item would have a column 1 duty of 4 percent ad valorem and a column 2 duty of 60 percent ad valorem. Ceramic insulators used in spark plugs are presently classifiable under item 535.14, TSUS, with a column 1 duty of 15 percent ad valorem and a column 2 duty of 60 percent ad valorem. The bill was introduced on behalf of a Texas manufacturer of special spark plugs used in stationary engines (but not suitable for aircraft or autos). The Texas firm claims that it can buy insulators of suitable quality only from one Ohio and one British manufacturer. The bill would make it easier for the Texas firm to meet the competition offered by the only other U.S. maker of specialty plugs, one of the "big three" spark plug makers which makes its own insulators. The Department opposes enactment of H.R. 11178 since it constitutes a permanent unilateral reduction of the duty from 15 percent to 4 percent. The Department has been advised by the Office of Management and Budget that there is no objection from the standpoint of the Administration's program to the submission of this report to your Committee. SPECIAL REPRESENTATIVE FOR TRADE NEGOTIATIONS This is in response to your request for the views of this Office on HR 11178, a bill "To reduce the rate of duty on ceramic insulators used in spark plugs". The proposed change would reduce substantially the present duty on such ceramic insulators. As a matter of trade policy, this office considers that in the absence of overriding domestic considerations, the reduction of U.S. duties should be undertaken in the context of trade negotiations which offer the opportunity to secure reciprocal foreign concessions of benefit to U.S. exporters. We do not believe that such overriding considerations are present in the case of ceramic insulators. We understand, moreover, that adequate supplies of this item are available from domestic producers. For the reasons noted above, this Office is opposed to the enactment of HR 11178. The Office of Management and Budget advises that there is no objection to the presentation of these views from the standpoint of the Administration's program. COMMENTARY BY THE AMERICAN FEDERATION OF LABOR AND CONGRESS OF INDUSTRIAL ORGANIZATIONS H.R. 11178: To reduce the rate of duty on ceramic insulators used in spark plugs. The Administration says there is an excess of U.S. supply. Therefore, no reduction should be made. [See also introductory remarks at p. 152.] Mr. JOHN MARTIN, Jr., Chief Counsel, Committee on Ways and Means, CHAMPION SPARK PLUG CO., DEAR MR. MARTIN: This will confirm our telegram reading, "We are opposed to passage of H.R. 11178 titled "To reduce the rate of duty of ceramic insulators used in spark plugs. Stop Letter follows Stop at the very least we feel a subcommittee vote on this bill should be delayed until interested parties can register their views." This apparent attempt to aid a specific manufacturer of spark plugs could cause harm to others in this business, with a net disadvantage to U.S. industry. We, and all other U.S. manufacturers of spark plugs who are engaged in export, are faced with duties and/or non-tariff barriers in every foreign market approached. These duties are applied to ceramic insulators as well as finished spark plugs. The foreign manufacturers have a tremendous advantage in lower labor rates and yet get further advantage in tariffs and/or import restrictions against U.S. products. At a time when unemployment is high within the United States, it seems ill advised to further open our markets to foreign products, admitted on a discriminatory basis in their favor. Sincerely, KEITH WILSON, Vice President, Public Affairs. STATEMENT OF HON. CHARLES WILSON, A REPRESENTATIVE IN CONGRESS FROM THE STATE OF TEXAS Thank you, Mr. Chairman, and members of the subcommittee, for allowing me to appear before you concerning H.R. 11178, a bill which I introduced to reduce the rate of duty on ceramic insulators used in spark plugs. Recently it came to my attention that one of the small companies in my Congressional District is experiencing difficulty in its business operation due to classification of ceramic insulators imported for use in making spark plugs. This company is Stitt Spark Plug Company and is located in Conroe, Texas. It is a small company and has been in business for sixty years. I believe it is one of only two firms in the world which manufactures a full line of extended-life, multiple-spark gap spark plugs for service in natural gas fueled reciprocating engines. Basically, these engnies are engaged in compression service. The largest horsepower class of engines is termed "Prime Movers" and is used principally for the interstate transmission of natural gas. The smaller horsepower class of these engines is used primarily for field-booster compression of natural gas; water injection for secondary recovery and generating sets for drilling rigs. The high alumina ceramic insulators, which are the most critical components of the spark plugs, are imported. These insulators can be used for no other purpose than as a spark plug component. The duty rate at the present time is 15 percent with the insulators classified under section 535.14 of the Tariff Schedules of the United States (TSUS). The legislation which I propose would classify the ceramic insulators used for spark plugs as a new item 535.13 (TSUS), with a dutiable rate of 4 percent. This rate is the same as would be charged if the completed spark plug were imported. I am told that the hermetic sealing operation that must be performed to make a ceramic insulator-center