TARIFF AND TRADE PROPOSALS WEDNESDAY, JUNE 17, 1970 HOUSE OF REPRESENTATIVES, Washington, D.C. The committee met at 10 a.m., pursuant to notice, in the committee room, Longworth House Office Building, Hon. Wilbur D. Mills (chairman of the committee) presiding. The CHAIRMAN. The committee will please be in order. We are very happy this morning to welcome to the committee a distinguished member of the other body, the Senator from the State of Arizona, the Honorable Paul J. Fannin. STATEMENT OF HON. PAUL J. FANNIN, A U.S. SENATOR FROM THE STATE OF ARIZONA Senator FANNIN. Thank you, Mr. Chairman and members of the committee. I thank you for this privilege of being with you this morning. The foreign trade policy of the United States since World War II has been to support and stimulate free trade. Free trade requires the removal of nontariff barriers as well as tariff barriers, and it requires fair methods of competition among trading partners. Although designed to regulate trade in a fair manner, the Countervailing Duty Act, the Antidumping Act, the Unfair Trade Practices Act, and the Trade Expansion Act of 1962 all have been largely ineffective. These measures have been ineffective, I believe, because the responsibility for their administration has been shared, and because indecision has been permitted without judicial recourse. The result has been increasing demands of domestic firms upon Congress for import quotas. For this Congress has only itself to blame. Worse yet, the setting of quotas put upon Congress essentially an administrative function of determining that a domestic produced has been harmed by international unfair methods of competition. I am introducing a bill to put our foreign trade regulatory laws on the same basis as those that regulate domestic trade. Administrative authority would be placed in one jurisdiction, with power to make findings and direct that dumping and countervailing duties be imposed where justified. Further, the regulatory agency would have authority to effectively enjoin unfair methods of competition by excluding imports as pro (4275) vided in section 337 of the Tariff Act, and to recommend mandatory action under the Trade Expansion Act of 1962. To make the administrative procedures responsive and to eliminate uncertainties, a time limit is placed by the bill upon the regulatory body for decision. And for fairness, judicial review is provided for both negative and affirmative decisions. This committee is well aware of the substantive provisions of the four regulatory acts which I have proposed to amend; therefore, I will only briefly discuss such provisions in order to point out the existing procedural defects. The first of the regulatory laws is the Countervailing Duty Act. The countervailing duty dates back to the American Tariff Act of 1890. The duty has been defined as a surtax added to goods benefiting from a bounty or similar assistance from the exporting country. Thus, the intention is to neutralize the foreign subsidy and thus prevent injury to domestic producers of comparable products who operate without benefit of such bounty. Under present law, the Secretary of the Treasury determines whether the goods have been subsidized and, if so, imposes the appropriate balancing duty. However, there is no time limit set in which he must act, or if he does act and decides against the complainant, there is no procedure for appeal provided by Congress. The legislation I am introducing would amend this act to provide that an administrative decision must be made within 120 days and to give a complainant the right to appeal an adverse ruling to the U.S. Circuit Court of Appeals for the District of Columbia. The antidumping duty likewise has been defined as a surtax. The additional tax is intended to equalize the price of imported goods when less than a predetermined fair value is received for such goods. This law was enacted in 1921 following a Tariff Commission report on dumping practices. Large concerns were selling at lower prices in the United States than in their own home market abroad. The purpose was to dispose of surplus production or to drive a U.S. competitor out of business. Therefore, in enacting the antidumping provisions, the Congress provided that where a domestic producer was injured by such dumping, a special duty would be imposed. The Treasury Department determines when imports are sold at less than fair value and the Tariff Commission determines if there is injury to a domestic producer or industry. Again, like the Countervailing Duty Act, no time limit was set for administrative action. In addition, no appeal procedure was provided in cases where the Treasury Department decided not to act on a complaint. But, on the other hand, if dumping duties are assessed against an importer, provisions were made for him to appeal. The bill I am introducing would amend the Antidumping Act to provide a 120-day time limit in which the administrative agency is to act upon