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Under existing law the true dollar value of imported merchandise for customs purposes is required to be ascertained by conversion of foreign currency at the proclaimed value of foreign coins on the gold basis.
The statute provides that "the value of foreign coin as expressed in the money of account of the United States shall be that of the pure metal of such coin of standard value" and the Secretary of the Treasury is required to proclaim quarterly "the value of the standard coins in circulation of the various nations of the world." It is claimed that these proclamations now serve little purpose because of the general abandonment of the gold standard and that customs duties are rarely based upon such proclaimed values. The proposed revision would accordingly repeal the requirement referred to and substitute par values which the Secretary of the Treasury finds are maintained by foreign countries for their respective currencies. This change would seem to follow the proposal of the General Agreement on Tariffs and Trade, article VII, paragraph 4.
Some question might exist whether irrevocable discretion would be vested in the Secretary by the provision that the par values to be used are only those found by the Secretary to be maintained by foreign countries. If the Congress approves of the use of the new suggested standard of par values maintained by any foreign country, it should so specify and do away with any discretion in the Secretary. This can be accomplished by deleting at page 40, line 22, the words "he finds."
The proposal would abolish the existing requirement of the determination of the so-called gold content of foreign currencies, and substitute for that pars as maintained by foreign countries. Where we are to get those pars or how they are to be determined or anything else is not set forth.
In the prior version of the bill, they would be obtained from the International Monetary Fund. Now we get them as fixed by foreign countries. I do not know where they come from. Under the present law if that par value has not been determined, or if the commercial rate which is called the buying rate, varies from 5 percent or more therefrom, the conversion to currency would be required to be made at the commercial buying rate. The duty of determining those buying rates is placed upon the Federal Reserve Bank of New York. Existing laws have been judicially interpreted to require the certification and use of more than one exchange rate in situations where multiple exchange rates exist, and the courts have held that the proper rate applicable was the rate used commercially for the purchase and sale of a particular class and kind of merchandise. This judicial construction has operated to insure that an importation into the United States purchased in foreign currency would be translated into American currency at a value which would truly and accurately reflect the actual commercial value of the merchandise.
This proposed new section, we believe, would pay lip service to that existing situation, but would vest the discretion in the Secretary of the Treasury to use either the par value as maintained or the buying rate being left to him to decide which he would use. We think that is wrong and we think that the Federal Reserve Bank should be required to certify all buying rates that are used in commercial transactions.
Under present law it has been the practice of the Federal Reserve bank to certify more than one buying rate of exchange where such rates exist but the bank has failed to certify some commercial buying rates which were actually used in commercial transactions in connection with the importation of merchandise into the United States. The Supreme Court has held that the power of the bank to certify exchange rates is in the category of administrative or executive action which is nonreviewable.
If conversion of currency is to be made on a basis to truly and accurately reflect the actual value of the imported merchandise, it should be made mandatory upon the Federal Reserve bank to certify all commercial buying rates for a particular foreign currency. If this be done, the bank's determination of such rates would still be a discretionary act and nonreviewable in the courts, to be sure. But the integrity of that bank would insure that all commercial buying rates which existed for a particular foreign currency would be certified and published. Customs officers would thus have before them complete iaformation of all possible commercial buying rates and, in accordance with the futher direction of the statute, would be required to use the rate which reflected the value of the foreign currency in particular commercial transactions. It is accordingly suggested that a new provision be inserted as a part of section 522 (b), at page 42, line 3, to read substantially as follows:
If more than one buying rate exists for a particular foreign currency, the Federal Reserve Bank of New York shall determine and certify under the provisions hereof and for the purposes of this section, each and every such buying rate actually used in commercial transactions.
The proposed section 522 at page 42 is not entirely clear. Conversion of buying rates to reflect the value of merchandise in commercial transactions comports with the commitments of the General Agreement on Tariffs and Trade (art. VII (4) (b)), but may be susceptible of an interpretation resulting in use of a rate that would not properly reflect true value of the merchandise. To insure that conversion be made on this basis, it is suggested that on page 42, lines 8, 9, and 10 be changed to read as follows:
currency for that date shall be made by applying the proper rate or rates so certified which are used commercially for the purchase and sale of the particular class and kind of merchandise under consideration.
