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If the proclaimed value referred to in subdivision (b) varies by 5 per centum or more from any one of the dual or multiple rates certified for the same currency, the proclaimed value shall be disregarded, unless such proclaimed value varies by less than 5 per centum from the rate selected or determined. In the latter case, conversion shall be made at the proclaimed value.
Mr. BRECKENRIDGE. I want to comment briefly on the Treasury's proposal to add a new section to this bill to insert the injury requirement in the countervailing duty statute comparable to the injury requirement that is now in the antidumping statute. We are very much opposed to that because the injury requirement in the dumping statute now, as for the past several years, in effect constituted a nullification of that statute. I think I should call attention to the fact that section 12 in the Simpson bill removes the injury requirement from the Antidumping Act. We feel that is the right approach. The two laws should be made consistent by adopting section 12 in the Simpson bill, rather than inserting the injury requirement, in this bill, with respect to the countervailing duty statute.
The only other matter which I want to mention is that we feel that any bill that is adopted by the committee should include a provision comparable to section 24, I believe it was, in H. R. 5505 of the last Congress, making it clear that the adoption of the bill is not a congressional ratification or approval of the General Agreement on Tariffs and Trade.
That, Mr. Chairman, completes my statement.
Mr. JENKINS. Any questions?
If not, we thank you very much, Mr. Breckenridge. You may leave your insertions with the reporter.
Mr. BRECKENRIDGE. Thank you.
Mr. JENKINS. The next witness I have here is Mr. Ray. You may proceed.
STATEMENT OF JOHN C. RAY, CHAIRMAN, IMPORT AND CUSTOMS COMMITTEE OF THE DETROIT BOARD OF COMMERCE, DETROIT, MICH.
Mr. RAY. Mr. Chairman and members of the committee, my name is John C. Ray. I am the chairman of the Import and Customs Committee of the Detroit Board of Commerce. I am appearing in behalf of the Detroit Board of Commerce to speak in behalf of the customs simplification act.
The port of Detroit is a major port of entry and exportation of merchandise, ranging third in the total amount of dollar volume of imports and exports. We, therefore, are slightly interested in simplifying procedures as far as customs are concerned. 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 could not 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 customs office has increased substantially in the interim, but are chargeable to the antiquated complexities of the present provisions of the Tariff Act of 1930 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 value was advanced by the appraiser and additional duties were to be paid, which in some instances wiped 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 wellbeing of the world economy which we, as a nation, are endeavoring to foster.
It has been my experience as a customs attorney to have demands made upon my clients from amounts of $50,000 and upwards on what is called withheld appraisements, where the customs have made investigations. After entry was made and after they had completed these investigations they would make substantial demands on importers which were in many cases ruinous.
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 15 of the Customs Simplification Act of 1953 will not completely simplify valuation of importations, it should, however, remove one of the most serious obstacles to increase of world 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 according to the specified statutory formula. Which, I may say, is very complicated indeed, and if such values are not available or determinable, then the appraiser would 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 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 investigations and determinations on value. This is caused by the cumbersome investigations which must be made in the exporting country by our Treasury attachés or customs agents.
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 to his financial sorrow 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, and where appraisement has been withheld pending the foreign investigation, such advanced or increased valuation may result in substantial sums of money being demanded of the importer upon liquidation or finalizing of the entry. 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 in increased duties were ruinous to the importer.
I may say there have been cases where valuations were not completed for 10 or 15 years because of the intervention of war and the difficulty of making these investigations. So valuations are being completed now on entries which were made in 1938 and 1939.
There are also instances where the importer was no longer in business at the time the valuation was completed.
The Customs Simplification Act of 1953 eliminates consideration of foreign value and makes export value the preferred basis of valuation, if it can be determined. If export value cannot be ascertained, then the appraiser would endeavor to apply the defined "United States 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 "United States 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 basis of valuation, will make valuations more realistic and more readily ascertainable to importers and customs officials, and should speed up valuations.
The "United States value," "comparative value," and "constructed value" as defined in the proposed act, are substantial improvements over the present equivalent tariff provisions, which I may say were very arbitrary and provided for certain rigid formulas which were very unbusinesslike and very unrealistic. 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 they can be determined.
Section 19 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 entered 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 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 fraudulent and the merchandise is subject to seizure and forfeiture.
I might say section 489 is particularly a bugaboo to international trade. It is a pitfall that not only novice importers would fall into, but even experienced importing firms would fall peril to.