a complaint, and to allow a procedure for appeal against an adverse ruling or failure to act within the time limit." The Unfair Trade Practice Act declares that unfair methods of competition or unfair acts in the importation of articles into the United States are unlawful if they have the effect or tendency to destroy or substantially injure an industry in the United States. If the President determines the act has been violated, he may direct that the imports involved be excluded from entry. To assist the President, the Tariff Commission receives complaints, investigates them, and reports its findings. Appeal may be taken to the Court of Customs and Patent Appeals on questions of law. After these procedures, the Tariff Commission's report is forwarded to the President for final action. If a violation is found, the President may, but is not required to, order that the customs authorities forbid entry of the involved goods. The legislation I am introducing would eliminate presidential review and provide that the Tariff Commission's determination be final, subject to judicial appeal. The Trade Expansion Act of 1962 contains a method for securing tariff increases under the escape clause procedure. The term "escape clause" is a provision in a treaty or a statute which permits the withdrawal or suspension of a tariff concession because of serious internal disorders attributable to the concession. The procedure is invoked by the filing of a complaint with the Tariff Commission. After the complaint is filed, the Tariff Commission conducts an investigation and makes a report and recommendations to the President. However, the final responsibility for granting relief lies with the President. The Tariff Commission report, although a statutory prerequisite for relief may not be followed by the President. Unlike the Countervailing Duty Act, the Antidumping Act and the Unfair Trade Practice Act, the escape clause provisions provide that an administrative decision must be made within specified time limits; 6 months in industry cases, and 60 days in firm and worker cases. It does have in common with the other acts the failure to provide a means of appeal for the complainant. In escape clause cases, however, the importers can appeal if the Tariff Commission decides against him. The legislation I am proposing would make the decision of the Tariff Commission final which would permit an appeal by the aggrieved party. More importantly, the legislation would provide that the decision is mandatory and not merely advisory to the President as it now is. Finally, the proposed legislation would provide that the administration of the above acts and their remedies be placed in one agency. The Tariff Commission, because of its expertise in dealing with foreign unfair trade practices, logically would administer these acts. Hopefully, the procedure requiring action within a time limit with right of appeal would tend to develop the technique of self-enforcement in trade matters that we have in our domestic trade laws, and would provide a deterrent to the rise of international unfair trade practices. In addition, Congress would have a record of Commission and judicial opinions from which to review the operations and effectiveness of the acts toward producing a more efficient, consistent and speedier administration of the regulatory acts. By amending these acts, as I have proposed, the Congress would assure that foreign producers selling their products in the U.S. market in competition with domestic producers would be subject to the same standards of fair trade that the domestic producers must observe. These amendments would in no way impede or restrict legitimate imports nor provide protection to any domestic industry against legitimate competition, or deprive any foreign industry of any fair competitive advantage which it might otherwise have. The results of the bill merely forecloses to the foreign supplier any unfair advantage which he might derive from a subsidy, price-cutting or other activities which have been recognized as unfair trade practices in the country for many years and which have been universally condemned. The U.Š. unfair trade practice laws prohibit domestic producers from uncertain unfair competitve conduct. The proposed bill would do no more than impose a similar prohibition against such unfair practices when they are engaged in by foreign competitors. Mr. Chairman, after seeing the economically depressed border area come alive in the last few years through the Border Industrialization program, I wish to emphasize the support of my constituents in Arizona for the retention of Tariff Schedule Item 807.00. Jobs have developed in both Mexico and Arizona because of the program. Approximately 3,500 new jobs have been created in Arizona in the past 3 years, and an estimated 3,250 jobs in the neighboring state of Sonora in northern Mexico. With this increase in jobs have come increased retail sales, growing bank deposits