Now, we do not ask for a subsidy against foreign competition but we do ask for a fair implementation of the law. Section 303 says specifically that countervailing duties shall be imposed if and when an export subsidy is paid by a foreign government. That has been a part of the tariff law, as I understand it, since about 1897.

The head of the Tariff Commission, Mr. Clubb, is quoted when he spoke to the American Importers Association in New York as saying that the countervailing duties have rarely been invoked and I quote him, "And then only after a lengthy process which would have discouraged all but the most determined complainants.”

All the canning industry is asking for is a timely administration of the law. There is no question that the Customs Bureau has dragged its feet and, as Mr. Sisk, has suggested, given us cause to doubt as to which side they are really on.

So, I join with Mr. Sisk in emphatically and strongly urging this committee to amend section 303 so as to insure a timely investigation and decision on the part of the Customs Bureau so that the law can be enforced.

Thank you, Mr. Chairman.

The CHAIRMAN. Thank you, Mr. Gubser.

We are pleased to have you with us, our colleague, Hon. John J. McFall.

We are glad to have you with us, Mr. McFall.

You are recognized, sir.

STATEMENT OF HON. JOHN J. McFALL, A REPRESENTATIVE IN CONGRESS FROM THE STATE OF CALIFORNIA

Mr. McFALL. Thank you, Mr. Chairman.

I concure with what both my colleagues have said and ask for the same action by the committee.

Mr. Chairman, I appreciate the opportunity to come before your committee today in the company of my good friend and colleague, Congressman Sisk, who is presenting a statement in behalf of the Canners League of California concerning a problem of extreme importance to the agricultural industry of our State.

I do not favor the concept of building a high-tariff wall around the United States, nor do I believe that the canning industry of California would approve such actions. Much of the economic well-being of California is dependent upon our ability to sell agricultural products abroad, and this means we must maintain open trade channels on a two-way basis.

There appears to be a need for action to assist our producers and processors to get an even break in one aspect of foreign trade, however. The fruit and vegetable industry of the Nation is not subsidized. Throughout the years, due to the initiative and hard work of the industry in developing and expanding markets abroad, international trade has been lucrative for both U.S. farmers and exporters and has greatly assisted the Nation in developing favorable balances.

Subsidization of agricultural products grown abroad and shipped to the United States, however, poses a serious threat to all segments of our agricultural industry.

I am particularly concerned about the situation described by my colleague and the Canners League of California, inasmuch as it relates to canned tomatoes and tomato paste. Farmers in my congressional district produce about 30 percent of all processed tomatoes grown in the State and California produces approximately two-thirds of all processed tomatoes in the Nation.

Having assisted the Canners League 2 years ago in obtaining relief from the growing threat posed by tomatoes subsidized in France and Italy, I strongly endorse the legislative proposal presented here today and urge the committee to incorporate it in a measure for consideration by the House of Representatives.

(The statement of the Canners League of California follows.)

STATEMENT OF CANNERS LEAGUE OF CALIFORNIA

This statement is submitted on behalf of the Canners League of California, whose membership accounts for approximately 90% of the canned fruit and vegetable production in California. California annually produces more than 75 million cases of fruits and juices and more than 70 million cases of canned vegetables; this represents approximately 40% of the total national production. Of greater significance is the fact that California annually produces approximately two-thirds of all of the processing tomatoes utilized in the United States, a substantial portion of which is canned as tomato paste. California accounts for nearly the entire national production of canned tomato paste.

Of growing concern to our members is the increasing quantity of tomato paste imported. Imports have been encouraged by repeated tariff reductions at the various sessions of the GATT, including the Kennedy Round. These imports are having a depressant effect upon the prices California canners are able to realize for canned tomato paste and the prices received by California growers for processing tomatoes.

In addition to the tariff reductions, shipments of canned tomatoes and tomato paste to the United States are being encouraged by export subsidies granted by the governments of Italy, France and Greece. Although Sections 303 of the Tariff Act provides for the imposition of countervailing duty to offset such subsidies, the U.S. Bureau of Customs is exceedingly slow, in our opinion, in instituting the action as required by the statute.

