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IMPORTS OF FRESH PEARS DURING THE LAST 5 SEASONS (IN BUSHELS)
The U.S. growers have made substantial investments in production and handling facilities and promotional efforts in order to develop a market within the United States during the exporting season of the Southern Hemisphere countries. These countries are taking advantage of this investment. The original purpose of this investment on the part of U.S. growers was to develop a more orderly and stable market for U.S. apples and pears. However, the import of Southern Hemisphere fruits into our markets during this marketing period has served to diminish the benefits intended. We, therefore, feel that we should have equal access to these Southern Hemisphere markets, at the equivalent period of time in their marketing season, as we are granting them. The alternative to this proposal is a restriction of the imports from these countries.
Now, you may ask : What do we want the State Department to do? We suggest :
1. The United States should adopt a firm policy that other countries be required to live up to their international commitments and cease discriminating against the United States.
2. U.S. Embassies should be advised of this policy and instructed to make indelibly clear to the involved countries that U.S. policy has been changed, and we will firmly insist that unjustifiable or unreasonable restrictions must be eliminated or appropriate action will be taken by the United States. This must be followed up.
3. The United States should oppose the expansion of the European Economic Community, i.e., the inclusion of the United Kingdom and Scandinavia, until and unless the protectionist aspects of the EEC's common agricultural policy is cleared up; otherwise, we'll lose the major European export markets we now have remaining.
4. With respect to specific issues :
(A) Southern Hemisphere apples and pears should be denied access to the U.S. until their restrictions against U.S. apple and pears are removed. Restrictions should be imposed on Southern Hemisphere pears. under Section 22 of the Agricultural Adjustment Act as asked by our industry in a request dated January 2, 1970, to the Department of Agriculture. (B) Firm action should be taken to :
1. Obtain lower import duties into Brazil, Mexico, Peru, Argentina, Sweden and Norway and removal of other discriminatory financial restrictions.
2. Eliminate seasonal entry dates into Norway, Sweden, Switzerland and Denmark, or, as a minimum, earlier entry dates.
3. Obtain relief from the restrictions of the EEC Common Agricultural Policy and their restrictions on pesticides.
4. Bring an end to subsidies granted by France.
5. Obtain removal of barriers imposed by Australia, New Zealand and Japan through the medium of sanitary restrictions. If we are not to have an equal opportunity to compete in world markets with other exporting nations, we should have the United States market reserved for us.
Gerald C. Crossland, President
CORN REFINERS ASSOCIATION, INC.,
Washington, D.C., June 9, 1970. Hon. WILBUR D. MILLS, Chairman, Committee on Ways & Means, House of Representatives, Washington, D.C.
DEAR MR. CHAIRMAN: The Corn Refiners Association very much appreciates this opportunity to present its views with regard to the duty-free status of tapioca, tapioca flour, and cassava.
As you know, our Association is the national organization of the American wet corn milling industry. Our members include American Maize-Products Company with a plant in Roby, Indiana ; Anheuser-Busch, Inc., whose plant is located in Lafayette, Indiana ; Clinton Corn-Processing Company (a division of Standard Brands, Inc.) located at Clinton, Iowa ; CPC International Inc. with plants located at Argo and Pekin. Illinois. North Kansas City, Missouri, and Corpus Christi, Texas; The Hublinger Company located at Keokuk, Iowa; National Starch and Chemical Corporation with a plant at Indianapolis, Indiana ; Penick & Ford, Limited (a subsidiary of R. J. Reynolds Tobacco Company) with a plant at Cedar Rapids, Iowa ; A. E. Staley Manufacturing Company with plants at Decatur, Illinois, and Morrisville, Pennsylvania; and Union Division, Miles Laboratories, Inc., whose plant is at Granite City, Illinois. Our industry is the Nation's largest food and industrial user of corn, and in any given year our industry's purchases of corn are a major factor in maintaining corn prices for farmers.
The principal products of our industry are corn oil, starch, corn syrup, corn sugar (dextrose) and other starch derivatives. These products are used throughout American industry, particularly in the manufacture of paper, textiles, food, drugs and adhesives. Products of the wet corn milling industry are also essential to national defense. They are essential to the manufacture of explosives, airplane engines, tanks, shells and hand grenade casings. They are used in missiles, uniforms, and mess kits, and are a part of every meal a serviceman eats from the barracks to combat rations in the field.
Our Association has always supported expanded trade among all nations on a fair and equitable basis. We would point out, however, that where America's efforts toward free trade are barred by trade barriers erected in other nations, a seious imbalance of trade can result. Essentially, that is the situation that now exists with regard to tapioca starch.
Among major industrial nations, only the United States does not have a duty on the import of tapioca starch. This unique situation coupled with the variable duties of the European Common Market means that the United States attracts an ever-increasing volume of the world's output of tapioca starch. One imported into this country tapioca starch competes directly with corn starch manufactured here. In essence, that means that our international trade in tapioca starch is financed by the profits and jobs of the American industrial firms affected.