and increased community prosperity. Nogales, Arizona has reported retail sales per person totalling $2,320 compared with $1,676 for the State. This same stimulation of economy has been reported in other border communities. In 1968, U.S. imports under the terms of 807.00 totaled $1,432 million. Imports alone from Mexico accounted for $73.5 million under 807.00. The value of U.S. components in the case of these imports from Mexico under terms of 807.00 was $50 million with a value added of $24 million. Mexico is a heavy user of goods of U.S. origin, thus creating a share of jobs for U.S. citizens. The continuation of our tariff policy will assist our good neighbor policy with Mexico with our favorable balance of trade being maintained. Mr. Chairman, I very much appreciate this opportunity to be with you this morning. I do feel that we have a special opportunity with Canada and Mexico to have a trade relationship that would be greatly advantageous to these bordering countries. Further, it would be extremely beneficial in times of stress, in times of emergency and, of course, we do have the great advantage of the time element and many other advantages in working together in trade programs. The CHAIRMAN. We thank you, Senator, for taking time from what all of us know is a very busy schedule to come to the committee and discuss with us the matters that you have. I appreciate particularly your discussion of the other side of the argument with respect to 807. I introduced a bill on the matter, as you probably know, at the request of representatives of the AFL-CIO who were quite concerned that this development might result or be caused at least by an unintended provision in the Tariff Act. They testified in favor, as you know, of the elimination of this provision. It has meant a great deal, however, to Americans as well as to Mexican citizens in your opinion? Senator FANNIN. Yes; I feel very confidently that it has done a great deal to help our two countries. Furthermore, I feel it has been of great benefit to the unions. I feel that way because many jobs have been retained in the United States that otherwise would have gone across the waters into, say, Taiwan, Hong Kong, or Korea. Many of the firms are still able to operate in the United States because of the advantages they have under 807 and the border industrialization program, especially. Incidentally, I was in business in Mexico years ago; I have no interest there now but I did work in Mexico for several years; I know Mexico well. I have worked with the Mexican people for years; I have developed a program between our two countries, especially between the State of Arizona and the State of Sonora, so I have been in a position to observe just what has happened. So, I must disagree with the findings of the AFL-CIO in this particular instance because I do feel that they have benefited greatly rather than been hurt by this program. The CHAIRMAN. We appreciate again your coming to the committee. Are there any questions of Senator Fannin? If not, we thank you, sir. Senator do you have a copy of your bill? Senator FANNIN. No; I do not have one with me. The CHAIRMAN. If you will furnish one, without objection we will include a copy of your bill at this point. (The bill referred to follows:) [S., 91st Cong., second sess.] A BILL To transfer to the United States Tariff Commission certain functions and duties now vested in the President and Secretary of the Treasury under the Antidumping Act, 1921, the Tariff Act of 1930, and the Trade Expansion Act of 1962 Be it enacted by the Senate and House of Representatives of the United States of America in Congress assembled, That (a) section 201 of the Antidumping Act, 1921 (19 U.S.C. § 160) is amended to read as follows: "DUMPING INVESTIGATION "Sec. 201. (a) Whenever a class or kind of foreign merchandise is being, or is likely to be, sold in the United States or elsewhere at less than its fair value and 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 merchandise into the United States. there shall be levied, collected, and paid on such merchandise, in addition to any other duties imposed thereon by law, a special dumping duty in an amount equal to the difference between the purchase price or the exporter's sales price and the foreign market value (or, in the absence of such value, the constructed value). "(b) The United States Tariff Commission (hereinafter called the 'Commission') is hereby authorized to investigate on complaint or upon its initiative and, within 120 days after the commencement of an investigation, to issue orders to effectuate the provisions of this title. Commission proceedings and actions under this title shall be in accordance with the provisions of subchapter II of chapter 5 of title 5 of the United States Code. Any final order entered in any such proceeding shall be made on the record after opportunity for a Commission hearing and shall be subject to judicial review in the United States Court |