We also feel that section 17 of the proposed act dealing with the amendment of entries and duties on undervaluation is a particularly good and constructive step toward improving international trade, and we wholeheartedly recommend its adoption.

Under sections 489 and 503 of the present law, the importer must give the final appraised value at his peril, subjecting himself to an undervaluation duty if he fixes too low a figure, and if, to be on the safe side, he fixes it too high, he receives no benefit from the final appraisement if it happens to be less than the entered value.

The present law also provides an additional undervaluation duty of 1 percent on the final appraised value of the merchandise for each 1 percent that such final value exceeds the value as entered by the importer, and if the appraised value exceeds the entered value by more than 100 percent, the entry will be considered presumptively fraudulent and the merchandise is subject to seizure and forefeiture. The present section 489, with its complexities and the heavy penalties and costs which can be incurred under it, has been a particular bug-aboo to international trade.

There have been instances in our area of severe penalties being incurred innocently under that particular section, Mr. Chairman.

Under section 17 of the proposed act this would be eliminated, and importers who are cooperative with customs officials in making full disclosure of all particulars on entry need no longer fear incurring additional penalty duties because of undervaluation. Section 17 of the proposed act also repeals the present unfair provision that where the importer's entered or declared value is higher than the final appraised value, the importer's entered value nevertheless becomes the dutiable value. This is tantamount to overpaying one's own income tax and not being able to recover such overpayment.

Along that line in respect to section 17, I would also recommend, or rather the Board of Commerce of Detroit recommends, the retention of the right of the importer to amend his entries. I believe that right should be protected and respected.

Senator KERR. Which right is that? Say that again.

Mr. RAY. That is the right of the importer to amend his entries at any time prior to the appraisement.

Senator HOEY. On customs?

Mr. RAY. Yes.

Along section 17, we would also recommend that a time limit be placed on the time in which the appraiser of customs has to make his appraisement. At the present time he may take anywhere from a year to 2 years, depending upon the difficulties that he encounters in obtaining values. That is because of the complexities attaching to foreign valuation, where the treasury attachés and agents in foreign countries make determinations of what the foreign value may be.

Well, the customs simplification will do away with the foreign value and the need for making foreign investigations will no longer be inherent or necessary.

However, that may not still obviate certain investigations, and we believe they should not be too extended. We feel that 120 days or 180 days are sufficient for an appraiser to make his determination of value; and somewhat similar to your income-tax laws, if he cannot make his determination in that length of time he could request of the importer an additional 30 days to make his valuation; that is, to have

the importer waive the period of time the statute provides, the statutory time, and if the importer would not consent to such a waiver, why, then, the appraiser could go ahead and make his appraisement on the basis of the facts which he has before him. It would be in the nature of a jeopardy appraisement, so to speak, from which the importer could appeal if he would. But to extend the time beyond 6 months, I think, is very unrealistic and unbusinesslike, and keeps a businessman unduly in suspense as to what the ultimate value of his importation might be.

Senator KERR. You do not think that the extension of the time changes the value and that, therefore, since it does not, that the declaration and fixation of it should be expedited?

Mr. RAY. That is right.

We also feel that section 19 of the proposed act, dealing with correction of errors and mistakes, is a salutary improvement over the present act permitting correction of errors, typographical errors, clerical errors at any time. It is a sound improvement of the present act. What is a clerical error has been construed by the courts and has been restricted in its definition, and the proposed section will do a lot toward removing the confusion and the inequities which attach to the present law.

In conclusion, we strongly urge the enactment of the Customs Simplification Act of 1951 at the present session of Congress. Overhauling and revision of our tariff laws has long been overdue. It is extremely important for business to have a fairly exact knowledge of the costs of the products bought and sold by it, or of the materials entering into the products manufactured by it.

The proposed act will permit importers to calculate their landed costs with some degree of certainty, and should expedite valuations at the customshouse. The proposed act will also eliminate the horror and injustice of having additional penal duties assessed for undervaluation and the inability to recover overpayments on entries, and will also remove a number of other minor annoyances and anachronisms inherent in the present tariff laws.

Senator KERR (presiding). All right, Mr. Ray. Thank you for your appearance and your testimony.

Mr. RAY. Thank you.

(The prepared statement of Mr. Ray is as follows:)

STATEMENT OF JOHN C. RAY, CHAIRMAN, IMPORT AND CUSTOMS COMMITTEE OF THE DETROIT BOARD OF COMMERCE, RE CUSTOMS SIMPLIFICATION ACT OF 1951 (H. R. 1535)

The Detroit Board of Commerce, by appropriate resolution, favors the enactment of the Customs Simplification Act of 1951 for the following reasons:

The customs port of Detroit is a major port of entry and exportation, ranking⠀ fourth in the total amount of dollar volume of imports and exports. It has been the sad experience of importers at Detroit that there have been, under the present customs laws, delays and other annoyances of various sorts in the entry of merchandise. These cannot be attributed to the inefficiency and inapplication of the customs service, which at Detroit still has the same number of employees that it had in 1937, even though the dollar volume of business handled by the office has increased substantially in the interim, but are chargeable to the antiquated complexities of the several provisions of the present Tariff Act of 1930, as amended.

