Mr. JOHNSON. If I follow you correctly, there will be only one determination of equivalent rates. That will not be done continuously, as is the problem in determining the American selling price. The American selling price has to be determined whenever an article is imported each time. Now, the simplification for customs is that we will not be relieved of all work on these goods, but we will apply to these goods the same technique we apply to any other goods. Mr. SIMPSON. When conditions change in the country of origin and for one reason or another prices change, won't that involve a recalculation? Mr. JOHNSON. No, sir. Mr. SIMPSON. Why not? Mr. JOHNSON. The rate would be fixed as of the time of the computation. That is when the equivalents are to be determined. Mr. SIMPSON. Under the present method, when the American selling price changes, that has the effect of changing the calculation; has it not? Mr. JOHNSON. It has the effect of changing the ultimate amount of the calculation. You still apply the 40-percent rate to the American selling price. Mr. SIMPSON. Then this equivalent protection envisages the formation of a rate by the Tariff Commission? Mr. JOHNSON. Yes, sir. Mr. SIMPSON. Of an actual rate? Mr. JOHNSON. Yes, sir-so many percent ad valorem. Mr. SIMPSON. Which will apply thereafter to items of that type? Mr. JOHNSON. May I amend my statement somewhat? They will determine two rates, and two rates would be set up for a coal-tar product, one to apply if it is competitive and the other to apply if it is noncompetitive, just as now the American selling price applies if it is competitive and the United States value applies if it is non-competitive. So that in order to achieve reasonable equivalence, there would have to be two rates, and that is contemplated. Mr. HOLMES. And that is the system now? Mr. JOHNSON. The system now is to apply either the American selling price or the United States value. Mr. HOLMES. Depending on whether or not they are competitive? Mr. JOHNSON. Yes, sir. Mr. SIMPSON. Now, will American manufacturers, to whom Congress intends to give protection, obviously, have as much protection and as certain protection under this method as they have today? Mr. JOHNSON. It is my opinion they will. Mr. SIMPSON. You say that because of the fact if they do not get equivalent protection under this bill they can fall back on the American selling price? Is that optional to industry? Mr. JOHNSON. No, sir. The American selling price would continue only until the new rates had been determined and made effective. Mr. SIMPSON. And who will determine whether they do give equivalent protection-whether the new rates give equivalent protection? Mr. JOHNSON. The Tariff Commission has stated in its reports that all of the rates would be fixed after public hearings in which all interested parties would have an opportunity to be heard and make full representations. Mr. SIMPSON. Well, this committee knows a lot about public hearings. They go in and complain, but that does not satisfy the American businessman who today has built up his business under the American selling price method. He knows what he has today. My question is one to which I think the committee ought to have a pretty certain reply. That is, under the present procedure he now is satisfied. He has his business established, and it is a business which Congress has encouraged and protected. Will he have under this simplification bill a certainty that he will have equivalent protection? To that you reply he can go before the people on the Tariff Commission and complain of the kind of protection he has and that he would be given the equivalent of the American selling price? Mr. JOHNSON. I certainly could not express any doubt that he would. The Tariff Commission is essentially an agency of Congress. Mr. SIMPSON. I agree with that. I do not want to give up something which American industry has today which in this special field is deemed important by Congress. I do not want under a simplification to create a situation where that industry, which is struggling and has been complaining, may find a tariff set by the Tariff Commission which that Commission says is equivalent to the American selling price but which industry may say is not and, as a matter of fact, may not be. Will this give industry real equivalent protection? Mr. HOLMES. Is not that the practice which has existed and is used today? Mr. JOHNSON. There are comparable practices, but there is no practice of establishing an equivalent rate of duty today. Mr. HOLMES. I understand that; but in the comparable practices, why cannot this comparable practice be transferred in establishing the equivalent procedure? Mr. JOHNSON. That is what we propose to do. Mr. HOLMES. That is my understanding. Mr. JOHNSON. To me this question really boils down to the question of confidence in the integrity and competence of the Tariff Commission, and I think my reply must be that I have full confidence in their competence and in their integrity. Mr. SIMPSON. But as to an American industry, which says that so-called equivalent protection provided by the Tariff Commission is not equivalent to the American selling price formula, the matter of confidence won't satisfy that industry and won't protect the country that needs the products of that industry. The American selling price, you told me earlier, is relatively easy to determine. I believe you told me that earlier. Mr. JOHNSON. Yes, sir. Mr. SIMPSON. And it does give the protection that industry needs, and we have this uncertainty about the equivalent protection, and apparently there is no way to prove it on the part of industry or at least to change the opinion of the Tariff Commission once made, and I just cannot see the purpose of changing it, except if you are willing to say we are doing it to get along with GATT, which I am inclined to think is the real reason for this. Mr. JOHNSON. It seems to me the answer to your doubt would be in drafting an express provision here for a judicial review of these rates. Mr. SIMPSON. Is it there? 87474-51-14 HEARINGS BEFORE THE COMMITTEE ON WAYS AND MEANS EIGHTY-SECOND CONGRESS FIRST SESSION ON H. R. 1535 A BILL TO AMEND CERTAIN PROVISIONS OF THE 87474 AUGUST 6, 7, 8, 9, 10, 13, 14, 15, 16, Printed for the use of the Committee on Ways and Means |