APPENDIX A

UNITED STATES VALUE

(1) On page 19, line 18, strike out the word "profit" and insert in lieu thereof the word "profits". In support of this proposed amendment it should be noted: (a) The definition of "United States value" in section 402 (e) of the Tariff Act of 1930, provides for an allowance for “profits”, i. e., not necessarily only one profit, when calculating that kind of value;

(b) The definition of "United States value" in section 13 of H. R. 5505 provides for an allowance for "any commission" [emphasis ours], i. e., one or more, when calculating that kind of value;

(c) By virtue of the definition of the term "purchasers at wholesale" on page 23 of H. R. 5505, the selling price, from which "United States value" as defined in section 13 of that bill is calculated, may be a price to retailers and, hence, will sometimes include two profits, i. e., an importer's profit and a wholesaler's profit.

(2) On page 19, lines 19, 20, and 21, strike out the words "imported merchandise of the same class or kind as the merchandise undergoing appraisement" and insert in lieu thereof the words "such or similar merchandise". In support of this suggested amendment it should be noted:

(a) In relation to the imported merchandise whose "United States value" is being calculated, the phrase "imported merchandise of the same class or kind" is much less specific than the phrase "such or similar merchandise". The former phrase merely signifies that both the merchandise which is being appraised aud the merchandise which may be considered in connection with the allowance for profit and general expenses must be imported and that they must have common characteristics which distinguish them from other species or varieties of merchandise. It does not signify that the merchandise which may be so considered must resemble the merchandise which is being appraised in respect of size, weight, quality, etc., or even in respect of value. For example, any automobile imported from any foreign country is merchandise of the same class or kind as a Rolls Royce imported from England. On the other hand, the phrase "such or similar merchandise", as defined on pages 23 and 24 of H. R. 5505, signifies merchandise which is "produced in the same country as the merchandise undergoing appraisement" and which is, at least, "of like materials" and "used for the same purpose" and "of approximately equal commercial value";

(b) The selling price, from which the "United States value" of imported merchandise is calculated under the terms of section 13 of H. R. 5505, must be a price of "such or similar merchandise". Hence, it is unnecessary and unreasonable to consider merchandise which is neither like nor similar to the merchandise undergoing appraisement but which is merely of the same class or kind, when determining the allowance for profit and general expenses involved in such an appraisement;

(c) The phrase "imported merchandise of the same class or kind" is too vague and indefinite a delineation of merchandise when may be so considered in such an appraisement and will undoubtedly be the subject of various interpretations and will result in much needless litigation.

APPENDIX B

CONSTRUCTED VALUE

On page 21, lines 7 through 13, strike out the words:

"(2) an addition for general expenses and profit equal to that which producers in the country of production whose products are exported to the United States usually add in sales, in the usual wholesale quantities and in the ordinary course of trade, of merchandise of the same general class or kind as the merchandise undergoing appraisement;"

and insert, in lieu thereof, the words:

"(2) an addition for general expenses and profit equal, in percentage to that which is usually added in sales in the country of production, in the usual wholesale quantities and in the ordinary course of trade, of such or similar merchandise, or, if there are no such sales of such or similar merchandise, of merchandise of the same class or kind which most resembles the merchandise undergoing appraisement;"

APPENDIX C

COMPARATIVE VALUE

(1) On page 20, line 15, we recommend that between the words "equivalent" and "of" be inserted "at the time of exportation to the United States."

(2) On page 20, line 18, from the word "which" to the end of the subsection, line 22, there be inserted in place of the present language the following: "which is comparable with and most resembles the merchandise undergoing appraisement in construction and use, with appropriate adjustments in value for differences in size, weight, material, construction, quality, texture, use, and other differences."

The intent of this suggestion is to bring the articles to be compared within as close relationship to each other as possible.

APPENDIX D

DEFINITIONS

(1) On page 22, line 18, strike out the word "all."

(2) On page 22, line 20, before the word "purchaser", insert the words "seller or".

(3) On page 22, line 21, after the word "law," insert "or (B) reasonably limit the number or classes of purchasers".

(4) On page 22, lines 21 and 23, strike out "(B)" and "(C)" and insert, in lieu thereof, "(C)" and "(D)", respectively.

(5) On page 24, line 6, after the word "appraisement", strike out the comma and insert, in lieu thereof, the word "and".

(6) On page 24, line 7, after the word "person", insert the words "and is" and, after the word "materials", insert the words "and construction".

The association makes the reservation that other changes in language in this section may be advisable, but those recommended are considered of greater significance.

