Mr. EVANS. Third, in the event of supply problems, the United States maintains a strategic stockpile from which reserves could be drawn.

Mr. EVANS. New stockpile objectives include an enlargement to some 3.5 million tons-a potential supply of over 2 years.

For the reasons set forth above, the domestic steel industry and other companies listed in this statement strongly recommend the suspension of the import duties on fluorspar as authorized in H.R. 5265. Accordingly, we urge the enactment of this proposed legislation. Thank you, Mr. Chairman, for this opportunity to present our industry position on current fluorspar duties.

Mr. VANIK. Thank you very much.

Mr. Steiger?

Mr. STEIGER. No questions.

The administration does not object to the bill being enacted; I see no problem.

Mr. VANIK. I am delighted the American Steel Institute is favoring this free-trade gesture.

I think this is a monumental step forward. I am glad that the fluorspar problem will really make it competitive.

We very much appreciate your testimony. Thank you very much. We have two companies that filed protests that I might as well tell you about.

One is U.S. Borax. I might quickly run through this to see what they say. They are producers. They wonder whether it is really of such economic importance to your industry that you are willing to continue to be dependent upon foreign supplies.

They thought they would derive greater economic development by helping Armco Steel, Pennwalt, Frontier Resources, NL Industries, U.S. Borax, Allied Chemical, and DuPont develop their products and provide domestic competition to foreign producers.

They are concerned about the fluorspar importation form the Republic of South Africa, which increased 400 percent in 1973.

They say, "It seems inconsistent for Congressmen who supported the ban on importation of Rhodesian chrome to support a bill which will encourage future importation of fluorspar in South Africa."

Mr. EVANS. In our testimony that we submitted to you, there is a table which indicates the percentage of material being imported from various countries.

South Africa has indeed increased. In 1976 they represented 13 percent of the total.

However, Mexico continued to maintain the highest percentage,

60.8.

The other countries in the world, Spain, Italy

Mr. VANIK. Is it true that domestic production diminishes each year as a result of increased costs of competition from low-cost foreign sources. Is that true ?

Mr. EVANS. The low-cost foreign sources are priced as a result even slightly higher than the domestic prices.

There is not a price war that is undercutting the domestic price structure.

Mr. VANIK. They also say the Mexican Government may be increasing the export tax on fluorspar.

That would make the domestic market more competitive.

Mr. EVANS. That would make the domestic more competitive.
Mr. VANIK. Thank you very much.

We will take these under consideration and we appreciate your testimony.

We will now move to the next bill, H.R. 5231, Mr. Breckinridge on chlorendic acid, James H. Davis, group vice president, Ashland Chemical Co.

Mr. Davis, we would be pleased to hear from you.

STATEMENT OF JAMES H. DAVIS, GROUP VICE PRESIDENT, ASHLAND CHEMICAL CO., ACCOMPANIED BY CHARLES SAUNDERS

Mr. Davis. Mr. Chairman, Chuck Saunders is accompanying me and sitting at the table also.

We filed a statement with your committee yesterday. I request permission to file, in addition to that statement, another one after this hearing.

Mr. VANIK. Yes; you may proceed.

Any statements will be admitted as submitted.

Mr. DAVIS. My name is James H. Davis, group vice president, Ashland Chemical Co., a division of Ashland Oil, Inc.

I am here today to urge favorable consideration of H.R. 5231, a bill to provide for the duty-free entry of chlorendic acid.

Chlorendic acid is a critical chemical used in certain unique flame retardant and corrosion resistant unsaturated polyester plastics for nontextile uses.

Chlorendic acid type polyesters are used in various military applications such as lifeboats, river patrol boats, and radomes.

They are also used in the construction of air and water pollution control equipment, containers of nuclear waste, aircraft components, electrical laminates, and rapid transit vehicles.

These chlorendic based polyesters are part of the products manufactured in three U.S. plants in Newark, N.J.; Valley Park, Mo., and Los Angeles, Calif.

These plants employ approximately 250 people and are a part of the materials of construction used by over 200 equipment and component fabricators employing several thousand people.

Last year Ashland acquired the flame retardant polyester technology of Hooker Chemical who was producing the product at Niagara Falls, N.Y. At that time the feedstock chlorendic acid required by the license was being produced domestically only by Hooker. Subsequently last year Hooker elected to drop this chlorendic acid production leaving no domestic source for this feedstock. Since that time

Ashland has been importing chlorendic acid from a plant in Belgium, the only remaining source of chlorendic acid in the world.

