APPENDIX MATERIAL SUBMITTED FOR THE RECORD BY SENATOR HATHAWAY CHAPTER 3-COUNTERVAILING DUTIES SEC. 331. AMENDMENTS TO SECTIONS 303 AND 516 OF THE TARIFF ACT OF 1930. (a) Section 303 of the Tariff Act of 1930 (19 U.S.C. sec. 1303) is amended to read as follows: "SEC. 303. COUNTERVAILING DUTIES. "(a) LEVY OF COUNTERVAILING DUTIES.-(1) Whenever any country, dependency, colony, province, or other political subdivision of government, person, partnership, association, cartel, or corporation, shall pay or bestow, directly or indirectly, any bounty or grant upon the manufacture or production or export of any article or merchandise manufactured or produced in such country, dependency, colony, province, or other political subdivision of government, then upon the importation of such article or merchandise into the United States, whether the same shall be imported directly from the country of production or otherwise, and whether such article or merchandise is imported in the same condition as when exported from the country of production or has been changed in condition by remanufacture or otherwise, there shall be levied and paid, in all such cases, in addition to any duties otherwise imposed, a duty equal to the net amount of such bounty or grant, however the same be paid or bestowed. "(2) In the case of any imported article or merchandise which is free of duty, duties may be imposed under this section only if there is an affirmative determination by the Commission under subsection (b)(1); except that such a determination shall not be required unless a determination of injury is required by the international obligations of the United States. "(3) In the case of any imported article or merchandise as to which the Secretary of the Treasury (hereafter in this section referred to as the 'Secretary') has not determined whether or not any bounty or grant is being paid or bestowed "(A) upon the filing of a petition by any person setting forth his belief that a bounty or grant is being paid or bestowed, and the reasons therefor, or "(B) whenever the Secretary concludes, from information presented to him or to any person to whom authority under this section has been delegated, that a formal investigation is warranted into the question of whether a bounty or grant is being paid or bestowed, the Secretary shall initiate a formal investigation to determine whether or not any bounty or grant is being paid or bestowed and shall publish in the Federal Register notice of the initiation of such investigation. "(4) Within six months from the date on which a petition is filed under paragraph (3) (A) or on which notice is published of an investigation initiated under paragraph (3) (B), the Secretary shall make a preliminary determination, and within twelve months from such date shall make a final determination, as to whether or not any bounty or grant is being paid or bestowed. "(5) The Secretary shall from time to time ascertain and determine, or estimate, the net amount of each such bounty or grant, and shall declare the net amount so determined or estimated. "(6) The Secretary shall make all regulations he deems necessary for the identification of articles and merchandise subject to duties under this section and for the assessment and collection of such duties. All determinations by the Secretary under this section, and all determinations by the Commission under (111) subsection (b) (1), (whether affirmative or negative) shall be published in the Federal Register. "(b) INJURY DETERMINATIONS WITH RESPECT TO DUTY-FREE MERCHANDISE; SUSPENSION OF LIQUIDATION.-(1) Whenever the Secretary makes a final determination under subsection (a) that a bounty or grant is being paid or bestowed with respect to any article or merchandise which is free of duty and a determination by the Commission is required under subsection (a) (2), he shall "(A) so advise the Commission, and the Commission shall determine within three months thereafter, and after such investigation as it deems necessary, whether an industry in the United States is being or is likely to be injured, or is prevented from being established, by reason of the importation of such article or merchandise into the United States; and the Commission shall notify the Secretary of its determination; and "(B) require, under such regulations as he may prescribe, the suspension of liquidation as to such article or merchandise entered, or withdrawn from warehouse, for consumption on or after the date of the publication in the Federal Register of his final determination under subsection (a), and such suspension of liquidation shall continue until the further order of the Secretary or until he has made public an order as provided for in paragraph (3). "(2) For the purposes of this subsection, the Commission shall be deemed to have made an affirmative determination if the commissioners voting are evenly divided as to whether its determination should be in the affirmative or in the negative. 66 "(3) If the determination of the Commission under paragraph (1)(A) is in the affirmative, the Secretary shall make public an order directing the assessment and collection of duties in the amount of such bounty or grant as is from time to time ascertained and determined, or estimated, under subsection (a). "(c) APPLICATION OF AFFIRMATIVE DETERMINATION.