Senator KERR. Mr. Tyre? Have a seat, Mr. Tyre.

STATEMENT OF A. C. TYRE, IMPORTERS ASSOCIATION, INC.

Mr. TYRE. My name is A. C. Tyre, and I represent the Importers Association, Inc., of Chicago.

The importers association is an organization composed of approximately 275 firms and individuals engaged in the importing industry. The Customs Simplification Act has been the subject of frequent discussions at meetings and committee meetings of this association for the past 3 years, and the association is hopeful that the bill, having reached the present stage, will be passed on favorably in the near future.

The organization is generally in favor of the bill as it has now been submitted, but there are certain defects in the bill which we feel should be corrected in the interests of customs simplification, and in the interests of importers, as well.

One of the principal objections which the importers association has raised is that of the elimination of the provision for amendment of entries.

The previous witnesses have covered the matter quite fully, and I do not think that I can add anything except that Mr. Bennett, in giving an explanation, might have amplified it a little bit.

For instance, if an importer files an entry on a declared value of $1,000, pays a regular duty of 25 percent, his duty would be $250.

98600-52---7

If, after receiving information that the correct value should have been $1,100, by the privilege of amending the entry he would pay the additional duty of 25 percent on $100, or a total of $275.

On the other hand, if the customs appraising officer should decide that the importer was culpably negligent or fraudulent in withholding the information relative to that increase of $100 in value, the duties would be assessed on the total value of $1,100 at 35 percent, or a total of $350 as against $275.

Senator KERR. Would that be $350 or $385?

Mr. TYRE. $385; I stand corrected.

Senator KERR. Well, I thought that is what it would be if I understood what you were talking about.

Mr. TYRE. That is correct.

The importer's only recourse in such a case would be to resort to a petition to the United States Customs Court, which we think is costly not only to the Government but to the importer, and for amounts involving differences such as I have illustrated, the amount is too small to resort to legal procedure, and, as a result, the importer simply pays the amount and forgets about it.

We think that the law can be amended as it stands at the present time with very little change.

Senator KERR. You mean the law, or the bill?

Mr. TYRE. The bill. It can be amended in that section by giving the importer the privilege to amend.

One thing that should be brought to the attention of your committee is that the present tariff law provides that there is a presumption of correctness on the part of an act of a customs officer, and the Government therefore is fully protected, and has a rather powerful weapon,. and the appraisers or the examiners do not need this additional protection as set up in section 489.

One other observation I would like to make is that under temporary free importations where, section 308 of the Tariff Act, salesmen arrive in the United States with samples, frequently the samples are not marked to comply with the requirements of the tariff law.

I would like to have inserted for the consideration of the committee a provision eliminating the requirements for the marking of merchandise which is entered as samples for temporary entry. The law has penalties for evasion of the marking provisions of the law, which I think are ample to protect the Government if the salesman should attempt to dispose of the merchandise without proper marking.

The law also has a provision for change in determining currency values, which is a considerable variation from the past practice, and provides for the publication of the rates as determined by the Federal Reserve, but subject to the decision of the Treasury Department as to whether or not they will be published.

The withholding of publication of the Federal Reserve exchange rates has caused some consternation on the part of importers in the past, and if the Treasury Department is given the right to determine the exchange rates, we believe that some provision should be included' making the publication of the rates mandatory and at a reasonable time after the rates are made available to them by the Federal Reserve bank.

I do not want to appear facetious, but I have seen posters on the bulletin boards of various Treasury Department offices which pro

claim in bold type, "Procrastination is the thief of time," and the statement of Mr. Bennett, the former witness, asking that a time limit be placed in the bill, limiting appraisements to 120 days is reasonable and should be included in the bill.

The failure of customs officers to promptly appraise merchandise is a constant source of irritation to importers. It is expensive to the Government by reason of the fact that it allows files to accumulate year after year without action, and it is merely human nature when an individual is confronted with a difficult problem to set it aside if he does not have a time limitation placed on him to perform an act, and I believe that the importers are entitled to that consideration.

I would like to file a written statement if the chairman agrees, to be filed within the next day or two.

Senator KERR. It may be filed, Mr. Tyre. Thank you, sir.
Mr. TYRE. Thank you.

(The statement referred to is as follows:)

STATEMENT OF A. C. TYRE ON BEHALF OF IMPORTERS ASSOCIATION, INC., CHICAGO, ILL., RE CUSTOMS SIMPLIFICATION BILL (H. R. 5505)

Section 5. American goods returned: These amendments to the tariff act should be adopted. At the present time an importer is required frequently to resort to lengthy correspondence and digging up of old records to establish the fact that the merchandise has been exported from the United States, when the examination by customs officers can, in most cases, establish such fact without the production of documentary proof.