According to our most recent projections, Ashland will need to import approximately 350,000 pounds per month of chlorendic acid, which would result in approximately $500,000 per year in tariff income, based on the current duty. However, there were no imports of chlorendic acid, and hence no tariff income, until a few months ago. Ashland Chemical manufactures the final product pursuant to licensing from Hooker. The Hooker technology requires chlorendic acid as a feedstock. Thus, there are no substitutes for chlorendic acid due to the technology limitation. There are several flame retardant and corrosion resistant products produced in the United States, but this chlorendic acid based product is unique in that it has an ideal combination of both flame retardant and corrosion resistant properties not found in other products.

For example, attached to your copy of the statement are two brochures which list several hundred environments for which our products are tested and proven, thereby providing and demonstrating its unique flexibility.

If relief is not granted by the approval of this bill, our technology becomes worthless, resulting in our going out of the market costing both domestic sales and domestic jobs.

In addition, the consumer would be deprived of an effective product from a domestic source. Passage of the proposed bill will continue the presence of a unique proven product in the marketplace and, in addition, will continue the utilization of domestic facilities and the continuance of domestic employment.

I would be pleased to answer any questions.

[The prepared statement and attachments follow:]

STATEMENT OF JAMES H. DAVIS, GROUP VICE PRESIDENT, ASHLAND CHEMICAL Co., A DIVISION OF ASHLAND OIL, INC.

My name is James H. Davis, group vice president, Ashland Chemical Co., a division of Ashland Oil, Inc. I am here today to urge favorable consideration of H.R. 5231, a bill to provide for the duty-free entry of chlorendic acid. Chlorendic acid is a critical chemical used in certain unique flame retardant and corrosion resistant unsaturated polyester plastics for nontextile uses. Chlorendic acid type polyesters are used in various military applications such as life boats, river patrol boats and radomes. They are also used in the construction of air and water pollution control equipment, containers for nuclear waste, aircraft components, electrical laminates, and rapid transit vehicles. These chlorendic based polyesters are part of the products manufactured in three U.S. plants (Newark, N.J.; Valley Park, Mo.; and Los Angeles, Calif.), which employ approximately 250 people and are part of the materials used by over 200 equipment and component fabricators employing several thousand people.

The extensive testing and application history of the chlorendic acid based polyesters, as evidenced in the attached exhibits,1 makes the substitution of alternative products expensive and, in some cases, impractical. Most of these polyesters have extensive performance history which provides needed information for the design and specification of materials of construction for chemical resistant applications, such as air and water pollution control equipment, pipes and tanks. Alternative materials of construction to chlorendic acid polyesters would include more expensive materials such as special metals. Other formulations have undergone extensive Underwriter Laboratories approval for the use in electrical com

1 (1) Guide to corrosion resistance of hetron and aropol polyester and furan resin laminates, and (2) corrosion resistant and fire retardant polyester resins.

ponents. Consequently, a modification of the formulations would require expensive reapprovals. Certain of these polyesters have been formulated to meet government specification and have been in use for 15 years.

The supply situation of chlorendic acid has been in a state of flux since the shutdown of the only domestic producing plant in 1976. The only current worldwide production of chlorendic acid is by Hooker Chemical in Genk, Belgium. Although Chlorendic acid is manufactured abroad, its primary raw material (75 percent by weight) is hexachlorocyclopentadiene, manufactured in this country by Velsicol Chemical and, until recently, Hooker Chemical. According to our most recent projections, Ashland will need to import approximately 350,000 pounds per month of chlorendic acid, which would result in approximately $500,000 per year in tariff income, based on the current duty. However, until late 1976 there were no imports and, thus, no tariff revenues. Without the relief offered by the bill, it will be necessary to price these products at uneconomic levels, thereby causing a significant deline in the amount of chlorendic acid imported and resulting in (1) less tariff revenue, (2) loss of jobs, and (3) loss of sales.

Passage of the proposed bill will continue the presence of a proven product in the marketplace. The beneficiaries of this legislation will be a wide range of customers of reinforced plastics which utilize fire retardant and corrosion resistant polyesters.