-An affirmative final determination by the Secretary under subsection (a) with respect to any imported article or merchandise shall apply with respect to articles entered, or withdrawn from warehouse, for consumption on or after the date of the publication in the Federal Register of such determination. In the case of any imported article or merchandise which is free of duty, so long as a finding of injury is required by the international obligations of the United States, the preceding sentence shall apply only if the Commission makes an affirmative determination of injury under subsection (b) (1). "(d) TEMPORARY PROVISION WHILE NEGOTIATIONS ARE IN PROCESS.—(1) It is the sense of the Congress that the President, to the extent practicable and consistent with United States interest, seek through negotiations the establishment of internationally agreed rules and procedures governing the use of subsidies (and other export incentives) and the application of countervailing duties. "(2) If, after seeking information and advice from such agencies as he may deem appropriate, the Secretary of the Treasury determines, at any time during the four-year period beginning on the date of the enactment of the Trade Act of 1974, that “(A) adequate steps have been taken to reduce substantially or eliminate during such period the adverse effect of a bounty or grant which he has determined is being paid or bestowed with respect to any article or merchandise; "(B) there is a reasonable prospect that, under section 102 of the Trade Act of 1974, successful trade agreements will be entered into with foreign countries or instrumentalities providing for the reduction or elimination of barriers to or other distortions of international trade; and "(C) the imposition of the additional duty under this section with respect to such article or merchandise would be likely to seriously jeopardize the satisfactory completion of such negotiations; the imposition of the additional duty under this section with respect to such article or merchandise shall not be required during the remainder of such fouryear period. This paragraph shall not apply with respect to any case involving non-rubber footwear pending on the date of the enactment of the Trade Act of 1974 until and unless agreements which temporize imports of non-rubber footwear become effective. "(3) The determination of the Secretary under paragraph (2) may be revoked by him, in his discretion, at any time, and any determination made under such paragraph shall be revoked whenever the basis supporting such determination no longer exists. The additional duty provided under this section shall apply with respect to any affected articles or merchandise entered, or withdrawn from warehouse, for consumption on or after the date of publication of any revocation under this subsection in the Federal Register. "(e) REPORTS TO CONGRESS.-(1) Whenever the Secretary makes a determination under subsection (d) (2) with respect to any article or merchandise, he shall promptly transmit to the House of Representatives and the Senate a document setting forth the determination, together with his reasons therefor. "(2) If, at any time after the document referred to in paragraph (1) is delivered to the House of Representatives and the Senate, either the House or the Senate adopts, by an affirmative vote of a majority of those present and voting in that House, a resolution of disapproval under the procedures set forth in section 152, then such determination under subsection (d) (2) with respect to such article or merchandise shall have no force or effect beginning with the day after the date of the adoption of such resolution of disapproval, and the additional duty provided under this section with respect to such article or merchandise shall apply with respect to articles or merchandise entered, or withdrawn from warehouse, for consumption on or after such day.". SENATE RESOLUTION 483-A RESOLUTION TO DISAPPROVE WAIVER OF THE COUNTERVAILING DUTY ON CERTAIN ITEMS OF GOVERNMENT SUBSIDIZED FISH IMPORTED FROM CANADA Mr. HATHAWAY (for himself, Mr. Muskie, Mr. McIntyre, Mr. Brooke, Mr. Durkin, Mr. Kennedy, and Mr. Pell) submitted the following resolution, which was referred to the Committee on Finance: "S. RES. 483 "Resolved, that the Senate does not approve the determination of the Secretary of the Treasury under Section 303 (d) of the Tariff Act of 1930, transmitted to the Congress on June 13, 1978." Mr. HATHAWAY. Mr. President, I am submitting a resolution to disapprove the decision to waive the imposition of countervailing duties on Canadian fish. A petition for such duties was filed last year by the National Federation of Fisherman and the Point Judith, R.I., Fishermen's Cooperative. I am offering this resolution in part to raise the issue with my colleagues of the need for close scrutiny of our national policies in regard to fisheries. The Canadians have agreed to phase out their direct landing subsidies and processing subsidies to the ground fishery. Much of this subsidy will be wiped out