This statement sets forth our experience with the Bureau of Customs, which we regard as unsatisfactory with regard to the length of time taken by Customs to investigate and act on documented complaints of subsidized imports, and also our proposal for legislation designed to expedite Customs procedures in the handling of such complaints.

PROBLEM OF OBTAINING RELEIF UNDER SECTION 303 OF THE TARIFF ACT

1. In mid-July, 1967 some members of the Canners League of California reported rumors of a subsidy being sought by Italian canners on the export of canned tomatoes and tomato products. The Canners League promptly instituted inquiries through the U.S. Department of Agriculture. On October 6 the U.S. Department of Agriculture furnished information to the Canners League confirming an Italian government order granting the subsidy. A complaint was filed on October 11, 1967, with the Commissioner of Customs requesting that countervailing duties be assessed. In our complaint we stated that the subsidy was announced by the Italian government on September 1, 1967, published in the Italian Official Gazette on September 28, 1967, and was retroactive to January 1, 1967.

On October 30, 1967, the Bureau of Customs acknowledged our complaint and said it would be investigated. On November 15 the Canners League sought help from California Senators and Congressmen to expedite the institution of countervailing duties as required by Section 303. On November 22 Senator Kuchel wrote to Ambassador Roth and Commissioner of Customs Johnson. On November 29 Commissioner Johnson wrote to Senator Kuchel saying the matter was being investigated. On December 8 Ambassador Roth wrote to Senator Kuchel indicating some doubt that the subsidy was being paid but said he would look

into the matter. On December 18 the Treasury Department informed Congressman Gubser it was too early to tell whether there was a basis for our complaint. This was rather strange as we had supplied copies of the official Italian government notice granting the subsidy together with an English translation. At this time it became clear that the matter was considered in Administration circles to be a political issue, that any action would be a result of a political decision. The government was actually dragging its feet in spite of the clear Congressional mandate appearing in Section 303 of the Tariff Act.

On December 29, 1967, the Canners League sent a telegram to Commissioner of Customs Johnson complaining of a similar French subsidy. In asking for imposition of a countervailing duty on tomato products from France, the Canners League also reminded Commissioner Johnson that no action had yet been taken regarding the Italian subsidy. On January 16, 1968, the Canners League sought help from other canning associations and the California Department of Agriculture. On January 26, more than three months following our initial documented complaint, Treasury issued a press release announcing it was investigating our complaint regarding the Italian subsidy. An order of investigation was printed in the Federal Register of January 27, 1968. The next day Senator Kuchel sent a wire confirming his conversation with Secretary Fowler regarding the investigation.

On February 1, 1968 Senator Kuchel wired us that Treasury also was investigating our complaint regarding the French subsidy, and this order was published in the Federal Register of February 2, 1968. The orders set forth the details of the investigation and invited comments. On February 8 we responded to Commissioner Johnson urging prompt favorable action. On March 6 Senator Kuchel informed us that he was in constant contact with Treasury urging action.

On April 1, 1968, at the Canners League Annual Meeting in Santa Barbara, California, a telegram was sent to Secretary Fowler requesting action since ten weeks had elapsed since actual publication of the order initiating the investigation. On April 3 Treasury wired that we would be informed when a decision was reached. On April 17, 1968, Senator Kuchel wired that Treasury had signed orders to establish countervailing duties against French and Italian imports as requested. April 19, 1968 the orders were published in the Federal Register with the duties to become effective and assessable 31 days after publication in the Customs Bulletin. As the next Customs Bulletin was scheduled for June 1, the countervailing duties became assessable on July 2, 1968.

Our complaint regarding the Italian subsidy was filed on October 11, 1967, and the Treasury didn't even decide to investigate until January 26, 1968. Despite the thirty-day time limit for comment, publication of the decision to impose countervailing duties was delayed until April 17, 1968, and further administrative procedures held up imposition of countervailing duties until July 2, 1968. The elapsed time between filing the complaint and the imposition of countervailing duties was eight months and three weeks. There was no retroactive effect.

