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Mr. VANIK. One of the things that concerns me is the consumer. I want to be sure we do not have sheltered markets for things that are made here by only one producer.
Mr. POUNDS. We determine that the price difference such as it is is probably not significant because of the low volume of the vitamin K required to be added to animal feed. It amounts to only about 2 grams per ton.
Mr. STEIGER. Is the domestic product interchangeable with this? Mr. POUNDS. Yes, it is, Mr. Steiger.
Mr. VANIK. Do you have any questions? The bill is introduced by Mr. Lent. Who are the principal sources of support for the legislation? Mr. POUNDS. This is favored by the importing firm, Heterochemical Corp.
Mr. VANIK. It is not favored by agricultural groups in the United States or interests involved?
Mr. POUNDS. No.
Mr. VANIK. Any further questions?
I think we should have a Treasury impact. I failed to get that on the preceding bill. What would be the Treasury impact on this bill, if you have it? If not, you can supply it.
Mr. POUNDS. I have that. It was supplied to us in "business confidence" and it was asked that we not issue the statement in a public hearing. We have provided it to the staff.
Mr. VANIK. The Treasury impact is not a matter of anybody's confidence. What we are losing or gaining in Treasury ought to be a matter of general information.
Mr. POUNDS. The item is in a basket category and the particular volume of imports could be computed from the revenue loss. We have supplied it to your committee.
Mr. VANIK. All right. That is sufficient.
Mr. ROSENGARDEN. Thank you, Mr. Chairman.
We estimate the revenue loss would be about $100,000.
Mr. VANIK. I would like to have you speak out. Was that $100,000? Mr. ROSENGARDEN. $100,000 loss of revenue. I might also indicate that there is a substituted product which is called MSB. It is produced by two U.S. producers, Abbot and Heterochemical Corp.
Mr. VANIK. Can we have the revenue impact of the preceding bill on hand tools?
Mr. POUNDS. Yes. We compute the revenue gain for these hand tools, if the bill should pass, would be $12,500,000 a year in duties collected. Mr. VANIK. Thank you.
If there are no further questions, we will move on to H.R. 706, introduced by Mr. White, which would extend from 8 to 24 months the period in which domesticated animals straying or sent across the contiguous boundary of Mexico or Canada for temporary pasturage and their offspring can be accorded duty-free status upon reentry into the United States.
This is an immigration bill, really, isn't it? What is the administration position on it?
Mr. POUNDS. The administration has sent a cleared letter to the committee. The administration does not favor enactment of this bill. We are unaware of any economic need for extending the current 8-month duty-free reentry period to 24 months as provided by the bill.
It is our understanding that this item was included in the tariff schedules of the United States to facilitate summer pasturage of domestic animals in territories adjacent to the United States. The current 8-month period appears to be sufficient for the purpose.
Mr. VANIK. What is the revenue impact?
Mr. POUNDS. There were no recorded imports last year so the revenue gain does not compute.
Mr. VANIK. That is significant.
Mr. ROSENGARDEN. Mr. Chairman, we do not have precise data on the potential loss of revenue but we anticipate it would be negligible. Mr. VANIK. Do you have any other comments on the bill?
Mr. ROSENGARDEN. No, sir.
Mr. VANIK. Very well.
Any further questions from members of the committee?
Mr. STEIGER. Have we heard from Mr. White at all on why he thinks the bill is a good idea?
Mr. VANIK. I have no communication from him. I imagine we will get that in the public statement portion.
Without objection, we will move to H.R. 1550, introduced by Mr. Wilson (of Texas), which permanently lowers the column 1 (MFN) rate of duty on ceramic insulators for spark plugs.
The stated purpose of the bill is to enable a U.S. manufacturer of spark plugs to compete with another spark plug producer which uses its own insulators in producing spark plugs.
What is the administration position on this bill?