retroactively, with the remainder due to end October 1. This, according to Treasury, will leave only a small subsidy which will become countervailable in January unless Canada ends that as well. I am glad that Canada has agreed to this step. I would hope that this cooperative attitude might also prevail in ongoing United States/Canada boundary negotiations, and in a resolution of the recent fisheries jurisdictional conflict. Despite these considerations, I cannot simply acquiesce to the Treasury Department's grant of this waiver. This situation points up the conflicting national policies which we are now pursuing which threaten the economic death of the New England fishing industry. First, while Canada is phasing out these more blatant subsidies to its fishermen, there is no doubt that indirect Canadian subsidies will continue, from insurance programs to possible price supports. Canada, in short, has been far better to its fishing industry than the United States has to its own. As a result, we had a $2.1 billion trade deficit in the fisheries in 1977. And all indications are that deficit may well grow rather than diminish. In terms of subsidizing its industry, there is little doubt that the past years of assistance which Canada has given its fisheries will be felt for years to come. The assistance given the industry in the past decade, both directly and indirectly, has the overall effect of lowering the operating costs of the fishermen, and of enabling them to cature U.S. markets. At present between 80 and 90 percent of Canadian catch is exported and the Canadian groundfish exports alone are worth $200 million annually. These fish come into our New England markets at times when our own fishermen may be tied up at port, unable to fish at all as a result of our national policy of "conser vation" of the fisheries. In the past Maine fishermen have been placed in the absurd position of throwing dead cod and haddock overboard because they could not land them, yet they could not prevent them from coming up in their nets. The choice presented was to return to shore and find another way to make a living for 2 weeks or a month, or throw the dead fish back, all in the name of fisheries conservation. As a result of situations such as this, the Department of Commerce has at last begun to take into account the growing complaints of Maine and New England fishermen. For the record, I would note that they were against the granting of this waiver. While the direct economic impact of this waiver may not be great, its symbolic impact for our domestic fishermen is, I think, of great importance. We tell our fishermen they cannot fish because we need to conserve the species; we then tell them we will not impose a duty on the Canadian fish which come into our country even though that industry has been Government subsidized for many years, Then we tell them as a matter of trade policy we would prefer not to grant subsidies to our own domestic fishing industry. This is the underlying irony of the situation. As a matter of policy we stand for free trade, for an end to foreign and domestic governmental subsidies to industry. In the long run, I would agree that this is the ideal. But in the short run we have an industry in this country running up against a conflicting national policy-to "conserve" and manage the resource from which that industry obtains its lifeblood. We must rationalize these policies. It is the fisherman who are the victims of this conflict in national policies. I hope that we can open a dialog on how to conserve, not only our natural fishery resource, but also our fishermen. As Chairman of the United States-Canada Interparliamentary Conference, I intend to put fisheries at the top of the agenda for next year's conference. At this time, I ask unanimous consent that correspondence from the Department of Commerce and to the Treasury Department be printed in the Record. There being no objection, the letters were ordered to be printed in the Record, as follows: [The material follows:] Hon. MICHAEL BLUMENTHAL, U.S. SENATE, Washington, D.C., June 1, 1978. DEAR MR. SECRETARY: It is our understanding that the Treasury Department is scheduled to make a final determination regarding Canadian subsidies on fish products by June 10, 1978. An affirmative preliminary determination was made last January, and we believe the facts warrant a similar final decision. Your Department must then decide whether or not to grant a waiver of the countervailing duty on fish imports from Canada. As you may know, the Canadian government has made substantial direct payments to both fishermen and processors on fish exported to the United States. In April, 1977, your Department determined that these payments were bounties or grants (TD 77–107). This decision, however, was limited to only a few of the tariff items covered by the Canadian assistance program. Therefore, a new countervailing duty petition covering a number of other tariff items was filed shortly after the Department's 1977 determination. Your Department has taken the full year permitted by statute to make a determination on the additional tariff items covered by this new petition. Since April