2. The next move on the part of Treasury was voluntary. On December 26, 1968, Treasury published a notice in the Federal Register saying that Italy had on November 27, 1968, reduced the amount of subsidy being granted on exports of canned tomatoes and tomato paste, and the Treasury ordered the countervailing duties reduced by a similar amount retroactive to that date (November 27, 1968). Contrast the slow action of Treasury in imposing countervaling duties with the voluntary, rapid and gracious action to favor imports by reducing countervailing duties.

3. We now come to the next chapter-the Greek subsidy. Over a year ago we received information that the Greek government was subsidizing tomatoes used in preparing products for exports in the amount of approximately 40 percent of the farm value. The existence of this subsidy was confirmed in an official report from the U.S. Department of Agriculture on October 20, 1969. As soon as this detailed information reached us we prepared and on December 17, 1969, filed a complaint with the Commissioner of Customs seeking assessment of a countervailing duty on canned tomato paste from Greece. This complaint was acknowledged by Customs on December 23, 1969.

On February 26, 1970, not having heard anything further on our complaint regarding the Greek subsidy, we again wrote to the Commissioner of Customs. In its acknowledgment dated March 4, 1970. Customs stated that Customs Representatives were making an investigation and as soon as a report was made

appropriate recommendations would be given to the Secretary of the Treasury. As this is written in mid-May-five months after filing of our complaint-there is no further word regarding this documented complaint, even though it is based on a report from the U.S. Agricultural Attache in Athens.

4. The Italian subsidies had been scheduled to expire December 31, 1969, but trade rumors reported efforts of Italian canners to have the subsidy continued. Early in February, 1970, we learned that the Italian government had renewed and had actually increased its subsidies on canned tomatoes and tomato paste. Confirmation of the increased subsidies was obtained from the U.S. Agricultural Attache in Rome, reproducing Italy's Ministerial Decree of October 14, 1969, as published in the Italian Official Gazette on November 6, 1969. On the basis of this information, the Canners League on March 18, 1970, filed a complaint with the Commissioner of the Customs seeking an increase in the countervailing duty rate to compensate for the increased subsidy. Not having an acknowledgment of this complaint, we sent a followup wire on April 8, 1970. It subsequently developed that an approximate increase in the countervailing duty had been published in the Federal Register of April 7, 1970.

The Bureau of Customs has demonstrated that it is indeed able to move promptly-in a period of only three weeks-and they could be complimented for having done so on the basis of the notice in the Italian Official Gazette with respect to this most recent complaint. It remains a mystery why action could be taken so promptly in this instance and on the reduction of the Italian subsidy, when contrasted to the long delays in acting on our original Italian and French complaints and the most recent Greek complaint.

LEGISLATIVE REMEDY

Our experience with respect to the French, Italian and Greek subsidies has convinced us there is need for insuring more prompt action by the Customs Bureau and Treasury Department in dealing with complaints and instituting countervailing duties as required by Section 303 of the Tariff Act.

Our belief in this regard is reinforced by the remarks of the Tariff Commissioner Bruce E. Clubb, in a speech before the American Importers Association in New York, when he noted that the Treasury Department has rarely invoked the countervailing duty provision, "and then only after a lengthy process which would have discouraged all but the most determined complainants."

Commissioner Clubb is quoted as saying that when a domestic producer complains that he is being ruined by subsidized imports, he should be able to go to the Treasury Department secure in the knowledge that if his allegations are true, his grievances will be effectively redressed and if they are not, this fact will be discovered and no action will be necessary. This has not been the case up to now, Commissioner Clubb said. The Countervailing Duty Law is not being enforced in any substantial way, he said.

