Point No. 2, in section 17 (a), we urge that the payment of increased regular duties deriving from increased appraised values be made a condition precedent to an appeal to reappraisement.

Thus, an importer should be required to place on file the additional duties that may be due by reason of an increased value, so that all parties will be protected at a later date, and a liability will not accrue many years in the future at a time when the importer may well have gone out of business.

Point No. 3, in section 17 (b), we take the position that the proposed cure is even worse than the existing difficulty. The law as it is now worded, section 489, works a tremendous hardship on importers, and we heartily endorse its elimination. At the same time, we feel that the proposed revision is even worse. It is unnecessary; it is quite vicious, and it creates fraud temptation. In addition, it should have a ceiling, as the present law does.

To illustrate: It is impossible from a practical standpoint for a large importer of a great variety of items who imports merchandise through many United States ports to supply the appraiser at each and every port with all of his foreign correspondence bearing upon price negotiations and price changes. Particularly is this true in large department stores where buyers do not even disclose to their import department all of the correspondence, particularly on items that they do not purchase. Now, if those department stores have to furnish the appraisers at every port where they make entries with all of this correspondence, it is just impossible. Now, carrying that one step further, the proposed law says that if an importer does not make available all of that correspondence to each appraiser there will be penalties automatically. As a result, this section seems to be a dangerous temptation to appraisers who can be persuaded to shut their eyes to this pernicious and unnecessary law.

Moreover, a penalty already exists under the present law, under section 592, which is not involved in this bill, H. R. 5505.

This section 592 provides penalties for the willful failure to produce information. Thus, the proposed section 17 (b) will merely make another penalty for an act already covered by an existing penalty, or two separate penalties for the same wrong.

Point No. 4, in section 17 (c), we urge that you delete the requirement that an importer set forth a "substantial reason" for requesting a notice of appraisement.

Point No. 5, we also urge, as did the previous witness, that a time limit of 120 days or some specific limitation be placed upon the appraiser in making his appraisement under section 500 (a) of the Tariff Act.

Now, I believe one of the most feasible methods of doing this would be to have the law worded, as one of the witnesses who has not yet appeared before you is proposing, so that where the appraiser does not make his return within 120 days the importer can go to court and obtain a show-cause order as to why the appraiser does not make his return. In other words, if the appraiser has a good reason, it will appear in court, and if the importer knows of the good reason he will

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not bring action. There should be some authorized procedure under which an importer can compel an appraiser to act, especially where there has been an arbitrary delay, nd unfortuntely those delays sometimes occur and create great difficulties.

The last point No. 6, in section 20 relating to the conversion of currency, we feel that the proposed section in satisfactory insofar as it goes, but that there should be an additional provision, as contained in the present law, under which the daily buying rates will be used where ever the daily buying rates vary by more than 5 percent from the values, the par values, as determined by the International Monetary Fund.

In other words, one should ordinarily use the rates of conversion as determined by the International Monetary Fund unless those rates do not effectively reflect commercial transactions, and that occurs when the daily buying rates are different by more than 5 percent. We feel that with that limitation, which is being argued by another witness before you, that section 20 would be quite satisfactory.

Now, I have distributed to you this second mimeographed sheet, entitled "Suggested Revisions to Section 13."

Senator KERR. That already has been placed in the record Mr. Tompkins.

Mr. TOMPKINS. Thank you. I would like to point out just three items that I feel are of particular importance there.

On my third footnote, it frequently happens that there are numerous values for an article. The price may be a dollar to some people, a dollar ten to other people, and a dollar twenty-five to still others, and yet they are all wholesale transactions falling within the wording of the statute any one of which coud be used as a basis for a dutiable value.

Now, we believe that you should authorize the appraiser to accept the sales price that is usually used, and not leave it to his discretion to accept any wholesale price he wants to. The thing should be more closely defined so that the appraiser would accept the "usual" price.

In point No. 11 of my footnotes-and this, I believe, is the most important defect that is envisaged in the present law-under the definition for "freely sold or offered for sale" the proposed statute requires that the price to "all purchasers" be considered. Now, the courts have interpreted that wording to mean that if the exporters do not offer the merchandise to everybody but confine their sales to certain buyers only, that you cannot consider the prices to such selected buyers. By using the same language "all purchasers" this hardship will be continued. To illustrate: The law as now interpreted prevents dutiable values being used where the merchandise is offered only to wholesalers. Under the present law, where the exporter sells merchandise only to wholesalers, you cannot use the prices to such wholesalers because the courts say he does not offer that merchandise to all purchasers; he does not offer them to retailers or to consumers. The present law is impractical, and this proposal as now made will carry on that great hardship.

In this same respect, I think that the only limitation upon the purchasers should be to exclude those who are not financially independent of the sellers. In other words, you should consider the prices to all purchaser-importers who are not subsidiaries of the exporters, or vice versa. Where there is a family relationship or what I call a financial

relationship, I concede that it would be bad to rely upon the prices involved; but where there is no tie-in between the exporter and the importer, the customs official should be permitted to use the prices involved in such sales.