Section 13. Value: The Importers Association, Inc., is in agreement with the removal of "foreign value" as a basis for assessment of ad valorem duties. Under section 402 (b) Export value the bill reads "freely offered for sale in the principal markets." Under section 402 (c) the bill reads "freely offered for sale in the principal market." It would seem that there would more likely be more than one principal market in the United States than abroad, and the wording of that section should be reviewed. Under section 402 (g) Definitions, paragraph (1) in one place refers to "all purchasers at wholesale" and in another to "usual purchasers at wholesale." The wording should be uniform since it would seem that the two terms would embrace a different class of purchasers and would cause confusion in the administration of the law. Paragraph (3) of the same section defines "purchasers at wholesale," therefore it would seem that the words "all" and "usual" could be eliminated from paragraph (1).

Section 313 (c). Draw-back-"Merchandise not conforming to samples or specification": The 30-day limitation in the present law is often difficult for an importer to comply with, and the provisions of the bill extending the time to 90 days should be adopted.

In report No. 1089, Eighty-second Congress, first session, the House of Representatives says on page 3, "Importers will no longer be uncertain what value will be assigned to their imports, and appraisements will be completed more promptly." It is sincerely hoped by the Importers Association, Inc., that the wording of the various provisions be carefully studied to eliminate as much as possible any uncertainty with respect to their meaning, and thereby enable both the Government and importers to receive the benefits of the many months of work in the passage of this legislation.

Senator KERR. Mr. Tipton.

STATEMENT OF STUART G. TIPTON, GENERAL COUNSEL, AIR

TRANSPORT ASSOCIATION OF AMERICA

Mr. TIPTON. My name is Stuart G. Tipton. I am general counsel of the Air Transport Association of America.

I represent the Air Transport Association of America which has as its members practically all of the certificated airlines of the United States, and all of the international airlines.

We welcome the opportunity of discussing this bill before the committee. It is an important bill for us. At the time the last administrative customs bill was passed through the Congress, airlines did not amount to much, and consequently there was no reason to give their particular problems any attention.

Since that time they have increased in their contribution to international trade and travel a great deal. As far as cargo is concerned it has gone up from 8,000 pounds of cargo in 1931 to 80,000,000 pounds of cargo in 1950.

Senator KERR. What percentage of increase is that?

Mr. TIPTON. It is 10,000 times. I cannot convert that into percentages, but it is 10,000 times.

Senator KERR. I cannot either, and I thought maybe you could. Mr. TIPTON. Passengers have increased from about 9,000 in 1931 to 580,000 in 1950; consequently, the airlines have a deep interest in simplifying the customs procedures because all we have to sell is speed. We charge approximately 10 times for moving cargo what surface carriers charge. In order to get people to pay that and to take advantage of that speed, we have to give them the speed, and customs procedures may well make the difference between selling a particular block of business and giving a shipper that service and not selling it at all.

We have three suggestions to make with respect to the legislation that is now before the committee. One deals with the consular invoices. As the committee knows, the consular invoice is a document describing the goods which is made out by the shipper abroad and certified by a United States consul. Section 16 of the bill would relieve the shippers of preparing such a document if the shipment is valued at less than $250. At the present time, the exemption applies to goods valued at less than $100. We certainly concur with the Treasury Department that something should be done to relieve shippers of the onerous requirements of securing consular invoices, but we think the document should be eliminated. That invoice is extremely complicated to prepare. It delays shipments substantially, is expensive, and is unnecessary.

To demonstrate how complicated it is, let me point out that although the form itself consists of two sides of one sheet, nevertheless the instructions for preparing the form require six pages and these six pages must be understood by foreign shippers. The delay involved includes not only the filling out of the form but the shipper must visit the United States consulate, although his office may be in another part of the country, to leave the invoice and oftentimes must make a second visit to pick up the verified invoice. Both visits involve delays and increase the expense of foreign trade. It may be said that these visits are unnecessary and mail could be relied upon, but it is well known that personal appearance is more likely to secure the service desired. It will be apparent since shipments from parts of South America and Europe can be flown to the United States overnight that it may often take longer to secure a consular invoice than it will to fly the goods to this country. The form serves no useful purpose in that information needed can be secured from the commercial invoice prepared by the seller and from the airway bill which accompanies the goods.