Last year I appeared before the Senate Finance Committee, in opposition to section 321 of the customs simplification bill, at which time the section called for raising the exemption from $1 to $10. Reducing the $10 to $3 in the current bill does not change a single argument we made at that time. What is wrong here is something basic and fundamental. We are opposed to this section because it constitutes an invitation to foreign producers of handbags to adjust their prices and their method of distribution to flood the country with foreign made handbags. We would have no complaint if this competition was fair and equitable. But this is not the fact when it comes to handbags. Firstly, and very important, is the fact that the domestically made handbags are subject to the 20 percent retail excise tax. Under this section, the foreign made handbag would not be subject to the excise tax. Secondly, and equally important, reptile handbags are subject to a 171⁄2 percent duty and leather handbags a 20 percent duty. This is supposed to represent and offset the difference between the American cost of production and foreign cost. Eliminate this differential on $3 handbags and eliminate the 20 percent excise tax and you create a real and substantial threat to the American handbag industry.

In the last few years there has been a great influx of straw, bamboo, willo, and wooden bags coming from Italy, Japan, and South America. The straw bags are subject to a 25 percent rate of duty and wood to 50 percent. Because Government statistics prepared by the United States Tariff Commission and the Bureau of Customs combine baskets and bags made of straw, bamboo, willow, and wood, we have no way of determining accurately how many of those baskets and bags are handbags. We do know, however, the amount is very substantial.

There was a time in the handbag industry when we made and sold white handbags and pastel shades of leather and fabric for summer selling. This business has been completely lost due to the importation of these straw bags. Today, a little flower or posie is attached to a straw basket or bag and it is sold as a summer handbag. This has caused the American handbag factory to close for two to three months every year and make thousands of employees idle.

In 1952, United States imported over 20 million baskets and bags made from bamboo, straw, willow and wood, at a dollar value of approximately $4 million. While all of these baskets and bags were not all handbags, we do know a very substantial amount were. We estimate that approximately 50 percent were handbags or converted into handbags by adding flowers or decorations to the basket or bag. Almost all of these bags and baskets which eventually sold as handbags cost from fifty cents to $1.50. While the American retailer may be selling these handbags, the American manufacturer is not producing them. Passage of section 321 will increase this volume and aggravate a presently bad condition.

We don't know what the quantities and what the dollar value is of the handbags that are imported free of duty as passengers' baggage. We believe that is is very considerable and represents a very serious inroad to the American handbag industry. Although our product is at a disadvantage, as compared to other commodities, because of the excise tax burden, we have felt there is little that could be done in this regard. Travelers abroad, and to South America, will always buy

souvenirs, and other commodities, competitively priced, and bring them into the country duty-free within the limitations provided.

However, raising the exemption from $1 to $3 on articles imported otherwise than on the person or in the accompanying baggage of an individual arriving in the United States will be an open invitation to circumvent the present $500 limitation on articles brought in on the person. When the limitation is $1, a woman would not consider the purchase of a handbag for mailing into the country. Raising it to $3 makes it practical, feasible, and worthwhile, particularly as to handbags.

Multiply this situation by the great number of other commodities that are sold for more than $1 and less than $3 and you have a condition that, to a great extent, will nullify the Government's intention of limiting articles brought in on the person up to $500 duty free.

Under subheading (c) of section 321, the Secretary of Treasury is authorized to diminish the $3 to a lesser amount whenever there is an abuse of this privilege. This is what I would call a little escape clause. All of you are familiar with the extreme features of the escape clause under the General Agreement on Tariffs and Trade and know that it is most difficult, to put it mildly, to have the escape clause invoked under the General Agreement. The escape clause in this bill will be just as difficult and impractical after the damage has been done.

The handbag industry is a small-business industry. There are no defense contracts in the industry. Congress has declared it to be in the national interest that small business be preserved as a vital force and basic element of the national economy. The excise tax, imports, and bad business generally in the soft-goods industries, have been whittling the handbag industry and gnawing at its vitals. While raising the limitation from $1 to $3 is not a momentous thing in itself, it is an important factor to a distressed industry. It portends greater instability and chaos.

I have given you the handbag manufacturers' views on this matter. I cannot believe it is sound policy to simplify things, at the sacrifice of an American industry.

We are confident that this committee will not force these undesirable results to come to pass. We respectfully urge that the current $1 limitation on duty-free shipmets remain untouched.

Mr. UTT. That concludes your statement, Mr. Berkowitz?
Mr. BERKOWITZ. Yes, sir.

Mr. UTT. Mr. Simpson was going to inquire, but he was called to the phone and I do not know whether he will return in time to inquire. I simply wanted to ask you if you feel that the raising of the limit from $1 to $3 would start mail-order houses, foreign mail-order houses, or mail-order houses in free zones, in America, which would be injurious to the retail business?

Mr. BERKOWITZ. Positively, sir.

Before the last hearing of the Senate Finance Committee, several mail-order houses have established themselves in Mexico, immediately thinking that they will take advantage, and we know that in Paris, France, several American firms went down there to establish that.

Mr. UTT. You have directed most of your testimony to the raise from the $1 to $3. Do you have any comment to make about the valuation clauses in the bill?

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Mr. BERKOWITZ. No, sir. Of course, 2 years ago I made a survey of the handbag industry in South America, and I spent 5 weeks in every country where they make handbags, from here to Argentina. I was surprised to see them going there and paying all kinds of money for a bunch of junk, when they could buy better bags in this country for a whole lot less.