Senator KERR. You mean where there is freedom of bargaining position between the two-

Mr. TOMPKINS. Exactly.

Senator KERR (continuing). That the price used should be that generally available, I believe you say here, to those of a particular class who want to buy.

Mr. TOMPKINS. Exactly.

Now, the last point I want to bring up under valuation, is my footnote No. 12 on the question of similarity. I think my footnote covers it with appropriate illustrations, but I do feel that the definition of the term "similar merchandise" should be clarified so that some regard shall be given to similarity in quality of workmanship and in construction, otherwise you will have most unreasonable results.

I might further state that I have made some study of the dutiablevalue laws of the United States as well as of foreign governments, and I am very much in sympathy, on the whole, with the section 13. I think it will go a long way toward resolving many of the complications. These suggestions I have made are somewhat technical and relate primarily to omissions that should be put in there.

In conclusion, we urge the passage of H. R. 5505. It contains many extremely helpful measures to reduce unnecessary administrative barriers in customs fields.

At the same time, we also request that you carefully examine into and favorably act on the suggestions as contained in the mimeographed arguments that have been submitted to your committee.

Thank you.

Senator KERR. All right, Mr. Tompkins, we thank you for your appearance and your statement.

The statement by Mr. Tompkins, together with his suggested revisions referred to, is as follows:)

STATEMENT BY ALLERTON DEC. TOMPKINS, REPRESENTING THE COMMITTEE ON TRADE BARRIERS, UNITED STATES COUNCIL, INTERNATIONAL CHAMBER OF COMMERCE, NEW YORK, N. Y., IN CONNECTION WITH H. R. 5505

My name is Allerton deCormis Tompkins, 44 Whitehall Street, New York. I am an attorney specializing in customs law. Before this committee I represent the American segment of the International Chamber of Commerce, known as Committee on Trade Barriers of the United States Council, International Chamber of Commerce.

The United States council is the American affiliate of the International Chamber of Commerce, there being throughout the world 30 national affiliates of the International Chamber of Commerce which has its headquarters in Paris, France.

The International Chamber of Commerce was organized in 1919 following World War I. It is an international spokesman of businessmen on world economic affairs. In the International Chamber of Commerce manufacturers, bankers, industrialists, merchants, and traders pool their views and information and forge a common policy. Basically the International Chamber of Commerce's purpose is to be broadly representative and to secure effective and constant action in improving world economic conditions.

The United States council is a fact-finding group hoping to shed new light on vital questions in fields affecting international economic relations.

Our committees, composed of businessmen, economists, and experts from all walks of economic and business activities, deal with policy questions as well aswith technical problems.

By making this information available we hoped to serve the welfare of freepeople everywhere in the quest for security and well-being.

The International Chamber of Commerce is very much in favor of the pro-posed legislation, H. R. 5505, which, if enacted into law, will materially decrease some of the administrative barriers that have plagued the United States import trade since the Tariff Act of 1930 was enacted many years ago. This proposed legislation is, however, only a small step in the right direction, as there are many additional unnecessary administrative barriers that still remain on the statutebooks to harass needlessly international traders.

First, let me say with considerable emphasis that my committee enthusiastically welcomes and favors this bill, and we pray that your committee will act favorably thereon. At the same time we find that certain specific items now contained in this proposed legislation really demand clarification or slight revisions. Unless these specific items are clarified, it appears this bill may createnew trade barriers contrary to its avowed purpose.

It so happens that I have made a study of the dutiable value laws of this country, as well as those of other countries. I would like to take this opportunity of addressing myself primarily to certain technical defects that now exist in section 13 which can and should be corrected to facilitate its smooth operation. Before going into the technical points of the pending bill, my committee requests that you carefully study and act favorably upon the following six points of revision that have already been called to your attention by other witnesses who are appearing or who have already testified before you:

1. In section 17 (a) we urge that you do not deny to an importer the right to amend his entry prior to appraisement. An importer should be permitted to amend before the appraiser acts if he finds that his entry figures are erroneous. 2. Under this same section 17 (a) we urge that the payment of the increased regular duties deriving from increased appraised values, be made a condition precedent to an appeal to reappraisement; thus placing the same safeguards on reappraisement action as are now enforced on protest action under section 515 of the tariff act. However, an importer should not be required to pay either penalties or section 489 additional duties as a prerequisite to a reappraisement appeal, or until there has been a final determination of the dutiable value.

3. In section 17 (b), we are convinced that the proposed cure is much worse than the existing disease. While we heartily endorse the elimination of section 489 as now contained in the Tariff Act of 1930, the proposed new successor is an abomination. A penalty already exists in section 592 of the tariff act for the willful failure to produce information required by customs officers. The proposed section 17 (b) not only would increase the dictatorial power of customs officials, but it would also make another penalty for an act already covered by an existing penalty; two separate penalties for the same wrong.

4. In section 17 (c), we urge that you delete the requirement that an importer must set forth a "substantial reason" for requesting a notice of appraisement.. Customs officers should not be made judges of whether or not a request meets with their thoughts of a substantial reason.