To accord with the amendments suggested to subdivisions (b) and (c) it is further suggested that on page 42, line 15, the word "may" be changed to read "shall".
Section 23 deals with transfers of goods in bonded warehouse and there would be a flat restriction on existing judicial review. Section 557 has been interpreted to permit a transferee of goods in warehouse to file a protest against assessment of duties in his own right on his own behalf. This was given in order to meet the needs of importers who bought goods in bonded warehouse and paid the duties but found themselves with no other way of protesting the collector's assessment. The proposed section 23 would abolish this right and may also impair, to some extent, at least, even the right of a transferor of warehouse goods to file protest against the assessment of duty on merchandise transferred by him.
Following the judicial holding that a transferee of warehouse goods had the right to file protest it is understood that the Treasury Depart
ment has modified its practice so that at the present time no liquidation is made of entries covering warehouse goods until complete and final withdrawal of merchandise covered thereby. No protest, of course, may be filed until such liquidation. Accordingly, if this practice be continued, maintenance of the transferee's right of protest would involve no administrative or other hardships on the Treasury Depart
Simple justice requires that the transferee who has paid the duty should retain the right to recover it if illegally exacted. It is accordingly suggested that the proposed section 23 be deleted in its entirety. The buying of imported merchandise in bonded warehouse occurs frequently, and unless the right to file protests is retained in the statute a transferee would be completely at the mercy of a transferror in order to be able to contest the collector's right. This right has been judicially concurred in in the case of United States v. Roberts. valuable right and should not be taken away.
In my formal statement I also refer to the possible effect of Reorganization Plan 26 of 1950. I will not take up the time of the committee this morning to comment on that. I ask that it be included as part of my remarks and receive the attention of the committee.
The possible effect of the Reorganization Plan No. 26 of 1950 (15 Federal Register 4935) must be considered in connection with the pending bill. Under that plan the Congress approved the transfer to the Secretary of the Treasury of
all functions of all other officers of the Department of the Treasury and functions of other agents and employees of such Department (sec. 1-A, plan No. 26).
Section 2 of that plan further provides that the Secretary may from time to time, make provisions "as he shall deem appropriate" authorizing any officer, agent, or employee to perform any of the functions so transferred to the Secretary. It is understood that the Secretary of the Treasury has redelegated the functions of the Bureau of Customs and all customs collectors and appraisers to the representative agency or officials under an order No. 120 issued July 31, 1950. Notwithstanding this fact, the Secretary of the Treasury would seem to possess authority to repossess these functions at any time by rescinding his order No. 120 referred to and to substitute his judgment and action for that of collectors of customs and appraising officers. The result may well be again to raise the question of the scope of judicial review intended by the Congress to be applied to all actions of collectors of customs and appraising officers.
Statements have been made that the provisions of the proposed customs simplification bill are not intended to and will not alter or take away, in any respect, existing rights of importers to full judicial review of administrative action in connection with imports. No possible doubt should be permitted to exist on this point. To insure preservation of this invaluable right to the import trade, there should be inserted, at the end of the bill, a provision along the following lines:
Nothing in this Act or in Reorganization Plan No. 26 of 1950 or in other Reorganization Plans adopted pursuant to the Reorganization Act of 1949, shall be construed to limit or restrict any rights of importers and others under sections 489, 501, as amended, and 514 and 515, Act of 1930, or to limit or restrict the jurisdiction of the United States Customs Court or the United States Court of Customs and Patent Appeals (28 U. S. C. 1582, 1583, 2631-2637 inclusive, 2638-2642 inclusive).
I would, however, if I may, take one further moment and offer a suggestion outside of my prepared statement which to me is a situation which is quite serious, and that is that the bill in its present form would vest such wide discretion and would subject so many of the administrative procedures to regulations of the Secretary of the Treasury that we are fearful that if the past interpretations of the constructions be applied to these new provisions, those regulations would be considered to be mandatory and there would be no judicial review left on the merits in any particular situation.
We recommend, accordingly, that there be added to and included. in this bill a new provision to provide, and I would like to quote if I may in the record
that the failure to comply with any regulation issued by or upon the authority of the Secretary of the Treasury shall not be deemed to bar an adjudication on the merits of any case by the United States Customs Court or the United States Court of Customs and Patent Appeals in any customs case.