But, it seems to me when people go abroad, they have to buy something, and apparently getting handbags, and belts for their husbands, were the most attractive thing to buy. And that created in this country a tremendous amount of repairs. More people started into the repair business in order to fix up the bags which had fallen apart, in pieces.

Mr. UTT. As to the total imports by reason of travel, do you not think that is comparatively small as compared with the total amount of business in the country?

Mr. BERKOWITZ. Well, it is not, sir. The importation of in 1952, I think, is about $5 million. To a small industry like ours, $5 million worth of importation is quite an amount. We used to export $10 million. We lost all those markets.

Last year, in 1952, I think we exported about $200,000 worth; and as to the South African trade and the Canadian and all that, we have lost that trade.

Mr. JENKINS. We thank you for your presentation, Mr. Berkowitz. The committee will adjourn until tomorrow at 10 o'clock.

(Whereupon, at 2:05 p. m., a recess was taken until 10 a. m. Friday, May 29, 1953.)

CUSTOMS SIMPLIFICATION

FRIDAY, MAY 29, 1953

HOUSE OF REPRESENTATIVES,
COMMITTEE ON WAYS AND MEANS,

Washington, D. C.

The committee met, pursuant to recess, at 10 a. m., in room 1102 House Office Building, Hon. Thomas A. Jenkins presiding.

Mr. JENKINS. The committee will be in order.

The first witness this morning is Miss Julia Bennett, director of the Washington office of the American Library Association.

STATEMENT OF JULIA D. BENNETT, DIRECTOR OF THE WASHINGTON OFFICE OF THE AMERICAN LIBRARY ASSOCIATION

Miss BENNETT. Thank you, Mr. Chairman. My name is Julia D. Bennett. I am director of the Washington office of the American Library Association. The American Library Association is a professional organization of 20,000 librarians, trustees, and friends of libraries interested in the development, extension and strengthening of our Nation's library services. Today I shall speak primarily for the college, university and large public libraries interested in securing foreign books for scholarship and research purposes. We appreciate the opportunity to comment on H. R. 5106.

Since the conclusion of the war, American libraries have been sadly hampered by antiquated customs regulations affecting the importation of books for college, university and public research libraries. Currently we operate under section 498 of the Tariff Act of 1930 (19 U. S. Code, section 1498) which authorizes the Secretary of the Treasury to prescribe rules and regulations for the declaration and entry of merchandise not exceeding $100 in value. Under this provision of the law, the informal entry has been authorized for libraries on importations not exceeding $100 in value.

Two factors have made the $100 limitation unrealistic. First of all, book costs have risen steadily since the war, and a $100 shipment now covers a very few books. Moreover, since the war American research libraries have taken more energetic steps to secure European research books. This was undertaken because of the fact that during the war American research was crippled by the lack of adequate European books in this country. Several governmental research groups strongly complained about this, and as a result the Library of Congress and the other great Federal libraries, working with the Association of Research Libraries, which is an affiliated national association of the American Library Association, have taken a number of steps to be sure that at least one copy of every important European research book is available in this country.

Secondly, libraries find the "customs declarations" time-consuming, often resulting in crippling delays in the receipt of books urgently

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needed for research or teaching, and particularly complicated, since not continuously used. Currently, all books and printed materials imported by libraries are duty free, so that the barrier for libraries is complicated consular invoices necessary on purchases over $100. In addition, "customs declarations" necessitates the services of a broker and additional clerical help which adds considerably to the cost of the books. It is not necessary, I am sure, to remind the committee, that currently, all libraries are suffering budgetwise from the inflated dollar. We are pleased to note in section 17 (d), H. R. 5106 amends section 498 of the Tariff Act of 1930 so as to increase the figure to $250 and further amends section 17 (e) to permit informal entry of merchandise covered by paragraph 1631 of the act without regard to the ceiling in shipments of any value. Books, maps, et cetera, for educational institutions and public libraries are listed under paragraph 1631.

We urge the passage of H. R. 5106 with particular reference to section 17 (e) whereby libraries may bring into this country, such merchandise as books, maps, et cetera, not intended for resale, under informal entry without regard to a ceiling of any value on shipments. We know that your committee will consider our problem. We appreciate this opportunity to testify.

Thank you, Mr. Chairman.

Mr. JENKINS. I would like to ask you one question: I wish you would give us an illustration of what your problem is. In other words, give us an illustration about books being ordered and coming in and so forth, so we can get an idea of a possible fact situation.

Miss BENNETT. A public library, a large public library, or college or university library orders a shipment of books. If that shipment is valued at over $100, it means that they have to fill out a large consular invoice which has to be considered by the customs. Therefore, the shipment cannot come in under informal entry, it must come through the formal customs.

In many cases a shipment, particularly for those libraries on the west coast, might come into a New York port. The library on the west coast would, of necessity, have to employ a broker which would get that shipment through the customs, taking care of the entry, the invoices, and so forth; by having to employ a broker plus the increased cost of clerical help in making out the invoices and the bookwork that is necessitated by this formal entry, it means a great deal of cost to each individual library. Also the time that is taken for these shipments of books to go through the formal customs means that that much time is taken away from the use of those books in this country. Mr. JENKINS. I think you recommend a change in the limit of value. Miss BENNETT. That is right.

Mr. JENKINS. From what amount to what?

Miss BENNETT. We are very pleased to note that that has been done in the bill under this new section 17 (e).

Mr. JENKINS. Then you approve the bill?

Miss BENNETT. We approve the bill as of that section, particularly that section of the bill. It is the only one which affects us directly. Mr. JENKINS. Are there any other questions?

Mr. COOPER. No questions.

Mr. UTT. No questions.