Section 4-Marking This section, if approved, would do away with the requirement of various special marking provisions in the commodity schedules of the Tariff Act. We should like to impress on the committee the importance of making the intent of Congress clear to the public, to the executive branch and the Customs Bureau, and to the customs courts in its report to the House, that the purpose in eliminating the requirement of these special markings is for simplification of procedures but that the committee attaches considerable importance to the strict enforcement of the basic marking requirements, contained in section 304 of the Tariff Act of 1930, as amended. Section 13-Administrative exemptions Fears have been expressed by retail groups and many domestic producers that the exemption of $3 shipments from tariff duties, allowed under section 13, may foster a high volume of foreign mail-order business to the detriment of American labor, production, and trade. The provision for permissive action by the Secretary of the Treasury to prevent abuses does not quiet these fears. Without a duty, there would be no statistical record of such imports upon which to base an appeal for relief. Moreover, the provisions of subsection (b) 3 seem impossible of administration under the provisions of subsection (c). Section 15-Value Subject to some important technical changes in wording of the various bases of valuation and in the definitions of expressions, the principal effects of this section are to eliminate the existing foreign-value basis from prime consideration in connection with export value-the higher of the two, being taken as the first basis of valuation-and to create a new alternative basis of valuation called comparative value. We believe it is evident the writers of the Tariff Act of 1930 intended that the definitions of "foreign value" and "export value" should be read in relation to each other and conjunctly. In other words, the limited definition of "export value," which stands for export price to the United States alone, was protected from abuse by the requirement that foreign value, that is, in brief, the value of the merchandise in the country of origin, be specified on consular invoices. The league presents no objection to the principle of eliminating the use of foreign value as a constant basis of valuation but it then requests the committee examine with care the new definition of "export value" and recognize the concern of a number of groups, including ourselves, that it be made reasonably safe from abuse. We understand that by a change in the definition of the expression "freely sold or offered for sale," the great majority of customs cases will be entered under "export value." As one reads the definition of "export value" in the bill, it seems to leave this basis of valuation wide open to abuse, as it is the value for export to the United States alone, without any relationship with the export value to other countries or to the value of the merchandise in the principal markets of the country of exportation. There are two ways of avoiding this legitimate concern, one is to do nothing and leave the present bases of valuation as they stand. The other, in our view, is for Congress to make its intent clear again, both at home and abroad, and to all concerned, that nothing in the definition of "export value" is to be construed as affecting in any way the provisions of the countervailing duty paragraph of the Tariff Act of 1930, as amended, and of the Antidumping Act of 1921. We recommend the addition of the following words after the period on line 11, page 27, of the bill: "Nothing in this subsection (b) shall be construed as affecting in any way the provisions of section 303 of the Tariff Act of 1930, as amended, or of the antidumping Act of 1921." As for the insertion of the new alternative basis of valuation "comparative value," between "United States value" and "constructed value" (at present known as the cost of production value), the league believes that the introduction of "comparative value" is unnecessary and undesirable because it will not serve the true purpose of simplification. We urge that it should be eliminated from the bill. This new basis of valuation is so loosely and vaguely defined as to invite frequent recourse to the courts for interpretation. It permits customs officials to exercise an indeterminable range of discretionary judgement and appears to lead, in the long run, toward the adoption of arbitrary and fictitious values, which may even withstand court scrutiny because of the lack of clear criteria. Section 22-Conversion of currency The proposed amended text of section 522 of the Tariff Act of 1930, as amended, requires, in subsection (a), that the Secretary of the Treasury shall keep current a published list, expressed in United States dollars, of the par values which he finds are maintained by foreign countries for their respective currencies. The League believes that the meaning of "par value" should be made clear by inserting the following words after the period on line 5, page 41, of the bill: "By 'par value' of a currency is meant the content in grams of fine gold in the monetary unit proclaimed officially by a government or any institution authorized by a government.' Additional section 26 The now familiar GATT caveat, which was section 24 of H. R. 5505, the previous customs simplification bill, is not present in this bill H. R. 5106. The caveat declares that "the enactment of this act shall not be construed to determine or indicate the approval or disapproval by the Congress of the executive agreement known as the General Agreement on Tariffs and Trade." The league strongly urges that this caveat be added as section 26 to this bill. Respectfully submitted, A. C. ACKERMAN, Mr. JENKINS. The next witness is Mr. Strackbein, chairman, Nationwide Committee of Industry, Agriculture, and Labor on Import-Export Policy. Mr. Strackbein is very well known to all of us. STATEMENT OF