electrode assembly is a critical one. So critical, in fact, that a small company could not successfully sub-contract the work overseas. Another consideration is the fact that the total spark plug market for spark plugs intended for service in natural gas-fueled engines is so small that a foreign assembly operation could not be warranted economically. I ask that your subcommittee give early favorable consideration to this legislation to allow the importation of these ceramic insulators for use in spark plugs to be brought in at the dutiable rate of 4 percent. H.R. 11259 To lower the duty on levulose until the close of December 31, 1977 DEPARTMENT OF COMMERCE This is in response to your request for the views of the Department of Commerce on H.R. 11259, a bill "To lower the duty on levulose until the close of December 31, 1977." If enacted, H.R. 11259 would amend the Tariff Schedules of the United States (TSUS) to provide for the importation of levulose at a reduced duty rate through December 31, 1977. The bill accomplishes this by adding the following new item to the TSUS: 907.90 Levulose: Column 1_ Column 2_. Cents per pound 0.6625 1.9875 The ad valoreum equivalent of the proposed column-1 specific duty, based on 1975 import prices, is 1.0 percent. There have been no imports of levulose from column-2 countries in recent years. Levulose is currently dutiable under TSUS item 493.66 at a column-1 rate of 20 percent ad valorem and a column-2 rate of 50 percent ad valorem. The Department of Commerce does not oppose enactment of H.R. 11259. Levulose is a purified saccharide that is not produced commercially in the United States. Current use of levulose is for special dietetic foods and medicinal products. Imports amounted to about 600,000 pounds in 1974, valued at $573,000. Because of its high price and specialized uses, levulose is not directly competitive with other commercial sweeteners of the type produced in the United States. For this reason there should be no significant effect on U.S. industry if the duty on levulose is lowered. The U.S. firm currently accounting for the bulk of levulose imports believes the temporary duty reduction will enable it to expand the U.S. market for levulose and justify its plans to establish a U.S. plant to produce the product domestically by 1978. The Department normally believes that duty reductions should be accomplished through trade negotiations to obtain reciprocal concessions of value to U.S. exporters. In this case, however, it believes the economic benefits of an immediate unilateral reduction outweigh the potential reciprocal concessions that might be negotiated. It notes furthermore that reducing the rate temporarily would retain some negotiating value since the President could negotiate a permanent reduction during the Multilateral Trade Negotiations. Enactment of this legislation would not involve the expenditure of funds by this Department. We have been advised by the Office of Management and Budget that there would be no objection to the submission of this report from the standpoint of the Administration's program. DEPARTMENT OF STATE The Secretary has asked me to reply to your letter requesting the views of the Department of State on H.R. 11259, a bill reducing the duty on levulose. The Department of State has no objection to the enactment of the proposed legislation. There is no commercial production of pure levulose, a sweetener used in pharmaceutical and dietetic food applications, in the United States. Domestic requirements are supplied entirely by imports. Some of the cost savings resulting from the duty reduction is likely to be passed on to consumers as we understand foreign suppliers are interested in enlarging and increasing their respective shares of the market. United States imports of levulose are classified for customs purposes under Item 493.66 of the Tariff Schedules of the United States and dutiable at 20 percent ad valorem. In 1974 imports from all countries totaled 653,000 pounds valued at $573,000. The Republic of West Germany, France and Finland were the principal supplying countries. The Office of Management and Budget advises that, from the standpoint of the Administration's program, there is no objection to the submission of this report. DEPARTMENT OF THE TREASURY Reference is made to your request for the views of this Department on H.R. 11259, "To lower the duty on levulose until the close of December 31, 1977." The bill would amend subpart B of part 1 of the Appendix to the Tariff Schedules of the United States (19 U.S.C. 1202) by inserting a new item 907.90 to reduce the rate of duty on levulose to .6625 cent per pound (column 1) and 1.9875 cents per pound (column 2) until December 31, 1977. This would effectively reduce the column 1 tariff on levulose from 20 percent to approximately 1 percent ad valorem. Levulose is a sugar complex used in special dietetic foods and medicinal products (e.g. for diabetes). Domestic consumption of this item is supplied wholly by imports. This bill should lower costs to consumers without injury to domestic industry. Furthermore, a temporary duty reduction ending on December 31, 1977, would not hinder negotiations in the MTN or conflict with any tariff reductions agreed therein. The Customs Service anticipate no unusual administrative difficulties if the proposed legislation is enacted. In light of the foregoing, the Department would have no objection to the enactment of the proposed legislation. The Department has been advised by the Office of Management and Budget that there is no