The most provoking delays and annoyances are those involving valuation of imported merchandise. Under the present law, it is not at all infrequent to be advised by the customs long after the imported merchandise has been sold at

what was considered a reasonable profit, that the entered dutiable value was advanced by the appraiser and additional duties are to be paid, which in some instances wipes out the profit. Such experience with the customs laws has prompted some importers in our area to give up importing which is to the detriment of the well-being of the world economy which we as a nation are endeavoring to foster.

Although the proposed Customs Simplification Act contains numerous desirable amendments of the present Tariff Act, we shall limit our remarks to those sections of the proposed act which we feel are particularly important and constructive improvements over corresponding provisions of the present Tariff Act of 1930. Although section 13 of the Customs Simplification Act of 1951 will not completely simplify valuation of importations, it should, however, remove one of the most serious obstacles to increase of international trade. Under the present law, on ad valorem duty importations the United States customs appraiser must determine and apply the higher of the foreign or export values, and if such are not available or determinable, then to apply the United States value of like or similar merchandise, and failing in this, then to apply a "cost of production" value. In some cases, notably chemicals, the American selling price is mandatorily applied in the first instance. To determine the higher of the foreign or export values under the existing laws makes for most of the delays in determining the valuations of importations. It is not at all uncommon, under the present law, for the customs to take a year and much more to complete their determinations on value. This is caused by the cumbersome investigations which must be made in the exporting country by our Treasury attachés.

During this period of investigation, the appraisement or valuation is withheld on all importations of like merchandise whose value is being investigated. The importer, during this period, in selling his merchandise at the entered valuation, does so at his peril as he may find that his entered value is not accepted as the correct valuation but a different and higher valuation is applied by the appraiser. Oftentimes, where there have been considerable importations of an item, such advanced or increased valuation may result in substantial sums of money being demanded of the importer. Obviously, this is an unrealistic and unbusinesslike way of treating importations. There are cases where several years were required to complete value determinations under existing laws and the final demands and increased duties were ruinous to the importer. There are instances where the importer was no longer in business at the time the valuation was completed.

The Customs Simplification Act of 1951 eliminates consideration of foreign value and makes export value the preferred method, if it can be determined. If export value cannot be ascertained, then the appraiser would endeavor to apply the defined "U. S. value" of like or similar merchandise. Failing in this, he would apply a "comparative value" which is the value of comparable merchandise from the same exporting country. Should the appraiser, however, be unable to determine either the "export value," the "U. S. value," or the "comparative value," then he would apply the "constructed value" which is the equivalent of the present "cost of production value." Elimination of foreign value and substitution of export value as the preferred initial method of valuation, will make valuations more realistic and more readily ascertainable to importers, and customs officials, and should speed up valuations.

The "U. S. value," "comparative value," and "constructed value" as defined in the proposed act, are substantial improvements over the present equivalent tariff provisions. The proposed valuations eliminate existing arbitrary or fictitious valuations and produce a method of valuation which is fair and equitable, based upon true values as near as can be determined.

Section 17 of the proposed act dealing with amendment of entries and duties on undervaluation is a particularly good and constructive step toward improving international trade, and we wholeheartedly recommend its adoption. Under sections 489 and 503 of the present law, the importer must give the final appraised value at his peril, subjecting himself to an undervaluation duty if he fixes too low a figure, and if, to be on the safe side, he fixes it too high, he received no benefit from the final appraisement if it happens to be less than the entered value. The present law also provides an additional undervaluation duty of 1 percent of the final appraised value of the merchandise for each 1 percent that such final value exceeds the value as "entered" by the importer, and if the appraised value exceeds the entered value by more than 100 percent, the entry will be considered presumptively fradulent and the merchandise is subject to .seizure and forfeiture. The present section 489 with its complexities and the

heavy penalties and costs which can be incurred under it, has been a particular bugaboo to international trade. Under section 17 of the proposed act, this will be eliminated and importers who are cooperative with customs officials in making full disclosure of all particulars on entry, need no longer fear incurring additional penal duties because of undervaluation. Section 17 of the proposed act also repeals the present unfair provision that where the importer's entered or declared value is higher than the final appraised value, the importer's entered value, nevertheless, becomes the dutiable value. This is tantamount to overpaying one's income tax and not being able to recover such overpayment. Section 19 of the proposed act, dealing with correction of errors and mistakes, will permit customs officials to correct any mistake adverse to the importer if discovered within 1 year after entry. Under the present law, such correction can only be made when the situation is the result of a "clerical error." Present interpretations of "clerical error" are too narrow. The inability of the customs service to correct patent mistakes or inadvertances with respect to entries, appraisements, liquidations, or other customs transactions, has on occasion caused importers in our area to complain bitterly over the unfair and harsh decisions that necessarily followed. The proposed change is replete with common sense and by all means should be adopted.