The present section 489 with its complexities and the heavy penalties and costs which can be incurred under it, has been a particular deterrent to international trade. Under section 19 of the proposed act, this will be eliminated and importers need no longer fear incurring additional penal duties because of honest undervaluation. Section 19 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 21 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, appraisement, or transaction, or within 60 days after liquidation or exaction when the liquidation or exaction is made more than 10 months after the date of the entry, appraisement, or transaction. Under the present law, such correction can only be made when the situation is the result of a "clerical error." Present interpretations of the Customs Court 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 1953 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 valuation at the customshouse. The proposed act will also eliminate the injustice of having additional penal duties assessed for undervaluation and inability to recover overpayments on entry. It will also remove a number of other annoyances and anachronisms inherent in the present tariff laws.
Mr. Chairman, although it is not a part of my statement, I would also like to comment on paragraph 7 of the Customs Simplification Act dealing with American goods returned, which is the subject matter of another bill which was filed by Representative Victor Knox, a member of this committee. It is H. R. 4034.
Mr. JENKINS. It deals with tariffs, does it not?
Mr. RAY. Yes, it does.
Mr. JENKINS. I do not believe it would be proper, do you think so, gentlemen, to bring in testimony with reference to another bill, except that if you want to insert this in the hearings as a part of your testimony it will be all right.
Mr. RAY. You mean submit the statement?
Mr. JENKINS. How long is the statement?
Mr. RAY. It is only four pages.
Mr. JENKINS. Without objection we will insert that with your statement in the record. That will be exhibited to the members if you will make it available to us what you have to say. You do want to insert as a part of your statement the resolution which is attached to your statement?
Mr. RAY. Yes, sir.
Mr. JENKINS. That is all right.
(The documents referred to follow:)
RESOLUTION OF THE DETROIT BOARD OF COMMERCE
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 United States exporters, consumers, and the employment of labor.
The board of directors of the Detroit Board of Commerce therefore respectfully urges the adoption of H. R. 5106.
By order of the Board of Directors May 28, 1953.
DETROIT BOARD OF COMMERCE,
Executive Vice President.
STATEMENT OF JOHN C. RAY, CHAIRMAN, IMPORT AND CUSTOMS COMMITTEE, OF THE DETROIT BOARD OF COMMERCE, ON H. R. 4034, AN ACT TO AMEND PARAGRAPH 1615 (G) OF THE TARIFF ACT OF 1930, AS AMENDED
The Detroit Board of Commerce, by appropriate resolution, favors the enactment of H. R. 4034 for the following reasons:
This amendment is to aid industry along the Canadian border. During the past 10 years, because of lack of American plant facilities or reluctance of American plants to take on certain operations, it was necessary for American manufacturers along the Canadian border to export their partly manufactured products to Canadian plants for some simple manufacturing process or operation which did not complete the product into a finished article, and then reimported the item for completion in their own plants.
Typical cases were exportations of ingots to be made into slabs preparatory to then being rolled into sheet steel in American steel mills; exportation of lever arms for adding machines for having angles bent in them; automobile truck and tank wheels and parts for flanging, stamping, drilling, etc.; piston rings for grinding, etc. In each instance, the article returning to the United States after such Canadian processing, was material that still required additional work or processing in American plants before being regarded as a finished product.
Under existing provisions of the Tariff Act of 1930, as amended, such articles, upon return to the United States, are subject to a classification duty applicable to the article in the form in which it is returned to the United States. This duty would include not only the value of the cost of the Canadian processing or operation, but also would include the cost of value of the article in its original exported form.
Paragraph 1615 (a) of the duty-free schedules of the Tariff Act of 1930 reads as follows:
"Articles, the growth, produce, or manufacture of the United States, when returned after having been exported, without having been advanced in value or improved, in condition by any process of manufacture or other means.' [Emphasis supplied.]
It can be seen that the foregoing provision does not give any relief to the situation as obviously any article after foreign processing has been advanced in value or improved in condition, and therefore would not qualify under the foregoing paragraph for free entry.
Subparagraph 1615 (g) of the duty free schedules reads as follows:
"Any article exported from the United States for repairs or alterations may be returned (duty free) upon the payment of a duty upon the value of the repairs or alterations at the rate or rates which would apply to the article itself in its repaired or altered condition, if not within the purview of this subparagraph.'
It does not give any relief as through Customs Court and Bureau of Customs interpretations, application of this subparagraph has been limited chiefly to repairs or alterations of a mechanical nature on equipment such as locomotives, buses, etc.
The Tariff Act of 1930 is not written with a consistent, unswerving policy of providing for the free advanced entry of only such American goods as are not advanced in value or improved in condition. For instance, paragraph 1410 of the act provides:
"That exported books of domestic manufacture, when returned to the United States after having been advanced in value or improved in condition by any process