"(b) For the purpose of determining the rate of duty to be assessed upon any merchandise when the rate is based upon or regulated in any manner by the value of the merchandise, the final appraised value shall (except as provided in sec. 562 of this Act) be taken to be the value of the merchandise." The result of this amendment, if adopted, would be that in cases where an importer enters goods at a value higher than that at which it is finally appraised, the final appraised value shall be taken to be the value of the goods, and the importer would not be penalized in any way for entering them at a higher value; and furthermore the difference between the higher duty paid and the duty ultimately assesssed will be refunded to him upon final liquidation of the entry. We feel that said section 503 should not be amended as proposed by said section 17 (d) of H. R. 1535. 4. Section 20. Conversion of currency (pp. 33 to 36, inclusive): Section 20 (a) of H. R. 1535 proposes to amend section 522 of the Tariff Act of 1930 by bringing the methods of converting foreign currencies for customs purposes in line with the articles of agreement of the International Monetary Fund. At present the primary basis for currency conversion is the value of foreign gold coin as published quarterly by the Secretary of the Treasury. The amendment proposed provides instead for the current publication, by the Secretary of the Treasury, of a list of the par values of foreign currencies which are maintained pursuant to the articles of agreement of the International Monetary Fund, or pursuant to any other international agreement entered into by the United States. All currency conversion must, if possible, be based upon the par value so determined. Under the present law (sec. 522) if the par value of a currency as established by its gold content should vary by 5 percent or more from the value measured by the buying rate in New York at noon on the day of exportation of the merchandise involved, then such buying rate is to be taken as the basis for conversion. The proposed amendment provides that in case there be no par value as determined by the International Monetary Fund or by other international agreement, then the value to be used for converting is the buying rate of the foreign currency in New York at noon on the date of exportation. Under the present practice, where the gold standard has largely disappeared, the par value based upon gold content is not used, but in place thereof, the current buying rate in New York is usually employed in converting currency. Based on the record we question the efficacy at the present time of the determinations of par values set by the International Monetary Fund. The rates which have been set thereunder have been the rates which the countries involved have set themselves, and it seems that such rates would be thereby arbitrary, and would not reflect a true and accurate value. A far more accurate or actual value would appear to be attainable by using the buying rate at New York, as is done at the present time, and therefore we can see no reason for departing from section 522 of the present Tariff Act of 1930 as amended. Moreover, in case no rate has been set by the International Monetary Fund, then the rate to be used, in accordance with the proposed amendment, is the buying rate at New York at noon on the date of exportation of the merchandise involved, the same basis as is now being used when the rate based upon gold content cannot be employed. It seems that in a great many cases, therefore, the buying rate at New York would be used under the amendment, just as that rate is now being used under the present section 522. This amendment, therefore, does not seem to be justified. The proposed amendment also provides for the application of a rate of exchange where the Federal Reserve bank certifies that more than one rate of exchange exists for the merchandise in question. At the present time such a situation is amply covered by the procedure followed since the decision of Barr v. United States (324 U. S. 83, 65 S. Ct. 522 (1945)). That case held that where there exists both an "official" rate and a "free" rate of exchange for British pounds, the rate to be used in converting to United States dollars should be the rate applicable to the merchandise in question, i. e., the rate at which the importer obtained the pounds used in his purchase of the merchandise. Since the importer, in that case, purchased pounds at the "free" rate of $3.475138 the Court held that such rate should be used instead of the "official" rate of $4.035. Customs officials since that decision have been governed accordingly, and the rates used now appear to be as realistic as it is possible to achieve. Mr. Justice Douglas, in writing the majority opinion of the Supreme Court in Barr v. United States, supra, said in part: "This history [of sec. 522] makes clear the search which has been made for a measure of the true dollar values of imported merchandise for customs purposes which was accurate * * * and at the same time administratively feasible and efficient. The formula finally selected is dependent on the actual value of the foreign currency in our own money. The rate for the foreign exchange with which the imported goods are purchased is recognized as the