Mr. POUNDS. The administration opposes enactment of this bill because there is sufficient United States domestic production of ceramic insulators used in spark plugs to meet domestic demands and there is no indication of a shortage which would make it advisable to lower the tariff to ease prices. Domestic insulator producers maintain that capacity exists to increase production and that they can supply any type of insulator required by spark plug manufacturers in this country. The Department does not have figures on the quantity and value of the domestic production of these insulators nor is import data available since ceramic insulators are classified within a broader TSUS category.
Mr. VANIK. Mr. Rosengarden?
Mr. ROSENGARDEN. Thank you. I think we can confirm the testimony. There are four known domestic producers of spark plug insulators but there is a substantial amount of what we call captive production, Mr. Chairman. The three largest producers of spark plug insulators are also the three largest producers of spark plugs. There is one further producer of spark plug insulators who does not produce spark plugs and sells his entire production to minor spark plug manufacturers.
Mr. STEIGER. Is there only one company that is in this situation?
Mr. POUNDS. There are a number of domestic manufacturers of spark plugs that make their own insulators.
Mr. VANIK. There is one that does not, though?
Mr. POUNDS. There is one that does not and there is at least one domestic manufacturer, actually, of insulators for spark plugs and it sells them to spark plug manufacturers that do not make their own insulators.
Mr. VANIK. Mr. Rosengarden, what about the Treasury impact? Mr. ROSENGARDEN. I am afraid we do not have data available to indicate the potential effects on revenue, Mr. Chairman.
Mr. POUNDS. Mr. Chairman, we have computed that the revenue effect for the whole basket category would be $308,000 per year on the basis of 1976 imports, but for the insulators alone, of course, the figure would be less than the gross figure.
Mr. VANIK. Are there any further questions from members of the committee?
H.R. 1856 AND H.R. 3674
If not, we will move to H.R. 1856 and H.R. 3674, introduced by Mr. Mathis, would provide for a duty on certain imports of palm oil presently admitted duty free. The domestic vegetable oils industry alleges that increased imports of palm oil have adversely affected their industry.
What is the administration's position on this bill?
Mr. POUNDS. The administration opposes the enactment of this bill. It would raise the duty 3 cents per pound for edible palm oil. While imported palm oil can be used as a substitute for domestically produced vegetable oils, the administration does not have evidence that increased protection from import competition for domestic producers of edible oils is necessary. Data necessary to determine whether the domestic industry is being injured or threatened with serious injury by increased imports would, the administration believes, require a thorough investigation of competitive conditions in the industry.
We are referring to the type of investigation that the U.S. International Trade Commission conducts under a petition under the Trade Act of 1974.
Mr. VANIK. Where is this palm oil generally produced? We produce some, do we not?
Mr. POUNDS. To my knowledge, we do not produce domestically any palm oil. It is imported from the Far East, largely. It is in competition with domestically produced edible oils derived from soybeans and
Mr. VANIK. I thought there was some production in the United States. What is the Treasury effect?
Mr. POUNDS. The revenue gain, should this pass, would be $23 million a year in duties collected.
Mr. VANIK. Mr. Rosengarden, I know the Tariff Commission, your commission has had a special study on this. There was one authorized. Mr. ROSENGARDEN. We show the potential gain in revenue based on 1975 data would be $28.6 million. However, the increase in the rate of duty might have the effect of reducing the amount of imports and thus reducing the total revenue collected.
Mr. VANIK. What is the country of source or the area of source? Mr. ROSENGARDEN. The major supplier is Malaysia. Other imports have come from the Philippines, Indonesia, Singapore, and some from West Africa.
Mr. VANIK. Do members of the committee have any questions?
Mr. HOLLAND. Mr. Chairman, I recall discussions last year about this palm oil import business.
Mr. VANIK. Wasn't there something that took place in the appropriations bill?
Mr. HOLLAND. That was in the foreign assistance appropriations, I think the big complaints from Mr. Mathis and many others of us was that the foreign palm tree plantation that produce this oil are subsidized in part by the U.S. Treasury through foreign assistance.
I would ask unanimous consent that we defer further consideration of this matter until Mr. Mathis can be present.
