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Mr. SIMPSON. Getting back to the purport of my question, then, the foreign government might still have a two-price system, one for domestic consumers and the other for export to market, and our duty, assuming the export price were ascertainable, our duty would would be levied against the export price which might be less than the going price to the citizen?
Mr. ROSE. That is correct.
Mr. SIMPSON. Is that desirable?
Mr. ROSE. Let me say this, sir. If it were an artificially low price based on sales below a certain amount, this act does not affect the antidumping duty applicable to sales at less than fair value in the law. Mr. SIMPSON. Is there a protective provision there that if the export price were so low, under this bill we would check into that?
Mr. ROSE. This bill does not purport in any way to affect the antidumping provisions of the existing law.
Mr. SIMPSON. You mean we could accept the price they put on it for export?
Mr. ROSE. No, sir. What I mean is that the antidumping provision is a provision in the present law which provides for the imposition of antidumping duties in the event of sales at less than fair value of goods in this country. That procedure would not be affected.
Mr. SIMPSON. I understand that. Is there anything in this bill that would immediately stop that, in the event it was ascertained that the price was less than the cost of production?
Mr. ROSE. If the price were less than the cost of production?
Mr. ROSE. The price for export were less than the price in the domestic market?
Mr. SIMPSON. Take the extreme case where it was deliberately away down, just to get rid of their product. Is there nothing in this bill which would restrict the fact that the Government here would have to take the export price as they state it as the basis for our duty?
Mr. ROSE. There is nothing in this bill. I do want to reemphasize that nothing in this bill affects the two protective provisions against that situation which are contained in the existing law.
Mr. SIMPSON. I understand that. But after all, that is a rather cumbersome relief that they would have to request, I think. It certainly has not functioned very effectively. Maybe there has not
been any occasion for it.
Mr. ROSE. It has functioned more frequently lately.
Mr. SIMPSON. A foreign country, I have been told, in cases in the past, had different prices between the domestic price and the export price. It could sell the article at home at one price, and have one at a great deal lower price under this bill for export without recourse on our part.
Mr. ROSE. I want to analyze that a little more.
Mr. SIMPSON. I want you to.
Mr. ROSE. The definition on page 31 is, "sold or offered to all purchasers at wholesale or one or more selected purchasers at wholesale at a price not less than at which it would be sold to all purchasers at wholesale without restrictions as to disposition and use, except normal restrictions in effect."
If I understand the case you are putting, you are assuming something other than a free market price.
Mr. SIMPSON. I am willing to assume a free market price, but a price at which they will sell to anybody in the world that will buy it, which is a price a great deal less than they are selling to their citizens. I realize the antidumping provisions could be brought in.
Mr. ROSE. Yes.
Mr. SIMPSON. But as far as this bill is concerned, our duties would be levied on that price, no matter what it is or how low it is.
Mr. ROSE. No, the antidumping provision has its own definition of what price is applicable, which would not be affected by this bill.
Mr. SIMPSON. Without respect to the antidumping provisions, if any country had a price for export, regardless of how much less it was than the domestic price, your administration levying the duty would apply to whatever price they said was for export.
Mr. ROSE. The amount of the antidumping duty is the difference between the price at which it is actually sold for export and fair market value as determined under the Anti-Dumping Act.
Mr. SIMPSON. You do not recognize that administratively. There has to be a request for relief there, does there not?
Mr. ROSE. The Secretary of the Treasury can make investigations on his own or he makes them on request of an interested party.
Mr. SIMPSON. But he is not required to do it under this bill with respect to every item unless he has reason to believe that some harm is being done, is that not right?
Mr. ROSE. This bill does not affect the antidumping provisions of the law.
Mr. SIMPSON. Then I hope I make my point clear. For example, the export value could be ridiculously low with respect to what the domestic price for that article was, if they wanted to do it, and our duty would be levied against that low price.
Mr. ROSE. May I put it this way. If you were assuming a fictitious price, in other words, a price that is not a normal commercial priceMr. SIMPSON. I am assuming that, and it is available to everybody in the world, and it is their export price.