measure of value of the foreign currency; the use of that rate reflects values in United States currency which are deemed sufficiently accurate to serve as the measure of the valuation of the goods for purposes of the ad valorem tax. "We would depart from that scheme if we were to read section 522 (c) as saying that on a given date only one buying rate for a specified foreign currency could be certified by the Federal Reserve Bank of New York or proclaimed by the Secretary of the Treasury" (324 U. S. 89, 90). "We assume that the 'official' rate was the all-inclusive rate and could have been used in payment of exported goods of all kinds. But section 522 (c) means to us that that buying rate is to be used which is in fact applicable to the particular transaction. To look to other transactions for the buying rate is to make a valuation of a wholly hypothetical import not a valuation of the actual one before the collector of customs * The language of section 522 (c) * * read against the background of these statutes indicates to us that Congress undertook to provide in each case the rate which gives the closest approximation to the value in dollars of the imported merchandise" (324 U. S. 91, 92). To sum up our position, the tying of conversion rates to the International Monetary Fund is a marked departure from present practice which has been built up over many years, and which is familiar to all persons engaged in foreign trade. The current practice of converting foreign currency is effective, and approaches the problem in a realistic manner. The case of Barr v. United States, supra, establishes a guide in the case of multiple rates of exchange which can be followed, and is being followed, with satisfaction. Any change in conversion methods at this time would seem to lead to confusion and would not give domestic manufacturers any more definite criteria to be followed in determining such conversion. In addition, it might lessen the protection which domestic manufacturers now receive, even under the present low rates of duty. We strongly urge, therefore, that section 20 (a) of H. R. 5505 not be enacted into law. III. CONCLUSION As stated, we are heartily in favor of any action which will further simplify the administration of customs procedures. However, because the rates of duties on carpets and rugs have been reduced in some cases as much as 75 percent from certain rates in the Tariff Act of 1930 and because imports have shown remarkable increases in spite of existing tariff duties, we are concerned that such simplification of administrative procedures be purely that and not provide an indirect route for circumventing in any way existing tariff duties. We urge that these points be given consideration in connection with the proposed bill. Respectfully submitted. CARPET INSTITUTE, INC. COMMERCE AND INDUSTRY ASSOCIATION OF NEW YORK, INC., Mrs. ELIZABETH B. SPRINGER, Chief Clerk, Senate Committee on Finance, Senate Office Building, Washington, D. C. DEAR MRS. SPRINGER: Reference is made to our telephone conversation yesterday afternoon, and certain specific changes in language in H. R. 5505, the Customs Specification Act, recommended by Mr. Fred Bennett during his testimony before the Senate Committee on Finance, on Wednesday, April 23, 1952. Attached herewith you will find the two specific changes referred to by Mr. Bennett. I would appreciate it if you would include these recommendations in the record of hearings on this proposed legislation. Thanking you for your cooperation, I wish to remain Very truly yours, VINCENT J. BRUNO, Manager, Import Division, World Trade Department. RECOMMENDED CHANGES IN LANGUAGE IN SECTION 17 OF THE CUSTOMS (1) On page 27, line 13, amend section 17 (a) to read as follows: "SEC. 17. (a) Section 487 of the Tariff Act of 1930 (U. S. C., 1946 edition, title 19, sec. 1487) is amended by deleting therefrom, or at any time before the invoice or the merchandise has come under the observation of the appraiser for the purpose of appraisement,', and substituting therefor, or at any time prior to the lodging of the appraiser's report of value with the collector,." (2) On page 28, lines 3 and 4, delete "all information required by customs officers", and substitute therefor "such information as is requested in writing by customs officers." BOUDIN, COHN & GLICKSTEIN, UNITED STATES SENATE, COMMITTEE ON FINANCE, (Attention: Mrs. Elizabeth B. Springer, Chief Clerk.) GENTLEMEN: Enclosed please find statement by the undersigned, submitted on behalf of the Pocketbook Workers Union. The undersigned testified orally before the committee on April 28 and was granted permission to file a written statement. Enclosed you will also find corrected transcript. Very truly yours, BOUDIN, COHN & GLICKSTEIN, By SAMUEL HARRIS COHEN. STATEMENT MADE BY SAMUEL HARRIS COHEN, ATTORNEY FOR THE POCKETBOOK WORKERS UNION, A. F. OF L. Honorable sirs, I appear as attorney for the Pocketbook Workers Union, affiliated with the International Handbag, Luggage, Belt & Novelty Workers Union, A. F. of L., in opposition to the proposed amendment in section 321 of H. R 5505. This union has about 12,000 members who work in the ladies' handbag industry situated in the greater area of metropolitan New York City. These members work for some 335 employers who