should be some provision there to permit bona fide sales to an exclusive selling representative in the United States, who is financially independent of the foreign seller, to be used in determining "export value" and "United States value." In my prepared statement, I gave some language, but I would like to give an alternative suggestion. We would amend the definition of "freely sold or freely offered for sale," and I have suggested that after the definition of "purchasers at wholesale" the words be inserted "who are financially independent of the seller." We do not believe that there should be an export value where the firm here is a branch concern of a foreign supplier, where the values arranged between the two on exclusive items might be just a bookkeeping value. We are looking for the true value. But instead of that suggestion, I think that we could add on line 25 of page 22 of the bill these words: Merchandise sold or offered for sale to an exclusive selling agent in the United States who is financially independent of the seller shall be deemed to be freely sold or freely offered for sale. That is the additional suggestion that I did not have in the prepared paper. The CHAIRMAN. Yes, sir. Mr. RADCLIFFE. The second amendment that we wish to suggest, and other witnesses have come to the same conclusion, is that we believe that the importers should be permitted to retain their present right to amend their customs entries. An entry has to be made within 48 hours after arrival as a rule, and even the bill itself in connection with the undervaluation duties mentions that the importer must furnish the appraising officers with information in his possession at the time of entry or which he can obtain within a reasonable time thereafter. Well, if he does obtain further information within a reasonable timeafter entry, under this bill, he would not be able to correct his entry in line with that information, and we feel it is quite important that the importers should retain their right to amend their entries. We also believe that a new subsection should be added in section 17 of the bill to provide a time limit of 120 days after the date of |