Mr. Rose. It is their export price. I have difficulty imagining a case where the antidumping provision would not be available under those circumstances.
Mr. SIMPSON. I am willing to agree with you on that. I wonder whether our duty would be levied against that ridiculously low price, and thereafter by way of relief you might say it was wrong, and then use the antidumping thereafter, but not at that time. You would not have time to do it?
Mr. ROSE. Actually the way in which that works-and these gentlemen here can correct me if I am wrong-when suspicion of dumping arises in the mind of the appraising officer at a port, he does not appraise the merchandise that is coming in, so that the amount of duty is not finally determined until the question whether there is dumping or not has been determined.
The usual effect of that, because of the uncertainty of it, is to prevent any further importation until that determination has been made.
Mr. SIMPSON. Are you telling me, then, that there is a limitation under existing law and within this bill and the export price is not the final determination as to whether those goods come into the country?
Mr. ROSE. If the case is one of dumping, yes, that is correct. May I continue with that point a little bit further?
Mr. SIMPSON. Surely.
Mr. ROSE. I think your assumption has been that there was something fictitious in the lower export price in a foreign country. Mr. SIMPSON. It could be.
Mr. ROSE. I would like to point out the kinds of circumstance in which there may be a lower export price and a higher domestic wholesale price. That frequently happens when the export is from a small country where the domestic market for purchases in the domestic market are typically in small quantities, whereas sales for export are in typically larger quantities; where under normal commercial procedures you would expect some price differentials. As things now are, the goods from a small country whose domestic market is small, and the price higher, those goods have to come to us at a higher duty than identical goods from a larger country that is exporting to us. That is one of the anomalies that results from the present law.
Mr. SIMPSON. Of course, one of the other circumstances is where they are deliberately endeavoring to take the market here, and cut the prices to do that, knowing that the duty would be applicable at that cut price.
Mr. ROSE. Yes.
Mr. SIMPSON. I think I understand that this liberalizes the possibility of imports at a price which is not realistic when compared with the domestic price for that article.
Mr. ROSE. Subject to safeguards.
Mr. SIMPSON. Subject to antidumping relief.
Mr. ROSE. And countervailing duty relief if there is any subsidy in the foreign price.
Mr. SIMPSON. Thank you very much.
Mr. ROSE. I would like to emphasize before we leave that point the technical argument from the standpoint of the administration of the customs service for this elimination of foreign value. Over one-third of the 120,000, unfortunately, invoices that we have that are over 90 days old, are held up on account of the necessity of foreign investigation, of which the considerable bulk is the determination of the foreign wholesale price, if we may call it that. That investigation is quite a difficult and burdensome thing. From the standpoint of the technical administration of customs the elimination of it would be of considerable value.
Mr. JENKINS. Mr. Forand will inquire.
Mr. FORAND. I am not quite clear on the statement you made, Mr. Secretary, relative to the other departments submitting statements. Am I to understand that each department is speaking for itself, but rather than each making a personal presentation here, you are just having their statements introduced in the record?
Mr. ROSE. Yes, sir. The provisions which are in the Jenkins bill were cleared by the Bureau of the Budget with all interested departments. But in view of the fact that the change in the date of the hearings shortened the period of the hearings to 3 days, as I understand it, and in view of the fact that the committee had been over the bill which was very closely similar to this at the last Congress, we felt that
more value would be obtained by leaving more time for private. witnesses to appear.
Consequently, I am the only Government witness, and the other principally interested departments are simply submitting statements in support.
Mr. FORAND. Then, am I to understand that you are speaking for the administration and the other departments are supporting you? Mr. ROSE. Yes, sir.
Mr. FORAND. This is the administration viewpoint you are presenting?
Mr. ROSE. Yes, sir.
Mr. FORAND. Thank you very much.
That is all, Mr. Chairman.
Mr. KEAN. Mr. Rose, as I understand it, somebody going into the mail-order business abroad, under this bill, could do it with things that he is selling for less than $3 without paying any customs duty. Somebody in Mexico could go into the mail-order business and do that.