Mr. VANIK. Well, he will have that opportunity. At this point, we are simply hearing the administration witnesses. So, he will have an opportunity to be heard along with any other public witnesses when we take up that phase, immediately after we get through with the administration witnesses.
Mr. VANIK. I would assume that the committee goes along on the idea of going through the whole proceedings of getting the administration position on all of the bills and then go back to hear public witnesses.
We are going to hear from Mr. Mathis and some companies involved in the importation later.
If that is satisfactory, I would like to proceed on this basis, so we can go clear through the administration's positions on all of these bills.
If there is no objection, we will move to H.R. 1904, introduced by Representative Stark, which provides for duty-free treatment, in both column 1 and column 2, for intravenous fat emulsion.
Intravenous fat emulsion is essential for long-term intravenous feeding of infants and patients under cancer therapy or extensive burn treatment. There is currently no production of any intravenous fat emulsion in the United States.
What is the position of the administration?
Mr. POUNDS. The administration favors a three-year temporary duty suspension of the column 1 rate for importation of intravenous fat emulsions but opposes a permanent unilateral duty elimination for this product as currently provided by the bill. As a matter of policy, the administration prefers in the absence of overriding economic reasons to the contrary that any permanent elimination of duties be accomplished in the multilateral trade negotiations. We are not aware of any compelling economic justification for immediate unilateral removal of the duty. However, a 3-year temporary suspension of the column 1 duty would remove the burden of duty from imports of this product during a period in which no domestic production exists without discouraging the development of domestic manufacture. In this regard, we understand that production of one U.S. firm is in the de
velopmental stage and that the firm expects to have a domestic production and marketing capability within 3 years.
Mr. VANIK. Treasury effects?
Mr. POUNDS. I am sorry, sir.
Mr. VANIK. What would be the revenue effect?
Mr. POUNDS. The revenue loss would be $308,000 per year.
Mr. VANIK. Mr. Rosengarden?
Mr. ROSENGARDEN. Mr. Chairman, we estimate the revenue loss would be $126,000 per year based on the present level of imports. Mr. VANIK. Any further comment on it?
Mr. ROSENGARDEN. Our information is that while there is presently no production of this material in the United States, and there has not been production of it during the last 5 years, a spokesman from the only laboratory that we know of that may produce this indicated that passage of the bill would have no effect on their operations.
Mr. GIBBONS. What is the current duty on this?
Mr. ROSENGARDEN. The column 1 rate of duty is 5 percent, and the column 2 is 25 percent ad valorum. When imported in bulk form, the rate of duty would be 1.5 percent ad valorum in column 1, and 10 percent ad valorem, column 2, when advanced, and free in columns 1 and 2 when in crude form.
Mr. GIBBONS. From whom do we import this?
Mr. POUNDS. Sir, it is imported exclusively from Sweden.
Mr. ROSENGARDEN. We estimate the imports to be about $2.5 million.
Mr. VANIK. Any further questions? If not, we move to H.R. 2646, introduced by Mr. Roncalio, which would permit the duty-free entry of binder twine and baler twine. It is alleged that duty-free entry will make this twine available at a cheaper price to agricultural interests. Do you have the administration position on that?
Mr. POUNDS. The administration is opposed to the passage of this bill. We point out that U.S. farmers currently have adequate supplies of agricultural twine available. The outlook is for continued adequate supplies and there is a considerable quantity of unused domestic capacity to produce manmade fiber twine which could be brought into production if demand so justified.
Price trends have reflected these supply positions and twine is available for the 1977 crop, we are advised, at prices over 60 percent less than those prevailing 18 months ago. The United States should not unilaterally eliminate duties which otherwise could be used to obtain reciprocal trade concessions, we feel. In this regard, the major suppliers are the European economic community, Japan and Canada. Mr. VANIK. Treasury effects?
Mr. POUNDS. The revenue loss would be $85,000 a year.
Mr. VANIK. Mr. Rosengarden?
Mr. ROSENGARDEN. Yes. We estimate the revenue loss probably would not exceed $100,000 per year.
Mr. VANIK. Any other comment?
Mr. ROSENGARDEN. No, sir.