of last year, the Canadian government has been well aware that its Groundfish Temporary Assistance Program and vessel construction assistance programs subjected Canadian fish exports to the United States to countervailing duties. No attempt, however, was made to repeal these subsidy programs. In the interim, we have permitted heavily-subsidized Canadian fish to be sold in U.S. markets. This situation has created severe economic hardship for New England fishermen. The Department of Labor recently documented the impact of these subsidized imports when it certified employees of several U.S. vessels for Trade Adjustment Assistance. We recognize that the Multilateral Trade Negotiations (MTN) have entered a sensitive stage in Geneva, and understand that the progress of these discussions will be taken into consideration by your Department when making a final determination on countervailing duties. It is our firm belief, however that the immediate economic pressures on U.S. fishermen must be given priority considera tion. We therefore strongly oppose any waiver of countervailing duties on Canadian fish. Sincerely, EDMUND S. MUSKIE, EDWARD M. KENNEDY, WILLIAM D. HATHAWAY, Mr. RICHARD SELF, U.S. DEPARTMENT OF COMMERCE, Director, Office of Tariff Affairs, Office of the Secretary, U. S. Treasury Department, Washington, D.C. DEAR MR. SELF: The Treasury Department is currently studying the advisability of imposing countervailing duties on imports of certain fish products from Canada pursuant to the petitions of the Point Judith Fisheries Cooperative and the Fisheries Marketing Association of Seattle, Washington. The purpose of this letter is to indicate the Department of Commerce's strong support for the imposition of countervailing duties on such products. U.S. trade law clearly requires the imposition of countervailing duties on imported fishery products when the evidence indicates that artificially low prices for imports are made possible by foreign government subsidies. The evidence is overwhelming that the Canadian fish imports in question are so subsidized. The Canadian government has instituted an extensive network of programs that assist the Canadian fishing industry in catching, processing, and freezing fish, and in transporting it to the United States, at prices that are more than low enough to compete effectively in the U.S. market. Under special circumstances, these countervailing duties may be waived. However, we believe strongly that a waiver cannot be justified for this fishery products, for the following reasons: (1) Canada has not indicated that it will terminate all of its subsidy programs for the fishery products in question. (2) Canada has apparently indicated a willingness to terminate some of its subsidies. Our experience in connection with Canadian commitments to reduce subsidies in 1977 casts significant doubt on Canada's willingness or ability to comply with such commitments. This suggests that a far better course of action would be to delay any waivers until commitments made by the Canadian government for the removal of subsidies have in fact been carried out. (3) The adverse impacts of allowing subsidized products to be imported into U.S. markets will persist long after the subsidies are terminated. Subsidized vessels constructed prior to termination of subsidies will continue to compete with non-subsidized U.S. vessels long after such termination. Markets such as the mid-western market captured by Canadian industry through anticompetitive subsidies cannot easily be recaptured by U.S. industry at a later date. (4) The purposes of the Fishery Conservation and Management Act of 1976 are significantly undermined by such subsidies. The Act was aimed at both conserving U.S. fishery resources and developing a strong U.S. fishing fleet. In order to protect fishery resources, the U.S. fleet is required to adhere to rigorous quotas to restrict the amount of fish that can be caught. Without heavy competing supplies of low-priced Canadian imports, the price for fish harvested by the U.S. fishing industry would tend to rise during the period that U.S. fishermen are forced to restrict their catches. Such a price rise would assist the harvesting sector of the U.S. groundfish industry to survive the period of quotas needed to restore our groundfish stocks. And because the price of raw material is only a part of the price of fish products, the impact of countervailing duties on U.S. consumers will be minimal. The question of whether special circumstances exist that justify a countervailing duties waiver must be considered in light of the significant United States balance of trade deficit in fishery products was $2.1 billion in 1977. The waiver of duties on these Canadian imports will further exacerbate this problem. Even when and if Canada meets the requirements for a waiver of these duties, we believe that a waiver should be withdrawn should it become evident that a subsidy code cannot be achieved in the Multilateral Trade Negotiations. We would be pleased to provide you with any additional information you may need in connection with this matter. Sincerely yours, [This concludes the material.] RICHARD A. FRANK. |