In 1947, in the GATT negotiations, the duty-free status of tapioca, tapioca flour and cassava was bound into our tariff schedules. Imports of tapioca starch at that time were running at around 100 million pounds. Since then they have more than doubled and in some recent years have tripled. Imports in each of the last two years have been around 200 million pounds, and as recently as 1967 imports were over 300 million pounds.
Competition between imported tapioca starch and the American corn refining industry has been especially severe with regard to some products. The Tariff Commission's study of 1959, for example, disclosed that open market sales of domestic corn starch to adhesive and dextrine manufacturers amounted to about 20 million pounds in 1958. This was just slightly more than the amount of imported starch sold to such manufacturers.* Thus, in the short space of a 10 year period the imported starch had gained a position equal to that manufactured here despite significant improvements in our technology, efficiency and ability to compete.
Thailand and Brazil are currently the major exporters of tapioca starch, but a number of other less-developed nations have the potential to export this product in large quantities. Indonesia, formerly the world's major tapioca starch exporter, and several African countries are included in this group. Because of the current European tariff wall and variable levies on tapioca starch, it is likely that any increased volume from the exporting countries would flow directly to the United States.
The United States' position with regard to tapioca starch imports has become more difficult in recent years because the Common Agricultural Policy (CAP) within the European Common Market has raised new barriers to tapioca starch imports. The CAP has provided nearly complete protection for farmers by using a variable levy system to eliminate the competitive price advantage of imported agricultural products. The variable levies even apply to products the EEC does not produce if such products compete in any way with domestic production. For this reason, tapioca starch has recently been subject to tariffs as high as 50 percent, in striking contrast to its duty-free treatment by the United States.
Other countries have managed to block tapioca starch imports by other means. In Japan, for example, the device of import control licenses is employed, and Japanese imports of tapioca starch have been limited to a small fraction of the United States imports.
We believe that United States negotiators should have the authority and responsibility to negotiate the removal of unreasonable foreign tariff barriers. If this authority is to have any real meaning, however, it must be strongly backed up in our tariff laws. Considerations of basic fairness dictate that American industries that have no tariff protection against imports should have the assistance of the United States Government to insure that other countries are not able to take unfair advantage of us.
This position accords with two fundamental goals of United States trade policy. It would contribute to the expansion of free world trade and provide greater access to foreign markets for products of less-developed countries.
Our industry has borne the brunt of a uniląteral free trade policy in the face of contrived protectionist barriers abroad. We have been seriously disadvantaged because of the flood of tapioca starch imports into our country. We are hopeful that this situation can be relieved by reducing trade barriers in other countries, but if this cannot be achieved, we urge that the only fair solution is the imposition of a duty on tapioca imports, as we have done on all other major competitive starch imports, or the adoption of a quota. Very truly yours,
ROBERT C. LIEBENOW,
STOKELY-VAN CAMP, INC.,
Indianapolis, Ind., June 15, 1970. Mr. JOHN MARTIN, JR., Chief Counsel, House Ways & Means Committee, Longworth Building, Washington, D.C.
DEAR SIR: This statement is submitted by Alfred J. Stokely, President and Chief Executive Officer of Stokely-Van Camp, Inc., Indianapolis, Indiana, on behalf of Stokely-Van Camp and Hawaiian Fruit Packers, Ltd., for consideration by the House Ways & Means Committee in their deliberations on foreign trade.
Stokely-Van Camp, Inc. is a publicly owned corporation with approximately 270 million dollars in annual sales. The capital stock of the corporation is traded on the New York Stock Exchange and is held by approximately 13,000 stockholders. The corporation processes and distributes preserved foods and ingredients for foods.
Hawaiian Fruit Packers, Ltd., Kapaa, Kauai Hawaii is a 95% owned subsidiary of Stokely-Van Camp with the remaining 5% being owned by citizens of the State of Hawaii. Hawaiian Fruit Packers sole source of revenue is the processing
*United States Tariff Commission Report on Starch Investigation No. 332–37, March 1960, p. 38.
of pineapple products grown on the Island of Kauai. The corporation was formed in 1932 and was the continuation of a pineapple business which existed prior to that date. The company has recently employed approximately 500 full and partlime employees.
The purpose of this statement is to request that the Committee recommend to the Congress the necessary legislation to allow the domestic pineapple industry to survive. This industry had its origination in the United States; however it is seriously endangered as the result of several factors, but principally by foreign competition.
Stokely-Van Camp Inc. is submitting this statement without participating by other domestic pineapple processors, although their support was solicited. The reasons the other domestic processors elected not to join in this effort can only be surmised. However, Hawaiian Fruit Packers is the only company, to our knowledge, which is engaged solely in the processing of domestic pineapple. It does not own any real estate which is subject to development, nor does it have any facility for producing pineapple outside of Hawaii.
HISTORY OF THE PINEAPPLE INDUSTRY
The domestic pineapple industry originated in 1903 and during the years. employment has been as high as 12,000 employees with eight processing plants. However, in recent years, total industry employment has declined to approximately 8,400, and there are only five producing plants remaining. One of the remaining plants was the subject of a recently publicly-announced sale between two large processors. It is our understanding that the continued operation of this plant is uncertain and the seller will acquire at least part of its requirements from foreign sources.