Our views are further supported by the remarks of Senator Fannin, a member of the Finance Committee. We quote the following excerpts from the official text of his remarks:

"The countervailing duty concept is almost as old as international trade itself. For centuries it has been recognized that the encouragement of exports through government subsidy distorts the natural and most efficient allocation of resources in international trade and creates false competitive advantages. The device most commonly used over the years to counteract the harmful effects of such subsidies has been the countervailing duty. The countervailing duty is simply a duty imposed by the importing country to offset the unfair advantage created by the subsidy.

"Our general countervailing duty law was originally enacted as a part of the Tariff Act of 1897. It was re-enacted in the Tariff Acts of 1909 and 1913, widened in scope in 1922, and, in its present form, embodied in Section 303 of the Tariff Act of 1930. Under its provisions, whenever a foreign government has subsidized a dutiable import into this country, the Secretary of the Treasury is required to determine the amount of the subsidy and to impose an additional duty on the import equal to the net amount of the subsidy."

"Recently there has been a new flurry of activity, focused in the main on subsidized imports from Common Market countries. Of the 11 countervailing duty orders now in effect, 9 were issued during the last three years and of those 9, 8 were directed against members of the Common Market."

...

"It is high time, I believe, that the United States began to take full

advantage of its countervailing duties law to meet the crisis of unfair foreign competition-a crisis that threatens our domestic industries and the jobs of countless Americans."

The position of the canning industry is that the Executive Branch should promptly carry out its obligation to impose countervailing duties on subsidized imports into the United States. To ensure that the will of Congress is carried out by the Bureau of Customs and the Treasury Department, we believe it would be wise to amend Section 303 by adding something along these lines to the end of Section 303.

"Provided, That the Secretary shall order the withholding of appraisement with respect to any article, no later than 60 days following receipt of a communication from outside the Custom Service alleging that a bounty or grant is being paid or bestowed with respect to such article imported into the United States, unless he has good and sufficient reason to believe that the complaint is without foundation and unsubstantiable, in which event he shall publish in the Customs Bulletin or the Federal Register, or both, a notice dismissing the complaint and giving his reasons therefor."

We believe that adoption of such an amendment to Section 303 would facilitate the Bureau of Customs' handling of complaints alleging the existence of a subsidy on imports. It is to be recalled that the Canners League based its complaints on information furnished by U.S. Agricultural Attaches through their official reporting, and that the Italian subsidies are in fact documented by publication in Italy's Official Gazette. Adoption of such an amendment to Section 303 would require the Bureau of Customs to give its official credence to and to act on such reports as emanate from the U.S. Agricultural Attaches or to explain its reason for failing to act. At the same time a provision such as we propose would permit rejection of capricious or ill-founded complaints. Withholding Customs appraisements as suggested would not in itself grant imposition of countervailing duties but would result in strong pressure for an early determination of the validity of a complaint, an end much to be desired. In cases where no subsidy existed, other governments could be expected to cooperate promptly with the Treasury in its investigation. The Treasury Department should welcome such cooperation and could well support this legislation.

We strongly urge favorable consideration of our proposal by your Committee. The CHAIRMAN. Any questions of our colleagues?

If not, we thank all three of you for coming.

Our colleague from Florida, the Honorable Paul G. Rogers, has a statement to present to the committee today. You may come forward and proceed as you wish.

STATEMENT OF HON. PAUL G. ROGERS, A REPRESENTATIVE IN CONGRESS FROM THE STATE OF FLORIDA

Mr. ROGERS. Mr. Chairman, I appreciate very much having the opportunity to present my views on legislation which I have introduced, H.R. 9656, the Fresh Fruits and Vegetables Market Sharing Act.

I understand that the Florida Fruit and Vegetable Association, the principal supporter of this legislation, has submitted its views to the committee and, therefore, I will not take up much of the committee's time.

I wish to commend the distinguished chairman and the members of this committee for undertaking these hearings into the foreign trade policy of the United States which I believe is lacking in strength and practicality, particularly insofar as the Florida fruit and vegetable industry is concerned.

I believe it is encumbent upon the Congress of the United States to remedy the injurious effects of an undue increase of imports on the domestic economy and to provide equitable safeguards against serious