5. We also urge that a time limit of 120 days be placed upon the appraiser in making his appraisement under section 500 (a) of the tariff act. Wherever an appraisement is not completed within 120 days an importer should have the right to bring legal action in the United States Customs Court against the appraiser to show cause why the entered values should not be accepted. The present unnecessary and unwarranted appraisement delays of innumerable years cause extreme hardships to foreign traders.

6. In section 20, we urge that this section be modified so as to avoid the necessity of using par values of the International Monetary Fund in any instancewhere such par values differ to a marked degree from the commercial buying rates. Thus, such a par value by International Monetary Fund should be used except where such a par value varies by more than 5 percent from the daily buying rate as determined by the Federal Reserve Bank of New York. Where the variance is more than 5 percent, then the daily rate of the Federal Reserve bank should be used.

Now in addition to the foregoing six points of revision I would like to call your attention to a number of technical suggestions in section 13, the dutiable-value provisions. Many of the following suggestions appear to be inadvertent oversights, but I feel that they are extremely important and should not be overlooked;

-otherwise, unnecessary hardships are bound to arise. To clarify my suggestions, I have prepared and distributed to you a mimeographed statement which is self-explanatory.

In conclusion, I repeat that we urge the passage of H. R. 5505, as it contains many extremely helpful measures to reduce unnecessary customs administrative barriers. At the same time we respectfully request that you carefully examine into and act favorably upon all of the foregoing suggested corrections or revisions.

SUGGESTED REVISIONS TO SECTION 13 (SEC. 402 OF TARIFF ACT) H. R. 5505 (By Allerton deC. Tompkins)

(a) BASIS.-Except as otherwise specifically provided for, the value of imported merchandise for the purposes of this Act shall be

(1) the export value;

(2) if the export value cannot be ascertained satisfactorily, then the United States value;

(3) if neither the export value nor the United States value can be ascertained satisfactorily, then the comparative value;

(4) if neither the export value, the United States value, nor the comparative value can be ascertained satisfactorily, then the constructed value;

or

(5) in the case of an article with respect to which there is in effect under section 336 a rate of duty based upon the American selling price of a domestic article, then the American selling price of such domestic article. Wherever the appraised value differs from the entered value, the appraiser shall specify the basis of value used by him.1

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(b) EXPORT VALUE. The export value of imported merchandise shall be [the market value or] 2 the usual price, at the time of exportation of the United States of the merchandise undergoing appraisement, at which such or similar merchandise is freely sold or offered for sale in the principal markets of the country of exportation, in the usual wholesale quantities and in the ordinary course of trade, for exportation to the United States, plus, when not included in such price, the cost of all containers and coverings of whatever nature and all other charges and expenses incidental to placing the merchandise in condition, packed ready for shipment to the United States.

(c) UNITED STATES VALUE.-The United States value of imported merchandise shall be the usual price, at the time of exportation to the United States of the merchandise undergoing appraisement; at which such or similar imported* merchandise is freely sold or offered for sale in the principal market of the United States for domestic consumption, packed ready for delivery, in the usual whole:sale quantities and in the ordinary course of trade, with allowances made for

(1) any commission paid or agreed to be paid on merchandise secured otherwise than by purchase; or, on merchandise secured by purchase or agreement to purchase, the addition for profit and general expenses usually made by sellers in such market on imported merchandise of the same class or kind as the merchandise undergoing appraisement;

(2) the usual costs of transportation and insurance and other usual charges and expenses from the place of shipment to the place of delivery,

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1 The customs courts have held that since Congress has not indicated that the appraiser should specify his valuation bases, he is under no obligation to inform the importer about this fact. This lack of information places a severe and unnecessary hardship upon an importer who tries to ascertain the accuracy of an advanced appraised value.

2 "The market value" is not similarly inserted in the definition of "United States value" (sec. 402 (c)). These words are unnecessary and add no additional points not already covered by the definition. If these words are left in the definition, then they should be similarly inserted in the definition of "United States value." Otherwise, an erroneous significance may be drawn by the courts from the difference between the two definitions. 3 It is rare indeed that merchandise is freely sold to every purchaser in usual wholesale quantities at the same price. Usually there is a sliding scale of discounts dependent upon various factors peculiar to each trade, thus permitting wide differences of opinion, and frequent conflicts, about the proper price to be used. This source of complaint and conflict can be avoided by the selection of the most equitable price, viz-the usual price.

4 The term "imported" is now contained in the definition of "United States value" in the Tariff Act of 1930. If this term is omitted, the courts may draw some erroneous significance therefrom. While under the definition of "such and similar merchandise" (sec. (h) (4) H. R. 5505) there is an implication that the merchandise must be imported, this important factor should not be left to inference and coniecture.

If the words "charges and expenses" are found necessary as an important factor in computing constructed value (sec. (e) (3) H. R. 5505), then, to avoid erroneous inferences, similar phraseology should be inserted in sec. (c) (2).