O. R. STRACKBEIN, CHAIRMAN, NATIONWIDE COMMITTEE OF INDUSTRY, AGRICULTURE, AND LABOR ON IMPORT-EXPORT POLICY Mr. STRACKBEIN. Mr. Chairman, I have no written statement. My name is O. R. Strackbein. I am appearing here as chairman of the Nationwide Committee of Industry, Agriculture, and Labor on Import-Export Policy I have only a few comments to make on H. R. 5106, Mr. Chairman. When I appeared before this committee on the previous customs simplification bill, I stated that we had no objection to the simplification and streamlining of our customs procedures. We do not believe that customs procedures should lend themselves to, or become an instrumentality for, protection of American industry. We think that such protection as may be necessary should be accomplished through the proper instrumentalities of the tariffs or quotas and not through delay of imports through the customs procedures. We did oppose a number of provisions in the previous bill. We opposed them on the ground that they had little or nothing to do with simplification of customs procedures, but were intended, rather, to modify our existing statutes to conform them with the provisions of the general agreement on tariffs and trade. Those provisions were largely eliminated in the previous bill, and I find few traces of them in the present bill, H. R. 5106. However, I do want to say something about the elimination of foreign value as a basis of customs collections, and the substitution therefor of export value. The principal difficulty that would arise with export value would come when there was allegation of dumping. Export value does not have to reflect the foreign market value as is required by the Antidumping Act of 1921. The Antidumping Act says that an extra duty, an antidumping duty, shall be levied, collected, and paid in addition to the duties imposed thereon by law, in an amount sufficient to equalize the difference between the foreign value and the invoiced value of the goods. It says that this shall be done if the purchased price or the exporter's sale price is less than the foreign market value, or in the absence of such value than the cost of production. This means that if we establish export values as the basis for levying our tariffs, this export value itself may represent a lower price than the market value. If so, as I understand it, the Antidumping Act would still apply. The real question is how industries in this country that are affected by such shipments will know that the export value is, in fact, lower than the foreign market value. At the present time, reports are made on foreign prices, and those reports are available. In the absence of such reports, it appears to me that it might be much more difficult to determine or even to suspect that dumping was taking place. The recommendation to move from foreign to export value was based upon the report made by the management firm that investigated this problem, I believe in 1947, McKinsey & Co. The report was held confidential. The working schedules and the data upon which the recommendations were based were never made public. I asked in the previous hearing whether I might see those papers to determine just on what ground the recommendation was made to eliminate foreign value and substitute export value. Some show should certainly have to be made to demonstrate that this change would result in simplification of customs procedure the change could actually be endorsed. I have never had the opportunity of seeing those schedules, of seeing the character of their investigations, or even having access to their reasoning, by which they arrived at the conclusion that export value as a means of levying the tariffs would lead to simplification of customs procedures. I do not believe that the Treasury Department representatives in coming before this committee demonstrated just how this change in the law would actually accomplish simplification of customs procedures. Mr. SIMPSON. I would like to ask Mr. Strackbein a question. Mr. JENKINS. Have you finished? Mr. STRACKBEIN. I have not concluded. I have on that particular point. Mr. JENKINS. Would you care to permit a question by Mr. Simpson? Mr. STRACKBEIN. Yes; I will. Mr. SIMPSON. It is argued that it is horribly complicated to ascertain the foreign value, and that this use of the export price would remove the necessity for a number of people who are engaged in endeavoring to ascertain the foreign value. In that respect, it would simplify the customs. Mr. STRACKBEIN. Well, of course, some necessary steps are sometimes taken. Mr. SIMPSON. I ask you this: Is it your view that it would shift the burden under the Antidumping Act, that it would shift the burden and make more difficulty for the American producer who would have to ascertain that fact as to the difference between the domestic price and the export price in order to make his case on antidumping? The American producer would have to go abroad and find whether it was in fact dumping or not. Mr. STRACKBEIN. Exactly. And not only that, the evidence would perhaps be more difficult to collect, when our own agents abroad, and consular officials, no longer collected this information on foreign prices. Mr. SIMPSON. What would your recommendation be, assuming that the export price is determined to be the proper figure? I was somewhat persuaded that it would be all right, though I now see the point that you make. What suggestion could you make? That we continue to make surveys and see whether there is a difference between the export price and the domestic price? Mr. STRACKBEIN. Well, in that event, I do not see that there would be much gained by way of simplification, or by way of removing the functions that you mentioned before. Mr. SIMPSON. And yet the result might be that the American manufacturer could not utilize the provisions of the antidumping law without knowing that fact. Mr. STRACKBEIN. Correct. I should think that the Treasury Department would be willing to spell out the channels through