manufacture handmade or quality handbags, and for some 150 employers who manufacture personal leather goods. Fifty-five percent of the said handbag production of the United States is produced by the members of the Pocketbook Workers Union. The 55-percent figure is misleading in that almost 90 percent of the higher-priced handbags is made in metropolitan New York. The out-of-town companies for the most part produce the less expensive handbags retailing from $1 to $5. Quality bags retail from $7.50 and up, with an average of from $10.50 to $12.50. The union for which I speak is experiencing at this time the worst business conditions it has ever had since about 1935. From the legal work required we get an insight into the depressed business conditions in New York. In the last 2 years my firm has been concerned with the collection of wages, vacation, and holiday pay and unemployment-insurance benefits. For the first time in recent years employers have been asking for, and receiving, an extension of time in which to remit to the union holiday and vacation pay and to pay wages to the employees. As stated before, the New York market primarily produces the quality handbags. It is this part of the industry that is most directly affected by the unfair imports of handbags. The proposed change in section 321 of H. R. 5505 will aggravate to a great extent the unfairness of the foreign competition to the quality handbag employer and worker, by encouraging imports of handmade quality purposes. The person of means is the purchaser of these handbags and also is the foreign traveler. The proposed amendment would encourage this group of citizens to purchase their handbags abroad, or through mail orders. Without the benefit of this proposed tax gift the foreign producer has many advantages. The wages of the hand pocketbook makers in the foreign countries are estimated to be from 30 percent, in countries like France, Germany, and Austria, to 40 percent in countries like England and Italy of the American wages. The foreign worker works from 48 hours to 54 hours per week as compared with the 371⁄2 hours worked by the members of the Pocketbook Workers Union. The productivity of the foreign worker is about the same as the American worker because we are talking about a handmade product. The American employer only outproduces the foreign producer in the quantity of output in the machine-made handbags retailing from $1 to $5 per bag. In addition, the collective bargaining agreement provides for welfare benefits, 2 weeks' vacation, measured by employment in the industry rather than for the individual employer because of the seasonal nature of the work, paid holidays, and numerous other fringe benefits. None of these terms of employment, with rare exceptions, is enjoyed by the foreign pocketbook worker. In addition to this unequal competition, this bill proposes to give a gift of duty taxes for handbags up to $10 per bag if for personal use, and $5 per bag if for resale. In addition, the employers of the members of the union are faced with the normal American way of doing business, and the cost thereof. Because of many good reasons, particularly sales promotion, seasonal clearance and mark-downs, the average retail mark-up is about 40 percent. Furthermore, the American producer of handbags is most unfairly burdened with the 20 percent excise tax. In the field of all wearing appare up to $10, which includes the quality handbags which we are discussing, only handbags of wearing apparel are so discriminatorily taxed. A lady's handbag is as much a part of a woman's dress as her hat or her shoes. In addition, in New York and many other States, employers are faced with a 2 to 3 percent sales tax. None of the said factors and costs items are part of the production costs of the foregin producer. The duty-free admission of handbags up to $10 means a mail order method of -selling. This further burdens the American producer because the mark-up in the mail order business is about 20 percent. This unequal burden will be further agravated by the fact that the mail order business of foreign origin, which will be fathered by this tax exemption, directly will compete with the quality hand-made bag producers. The American bag mail-order producer selling in the cheaper market does not compete with the quality hand-made bag manufacturer. Congress has often given lip service to the need of encouraging the smallbusiness man. I say lip service in view of the record of more and more large scale and monopoly production being the norm for American business, especially in the last 50 years. The report of the Select Committee on Small Business, House Document No. 559, Eighty-first Congress, gives the true picture of this monopoly development. In this instance, by defeating the proposed amendment, this honorable committee can encourage small business. The quality hand-made bags that are threatened by this bill are produced by small companies. employers in the New York market employ over 100 employees. About 125 employers employ 20 or less employees. It may be said that the amount of handbag imports may only total a few million dollars. The loss of this amount of business to small companies, already hard-hit by the 20 percent excise tax, means the difference between solvency and