Mr. ROSE. $3 is the upper limit of unaccompanied imports which this bill would permit. There is a provision in it which permits the Secretary of the Treasury to reduce that amount to protect the revenue. Our concept of this is not that $3 is going to be allowed as a blanket exemption in all cases. For instance, a case we have currently in mind that we would wish to restrict by regulation immediately would be imports of alcohol or tobacco. The need for the provision in those cases is to prevent a nuisance examination of people coming across the border, but we would not permit any mail-order importation of alcohol and tobacco under this section.
Similarly, I think we contemplate the $3 exemption as one for the purpose of taking care of the sporadic spot transaction, rather than one under which we would look forward to having a mail-order business founded based on that $3 exemption. We would want to explore the possibility, if any developments of that kind occurred with large commercial aspects to them, of preventing that kind of thing by regulation. That is the purpose of not making it a flat exemption, but providing for regulatory authority below the $3 limit in the Secretary of the Treasury.
Mr. KEAN. The Secretary could make the limitations in any specific case.
Mr. ROSE. Or class of cases.
Mr. KEAN. The classification of a certain type of goods.
Mr. KEAN. The conversion of currency section, at present as I remember, the Federal Reserve Bank publishes a list daily of what they consider the going rate for the majority of business transactions. Is that the wording? My memory goes back 3 or 4 years on that.
Mr. ROSE. Actually I think they certify to customs and customs publishes the rates actually in commercial export use by a particular country. In other words, if it is one rate, they certify that. If it is a series of multiple rates, they certify each one of them.
Mr. KEAN. Who fixed what rates shall be used? If they publish multiple rates
Mr. ROSE. The customs does that under the Barr case, as I understand it, based on the rate applicable to the particular type of merchandise or the particular transaction.
Mr. KEAN. The rate applicable to this particular merchandise, not to the rate at which most transactions are going?
Mr. ROSE. That is my understanding. It is a combination. It is most of the transactions in that particular kind of goods.
Mr. KEAN. I want to study this a little more.
Mr. JENKINS. Mr. Eberharter will inquire.
Mr. EBERHARTER. In the proposals in the present Jenkins bill before the committee now, are there any radical departures from what we passed in the House about three years ago?
Mr. ROSE. I should not say that there are any radical departures. Before you came in, I introduced into the record a statement which we had prepared of the differences. They do represent what we regard as improvements based on the testimony that was given before. There are some new sections. For instance, the accounting section is a new section in the customs simplification bill which we regard as of substantial importance to eliminate the assignment and requirement of specific functions of the collector, comptroller and surveyor of customs, in such detail that they rigidify the accounting and record keeping, and in effect preclude the adoption of what we regard as a modern system of audit.
Mr. EBERHARTER. As I remember a few years ago, there were many, many suggestions presented by importers which the committee did not adopt. If my memory is correct, we passed a bill about which there was not much controversy, with the idea in mind that later on we would go into the controversial subjects more deeply and straighten them out. Would you say generally that is what you are proposing to do?
Mr. ROSE. I think there is very little controversy as to most of the provisions of this bill. As Mr. Jenkins pointed out, I have heard arguments that the proposal regarding the value section was not entirely satisfactory all around. As I said, I will be very much interested to review what testimony is offered here from that standpoint. We think that substantial improvements in the present value provision are necessary. We think this is a good provision, but we are not disposed to be hard minded about the specific method. We think it is an improvement.
Mr. EBERHARTER. Then if we passed the measure substantially as you propose now, the only matter that might be controversial is that value thing, and there would be great differences of opinion, I assume, among the trade itself?
Mr. ROSE. Of course, it is a fairly large order for me to say what is or is not controversial in this bill. I can only state the provisions with respect to which I have heard questions raised. The value provision is one. The only other one that I have heard of is the point. that Mr. Kean adverted to, the possible effect of the three dollar exemption for imports by mail.
Mr. EBERHARTER. When we started on this subject before, the committee found so many complex questions that we passed a bill without resolving the complex questions and considered it more as temporary relief of the more onerous and outdated provisions of the customs statute as it existed at that time. Your proposal is practically the same as that this time, is it not?
Mr. ROSE. It is with some improvements and additions which we think help.