objection from the standpoint of the Administration's program to the submission of this report to your Committee. DEPARTMENT OF LABOR This letter is in response to your Committee's request for the views of the Department of Labor on H.R. 11259, a bill "To lower the duty on levulose until the close of December 31, 1977." Levulose is currently categorized in item 493.66 of the Tariff Schedules of the United States. The column 1 duty is 20 percent ad valorem and the column 2 duty is 50 percent ad valorem. The proposed legislation would amend the Tariff Schedules of the United States by reducing the duty on levulose until the close of 1977. H.R. 11259 would reduce the column 1 duty on levulose to 0.6625 cents per pound (equivalent to approximately 1 percent ad valorem). The new column 2 duty would be 1.9875 cents per pound. The Department of Labor has no objection to the enactment of this legislation. Levulose (fructose) is a monosaccharide and a basic component of sucrose (sugar). It is sweeter than sugar and has special dietary uses for diabetics and in sweeteners which do not cause dental decay. Since there is no natural source of levulose, it must be derived through a costly chemical process, making it more expensive than sugar. Consequently, it is not competitive with sugar. At present there is no domestic production of pure levulose, although one domestic company does produce a product which is 50 percent levulose. Since there is little domestic production of levulose, a duty reduction would have little impact on the domestic economy. In addition, a temporary duty reduction at this time could be beneficial to consumers of levulose who must purchase imports. The Office of Management and Budget advises that there is no objection to the submission of this report from the standpoint of the Administration's program. H.R. 11321 To suspend until July 1, 1977, the duty on certain elbow prostheses if imported for charitable therapeutic use, or for free distribution, by certain public or private nonprofit institutions DEPARTMENT OF COMMERCE This is in response to your request for the views of this Department on H.R. 11321, a Bill "To suspend until July 1, 1977, the duty on certain elbow prostheses if imported for charitable therapeutic use, or for free distribution, by certain public or private non-profit institutions." H.R. 11321 would suspend for the period beginning on the date of enactment and ending on July 1, 1977, the column-1 duties applicable to imports from countries accorded most-favored-nation tariff treatment of externally-powered electric elbow prosthetic devices for juvenile amputees, and parts thereof, if imported solely for charitable therapeutic use, or distribution free of charge, by any public or private nonprofit institution established for educational, scientific, or therapeutic purposes. H.R. 11321 would amend subpart B of part 1 of the Appendix to the Tariff Schedules of the United States (19 U.S.C. 1202) by inserting immediately before item 912.10 the new item 912.08 providing for the above suspension of duty. The column-2 duties applicable to imports of electric elbow prosthetic devices from other countries would not be affected. The Educational, Scientific, and Cultural Materials Importation Act of 1966 (Public Law 89-651; 80 Stat. 897) permits the duty-free entry of certain instruments and apparatus when entered for the scientific or educational use of non-profit institutions established for scientific or educational purposes. The Act does not have any application to scientific devices imported solely for therapeutic purposes. Waiver of duty under the Act is contingent upon a determination by the Secretary of Commerce that no instrument or apparatus of equivalent scientific value to the foreign article, for the educational or scientific purposes for which the instrument or apparatus is intended to be used, is being manufactured in the United States. The intent of the Congress in enacting P.L. 89-651 was to implement the international Florence Agreement in the United States by providing a uniform basis for the granting of waivers of the duty on scientific instruments, without having to resort to special legislation. The Department of Commerce recommends that the Committee give favorable consideration to H.R. 11321. We note in this connection that the Department provided comments on H.R. 6983, an earlier version of this Bill, in a letter to your Committee dated November 26, 1975. We also note that H.R. 11321 fully incorporates the changes suggested by the Department on that occasion. There appears to be a minor typographical error in the numerical designation of the proposed new item, which reads "912.80" where we believe it should read "912.08". We have been advised by the Office of Management and Budget that there would be no objection to the submission of our report to the Congress from the standpoint of the Administration's program. DEPARTMENT OF STATE The Secretary has asked me to reply to your letter requesting the views of the Department of State on H.R. 11321, a bill providing for the duty-free entry of certain prosthetic equipment. In general, the Department of State is favorably inclined to the provision of assistance to persons with orthopedic impairments or other disabilities. The proposed legislation appears to be of primary interest to other executive branch agencies and we accordingly defer to their views. The Office of Management and Budget advises that, from the standpoint of the Administration's program, there is no objection to the submission of this report. |