which an American manufacturer or an American industry could operate in order to obtain the kind of information that would be necessary. It is not clear to me just what an American competitor of imported goods-just what recourse he does have under this bill. Mr. SIMPSON. In order to utilize the Antidumping Act? Mr. STRACKBEIN. In order to utilize the Antidumping Act. Mr. STRACKBEIN. The other question here is the one on currency conversion. There, again, we have a problem. I believe that is section 22. This section would recognize different currency rates, and by recognizing them, of course would give them legal standing. Again, I think it should be made thoroughly clear just how the countervailing duties could be invoked if these multiple rates of currencies were officially recognized by the United States. I would assume that if it could be shown that a particular rate conferred a bounty upon the producers abroad, that the countervailing duties could still be levied in this country, by this country. Suppose you had two or three different conversion rates, and it could then be demonstrated that one of those rates had the effect of conferring a bounty upon the foreign producer of the particular article, then our countervailing statute would still apply. Mr. SIMPSON. But, Mr. Strackbein, only if that rate were more than 5 percent less than the rate which our Government determined to be the official or proper rates. Mr. STRACKBEIN. Yes; that appears under subsection (d), I think, of section 22. Mr. SIMPSON. In other words, give a certain leeway to the foreign country to vary from the rate which we here establish as what I will call the official rate, and if that varies not over 5 percent you could not use your countervailing duty. If it were over 5 percent, then you could. Mr. STRACKBEIN. Mr. Simpson, I was not here when the Treasury Department representatives testified. Did they have any explanation for the 5 percent figure? Mr. SIMPSON. I did not hear any explanation given as to why it was 5 percent, with the exception that 1 of their men told me that with respect to a certain South American country that 5 percent represented the exact situation that prevailed there, and had to do with the recent decision where they used the countervailing point. Mr. UTT. My recollection was that it was said that there should be included in this bill, he thought, an injury test to bring about the countervailing duties on all currency. That is my recollection of the testimony yesterday. That may answer the question of Mr. Eberharter with reference to that question. It was suggested that it should be included. Mr. STRACKBEIN. That there should be an injury test which is not now in the bill? Mr. UTT. Right. Mr. STRACKBEIN. I think we would oppose that. It is sufficiently difficult now to make a satisfactory case under the law without having to go into great detail and establish injury. There is one more matter and this has to do with the temporary free importation in bond of certain articles. The present bill, 5106, on page 16, section 10, amends section 308 of the Tariff Act of 1930. I would like to propose that section 308, paragraph 3, be amended. This is the paragraph that permits the importation under bond of certain items to be used and samples in this country, and then reexported under a drawback privilege. In September 1951 during the hearings on the previous bill, we made a recommendation that an amendment be attached to section 308, paragraph 3, and the material then presented has been abstracted from the hearings of that time. I would like to insert them in the present report. There is a series of questions from Mr. Mills, a member of this committee, who was questioning Mr. Nichols, who was at that time representing the Treasury Department. Í would like to read just a few paragraphs to acquaint this committee or to refresh its memory on this particular subject. There are about three or four questions and answers. With your permission. Mr. Chairman, I would like to read those. Mr. JENKINS. Without objection, Mr. Strackbein. Mr. MILLS. It is certainly in the best interests of our own country to bring in something that is produced abroad if we need it here, and from a sample of that article we can have something available here that we would not otherwise have. But it is hard for me to conceive that those who wrote the Tariff Act of 1930 intended to create a situation wherein such a practice would develop as has grown up in connection with the photoengraving plates. As I understand the intention of the people who drafted the act of 1930, they did not intend to put articles on the free list except by specific designation. They were thinking rather in terms of increasing the duties on most items. Mr. Johnson was another representative of the Treasury Department. [Continues reading:] Mr. JOHNSON. Mr. Mills, the customs service adopted the interpretation that you have suggested, and for a considerable time held that articles could be imported for examination with a view to reproduction under section 308, paragraph 3, only if the identical article imported was to be duplicated. However, the court held in two different cases, first, that certain model gowns could be imported with a view to reproduction therefrom of paper patterns which surprised us a great deal. But, of course, the court determines what the law is. Secondly, they held that certain drawings, paintings made by hand, could be imported for the production of wallpaper. Now, from those decisions the present practice has developed, and I do not believe that we have gone one iota beyond the principle of those decisions. Mr. MILLS. In the beginning you must have shared the thought that the statement that I am now expressing was a correct interpretation of the law. Mr. JOHNSON. That was our original interpretation. Mr. MILLS. It would appear to me, notwithstanding the decisions of the court, that perhaps your original thought on the expression of mine today is still |