Thank you, Mr. Chairman.
Mr. JENKINS (presiding). We thank you for your appearance and your fine statement.
Any questions, gentlemen? If not, we thank you.
The next on our list is Mr. Bruno, manager, import division, world trade department, Commerce and Industry Association of New York. Do you have a prepared statement?
STATEMENT OF VINCENT J. BRUNO, MANAGER, IMPORT DIVISION, WORLD TRADE DEPARTMENT, COMMERCE AND INDUSTRY ASSOCIATION OF NEW YORK
Mr. BRUNO. Yes, sir; I have.
Mr. JENKINS. You may proceed.
Mr. BRUNO. Thank you. My name is Vincent J. Bruno. I am the manager of the import division of the Commerce and Industry Association of New York, Inc., which is the chamber of commerce for the New York metropolitan area, and includes within its membership approximately 1,000 business firms directly interested in the importation of goods from abroad.
Since it was organized in 1897, this association has been active in connection with problems affecting United States import trade and consistently has supported improved methods and procedures which, without endangering the revenues, would result in more efficient collection by the Government and reduction of unnecessary expense and inconvenience for importers.
Over a certain period of time certain improvements in the regulations governing the entry of goods and the assessment of customs duties have been achieved by administrative action. However, elimination of many undesirable administrative features of the Tariff Act can be accomplished only by legislative action, and the bill now under consideration by this committee represents an encouraging step toward realizing more equitable and efficient conditions under which customers and importers can function.
The Commerce and Industry Association generally supported prior customs simplification measures introduced in both the 81st and 82d Congresses, although we could not give our unqualified approval to those bills inasmuch as they contained several objectionable provisions.
Their ultimate objectives, however, were the same as those found in the present bill-namely, a simplification of the methods and procedures followed by customs officials responsible for the clearance of imports into the United States, with the emphasis on efficiency and economy of operation.
The principal defects in the earlier customs simplification bills have been removed from the present bill, and, in this connection, we would like to commend the various Government agencies which assisted in drafting H. R. 5106, especially the Treasury Department and the Department of Commerce, for their recognition of the areas of particular hardship for both Government and the import trade, and their realistic proposals to solve the existing problems.
We wish to place considerable emphasis on the need for early enactment of a customs simplification bill inasmuch as it will effect many highly desirable changes in the law. That is not to say that it embodies all possible improvements in the special and administrative provisions of the Tariff Act, or that importers unanimously approve all its provisions. Nevertheless, it is a sound piece of legislation and, rather than delay its enactment further, we endorse the present measure as representing the most practicable solution to existing conditions.
There are several sections of the bill which are major amendments of the present law and of such importance as to justify, on their own merits, prompt and favorable action on H. R. 5106, irrespective of minor features which might be debatable. To emphasize their importance and give them our express endorsement, we will mention them briefly.
Section 12, drawback: The bill proposes to extend two time limitations, in section 313 of the Tariff Act, involving drawback. The time within which imported goods must be used in the production of an article and that article exported from the United States would be extended from 3 to 5 years; and, the time within which a producer may avail himself of the substitution provisions of section 313 would be extended from 1 year to 3 years. This association has long urged these two-time extensions; in fact, H. R. 4612 was introduced at our request in the 81st Congress to accomplish this very result.
Section 15, value: Over the years the liquidation of thousands of customs entries has been delayed because of the inherent complexity of determining the dutiable value of imported merchandise. In the majority of such cases, this delay is caused by the requirement in section 402 of the Tariff Act that the customs appraiser must determine "foreign value" and "export value," and use the higher of the two.
The time-consuming problem facing the appraiser in determing the "foreign value" of an imported article readily can be appreciated when one realizes that such value generally must be determined in the country of exportation and that commercial practices and conditions of sale in the principal markets of that country are factors in ascertaining such value. As a consequence, the determination of dutiable value and the liquidation of the entry may require several years' time.
This Association has urged consistently that the prime basis for dutiable value be the "export value." We are gratified to see that the present bill eliminates "foreign value."