In conclusion, we strongly urge the enactment of the Customs Simplification Act of 1951 at the present session of Congress. Overhauling and revision of our tariff laws has been long overdue. It is extremely important for business to have a fairly exact knowledge of the costs of the products bought and sold by it, or of the materials entering into the products manufactured by it. The proposed act will permit importers to calculate their landed costs with some degree of certainty and should expedite valuations at the customshouse. The proposed act will also eliminate the horror and injustice of having additional renal duties assessed for undervaluation and inability to recover overpayments on entry, and will also remove a number of other minor annoyances and anachronisms inherent in the present tariff laws.

RESOLUTION OF THE DETROIT, MICH., CHAMBER OF COMMERCE

CUSTOMS SIMPLIFICATION ACT OF 1951 (H. R. 1535)

"The Detroit Board of Commerce representing the many vast and diversified industries and businesses operating within the Detroit area whose connections and investments are extended throughout the world, has for the past several years been concerned with the cumbersome, complicated, and unnecessary United States customs regulations and restrictions. We believe they have created a needless hardship for United States importers and thereby had an adverse effect upon the United States exporters, consumers, and the employment of labor. "The board of directors of the Detroit Board of Commerce therefore respectfully urge the adoption of the Customs Simplification Act of 1951, H. R. 1535." Adopted by the board of directors, April 21, 1952.

Respectfully submitted.

Senator KERR. Mr. Tompkins?

Mr. TOMPKINS. Yes, sir.

WILLIS H. HALL, Secretary.

Senator KERR. Sit right down, Mr. Tompkins.

STATEMENT OF ALLERTON deCORMIS TOMPKINS, COMMITTEE ON TRADE BARRIERS, UNITED STATES COUNCIL, INTERNATIONAL CHAMBER OF COMMERCE

Mr. TOMPKINS. My name is Allerton deCormis Tompkins, and before this committee I represent the American segment of the International Chamber of Commerce, known as the Committee on Trade Barriers, United States Council of the International Chamber of Commerce.

The United States Council is the American affiliate of the ICC, there being throughout the world 30 national affiliates of this organization, which has its headquarters in Paris, France.

Basically, the ICC is an international spokesman of businessmen on world economic affairs. Its purpose is to be broadly representative and to secure effective and constant action in improving world economic conditions.

We are very much in favor of the proposed legislation, H. R. 5505, which, if enacted into law, will materially decrease some of the administrative barriers that have plagued the United States import trade since the Tariff Act of 1930 was enacted many years ago. This proposed legislation is, however, only a small step in the right direction, as there are in addition many unnecessary administrative barriers that remain on the statute books, which needlessly harass international traders.

Senator KERR. Would you say that the purport of your testimony is that these barriers harass the traders or impede the trade? Mr. TOMPKIN. Both, Mr. Chairman.

Senator KERR. Well, I think there would be some difference. Go ahead.

Mr. TOMPKINS. I have filed with your committee a mimeographed. statement, which I request be placed in the record.

Senator KERR. It will be put into the record. Is that with your suggested revisions to section 13?

Mr. TOMPKINS. Yes, that is true. I have prepared two statements.. One is a brief summary of what I would like to say before the committee, and the other is a mimeographed statement that relates specifically to section 13.

Senator KERR. All right.

Mr. TOMPKIN. Before going on to section 13, I would like to mention. one or two points, bearing in mind that we are greatly in favor of this. act, and request its adoption.

We do think that there are some minor important amendments, that should be made in order to avoid unnecessary complications at. a later date.

Briefly, the six points which we would like to have considered in addition to section 13 are:

Point No. 1, we urge that you do not deny to an importer the right to amend his entry. The importer should be permitted to amend his. entry if he wants to do so. This point relates to section 17 (a) of the proposed bill.

Senator KERR. Have you prepared a suggested wording for the amendments you seek?

Mr. TOMPKINS. I have discussed the matter with other people who are appearing before this committee, and I have not attempted to enlarge upon the statements that they have made and are making

to you.

Senator KERR. Will you or they, or have they, submitted suggested language?

Mr. TOMPKINS. Yes; they will.

Senator KERR. All right.

Mr. TOMPKINS. These points that I am covering now, these six points are being taken up by other people who have appeared or are appearing before you, and I just want to lend my support to their proposals.