bankruptcy. Only 5 The women of America who purchase the quality hand-made bags are already boycotting the American bags because of the 20 percent excise tax. On a $10 purchase, the tax is $2 and on a $20 purchase, the tax is $4. The American handbag consumer has refused to pay this singular and unreasonable tax. The at'tempt of this bill to admit hand-made bags, duty-free, amounts to, in the opinion of the union and its 12,000 affected members, a massacre and destruction of the American craft of making quality hand-made bags. It means the development of .an unfair competing development in foreign countries. While the bill provides for exceptions as the Secretary of the Treasury shall prescribe, this is not very reassuring. While it may be legal for Congress to abdicate its law-making functions to administrators, experience in the customs field especially has shown that administrators do not exercise their discretion. We believe that the figures set forth in the bill, of $10 and $5, will not be modified by virtue of the exception provisions. The part-time employed and underpaid workers of the Pocketbook Workers Union are confident that their views will be favorably received by this esteemed committee. They trust that this prejudicial bill will not be permitted to leave the confines of this committee. Please accept our sincerest thanks for your courtesy in hearing the plea of the quality hand-made-bag workers of America. Hon. WALTER F. GEORGE, U. S. CUSTOMS INSPECTORS' ASSOCIATION, Chairman, Committee on Finance, Senate Office Building, Washington, D. C. DEAR SENATOR GEORGE: Reference is made to the proposed Customs Simplification Act which is being considered by the Senate Committee on Finance. This act would amend certain provisions of the Tariff Act of 1930 and related laws. The members of this association are concerned about the language of the proposed new section 646 of the Tariff Act of 1930, as set forth in section 21 of the proposed Simplification Act under the title "Customs Supervision," reading as follows: "SEC. 646. Customs Supervision. "Wherever in this Act any action or thing is required to be done or maintained under the supervision of customs officers, such supervision may be direct and continuous or by occasional verification as may be required by regulations of the Secretary of the Treasury, or, in the absence of such regulations for a particular case, as the principal customs officer concerned shall direct." The official analysis of the proposed act states that section 21, Customs Supervision, was to apply to section 304 and section 562 of the Tariff Act of 1930. However, the language of the proposed Simplification Act as set forth in the proposed new section 646 of the 1930 Tariff Act, as embodied in section 21 of the proposed act, does not state any such limitation. It plainly states that "Wherever this act any action, etc." Our association is of the opinion that section 21 should be eliminated in its entirety. Such relaxing of customs supervision is contrary to the intent of the law, a potential threat to the revenue and to the proper functioning of customs. inspectors, and other groups of customs officers. Section 21, if allowed to remain in its present form, would change all existing law providing for customs supervision. It would substitute spot checks and paper controls for the physical supervision which experience has shown is required to property safeguard the revenue and prevent smuggling. We respectfully request that your committee consider our recommendation that the proposed new section 646 of the Tariff Act of 1930 be eliminated from the Customs Simplification Act. Respectfully submitted. JOHN J. MURPHY. President. NEW ORLEANS, LA., May 1, 1952. Hon. WALTER F. GEORGE, Chairman, Senate Finance Committee, United States Senate, Washington, D. C. Mr. Chairman and gentlemen of the committee, it is my understanding that the Senate Finance Committee has just concluded public hearings on the bill known as H. R. 5505, the Customs Simplification Act of 1951. Because of the existence of a long-standing inequitable condition affecting the operators of United States Customs bonded warehouse space in this country, I have taken the liberty of dispatching this letter to you and the members of the committee, via air-mail special delivery, in the hope that you will see fit to amend H. R. 5505 as outlined below. The problem of operators of United States Customs bonded warehouse space for many years with respect to general-order storage has briefly been this: In many instances, after imported merchandise arrives in the United States, no duty is paid thereon and free wharf time has elapsed, the collector of customs in the particular locality orders this imported merchandise placed in general-order storage. The selection of a warehouse is at the discretion of the collector of customs but, in any event the public warehouseman selected must be the bona fide operator of United States Customs bonded warehouse space, with classes 3 and 8 privileges, duly licensed by the collector, having met all requirements of law. After the appropriate order has been issued by the collector of customs the imported merchandise is transferred from wharf into the United States Customs bonded warehouse space of the public warehouseman. |