Hawaii dominated the pineapple industry for many years after its initial development. However, other countries. utilizing Hawaiian know-how and United States capital, have entered into the pineapple industry to the detriment of the Hawaiian and U.S. economy. Attached hereto as Exhibit A is a tabulation which shows Hawaiian production as related to the known world production for 1950 through 1968, the latest information available. As indicated by this exhibit, Hawaii's share of world production has decreased from approximately 72% in 1950 to 39% in 1968. It is interesting to note that this decrease has occurred since the decrease in tariff rates on pineapple products as a result of the 1948 G.A.T.T. Geneva agreement.
The incursion of foreign pineapple products and the resulting detrimental effect on the domestic pineapple industry is further illustrated by Exhibit B which shows the per capita consumption for canned pineapple for the period which 1956 through 1969. During the period total per capita consumption has remained relatively stable, however, per capita consumption of imported pineapple has almost doubled.
INDUSTRY ECONOMIC PROBLEMS
Hawaiian Fruit Packers. to our knowledge, is the only company which would be truly indicative of the profit trend in the domestic pineapple industry, since it does not engage in any other business.
Set forth below is a tabulation which shows the results of the operations of Hawaiian Fruit Packers for the last ten years :
Net income (loss)
9 months ended: Feb. 28, 1970 (estimated). Fiscal year ended:
May 31, 1969 May 31, 1968 May 31, 1967 May 31, 1966 May 31, 1965 May 31, 1964 May 31, 1963 May 31, 1962 May 31, 1961
3, 234, 242 3, 425, 523 3,681, 297 4, 113, 159 4, 474, 345 4, 390, 626 3,944, 902 3,266, 358 3, 605, 280
($69, 842) (75, 163) 29, 297 (92, 688) 72, 020 248, 136 86, 021
7, 890 123, 043 212, 870
It is evident that Hawaiian Fruit Packers had been a profitable operation but in recent years, as imports of pineapple increased, it has grown unprofitable even though drastic steps have been taken to cut expenses.
The pineapple industry, like many other U.S. industries, suffers from a wage rate differential with foreign countries. In addition to this standard argument for increased tariff protection, Hawaiian pineapple bears the burden of subsidizing the domestic shipping and sugar industries. The freight rate (using domestic bottoms) from Hawaii to the eastern markets as compared to foreign rates available to foreign producers increases the Hawaiian cost 25 cents per case using Taiwan as an illustrative example. Also, the purchase of domestic sugar at 10 cents per pound as opposed to world market sugar at four cents per pound, increases the Hawaiian cost approximately 10 to 15 cents per case. Although not suspectible of precise determination by us, we have seen figures which indicate that wage rates in Hawaii are manyfold greater than Taiwan, for example. The additional burden of shipping and sugar costs would approximate 7% on an ad valorem basis without any consideration for additional labor costs.
An increase in the effective tariff rate on pineapple to the equivalent rate on peaches or fruit cocktail may make it possible for Hawaiian pineapple producers to survive. It is obvious that if the tariff rate is not raised, the Hawaiian pineapple operations will become more unprofitable. Wage rates are continuing to rise and selling prices cannot be increased because of the competition of foreign imports which hold the prices down. If the domestic industry cannot operate profitably, it will be eliminated as an economic factor.
PREVAILING TARIFF RATES
In 1930 there was a duty of two cents per pound on pineapple and 70 cents per gallon on pineapple juice. This was reduced over the years to .75 cents per pound (January 1, 1948, G.A.T.T. Geneva) and to 20 cents per gallon on pineapple juice. Currently, the tariff on pineapple is the equivalent of approximately 642% ad valorem and this compares to the approximate 15 to 20% ad valorem tariff on fruits such as peaches and fruit cocktail.
We conceive of no substantial reason that pineapple should bear any less tariff protection than other domestic fruits with which it is competitive.
Stokely-Van Camp, Inc. intends to present its case wherever necessary in order to protect the domestic pineapple industry. We are advised that it will be difficult, if not impossible, to obtain administrative action because of ramifications on other industries and foreign trade in general.
If protective action is not taken, it will only be a matter of time before Hawaiian pineapple will be phased out of the industry and the State of Hawaii will lose over 8,000 direct job opportunities and the many other attendant economic benefits. At the same time, the United States balance of payments will be adversely affected to the extent of the value of the increased imports of pineapple imported into the country.
The submission of this statement reflects the sincere desire of Stokely-Van Camp to remain in the pineapple industry in Hawaii. However, it will not be economically feasible for us to do unless the domestic pineapple industry receives added protection from the adverse influences exerted upon it by foreign pineapple sources.
As previously stated, it is our opinion that the most efficient and practical way to protect the domestic pineapple industry is to increase the tariff on imported pineapple to a level which reflects the intent of existent tariff legislation. The basic inequity has been demonstrated above. The present tariff rates were established at a time when foreign pineapple was not a factor; and obviously do not reflect the present balance of world competition. Therefore, we respectfully request that the Committee seriously consider recommending an increase in the tariff on imported pineapple to properly reflect present day realities. Respectfully submitted,
ALFRED J. STOKLEY, President. Enclosures :