Hon. ROBERT L. DOUGHTON, WASHINGTON, D. C., August 23, 1951. Chairman, Ways and Means Committee, House Office Building, Washington, D. C. Strongly urge modification of customs simplification bill, H. R. 1535, by elimination of section that would represent ratification of the General Agreement on Tariffs and Trade. If this is done, we will support the bill; otherwise must oppose it. Request this telegram be read into the record. UNITED WALL PAPER CRAFTSMEN & WORKERS OF NORTH AMERICA, SUPPLEMENTARY STATEMENT FILED BY STUART G. TIPTON, GENERAL COUNSEL OF THE AIR TRANSPORT ASSOCIATION OF AMERICA, ON H. R. 1535 In addition to the testimony presented for the committee we wish to submit the following comments on the above bill. We favor the adoption of section 11 which would authorize the Secretary of the Treasury to disregard certain differences between the estimated duties or taxes deposited and the total amount of duties or taxes accruing when such a difference is no more than $5. Likewise if the aggregate value of articles brought in by any individuals does not exceed $10 such goods may be admitted free subject to regulations of the Secretary of the Treasury. These amendments of existing tariff act are desirable in that they relieve both the customs and members of the public from red tape which is more expensive than the revenue which it secures. Section 6 of the bill recognizes that travelers seeking to pass through the United States should not pay duty on goods they are taking with them and exempts from duty articles not exceeding $200 in value accompanying a person in transit. It is particularly desirable to relieve an air traveler passing through the United States from customs red tape because of a short time such traveler will be in the United States. For example, a traveler moving from Mexico to Europe by air will have only 1 hour in San Antonio to prepare any forms necessary to permit his baggage to go to New York or Boston to connect with a Europe-bound aircraft. At the present time the preparation of in-bond forms at the point of arrival in the United States may take so much time as to cause the passenger to miss his onward flight. This bill in section 6 would amend paragraph 1798 to exempt $200 worth of articles, thus giving some recognition to this problem but we recommend that the value of articles exempted be increased. It is understandable that a traveler from Mexico to Europe, for example, may well wish to take personal property and other articles with him exceeding $200 in value. We recommend that the figure be set at $500. We suggest therefore that paragraph (b) (3) on page 6 read "not exceeding $500 in value of dutiable articles accompanying such a person who is in transit to a place outside United States customs territory and who will take the articles with him to such place." Since such goods may be brought into the United States only on the condition that they be removed with the alien in transit, this exemption would not permit the goods to enter the commerce of this country. We recommend that in addition to the provisions included in the bill and in addition to those provisions recommended in our testimony, the bill include a provision amending section 484 of the Tariff Act of 1930 to permit entries to be made within 72 hours of the entry of the vehicle which brought the goods. At the present time that section requires that entry be made within 48 hours and failing entry within that period the Customs Service can require that the goods be placed in storage. Placing goods in storage involves expensive bonded transport, storage charges, it increases substantially the handling required by customs officials and adds to the inconviences of the importer. We urge that this inconvenience be imposed only if the importer has not entered the goods within 72 hours of its arrival. There remains one practice in the present customs procedure which works hardship on air carriers and shippers by air to which we wish to direct the committee's attention. That is the transportation entry using Customs Form 7512. The procedure relates to the following transaction. When shipments enter the United States for the sole purpose of transiting the United States to a port of export. the goods proceed under the transportation entry and move under bond to assure their export rather than their entry into the commerce of this country. If a shipment from Mexico City to London, for example, enters at San Antonio, it is placed in bond at San Antonio to be released at Boston or New York for transshipment to London. To employ that procedure it is necessary for the carrier to prepare 10 copies of the prescribed form. If while the shipment is en route to New York, it is determined that the shipment must be exported from Boston rather than New York, the carrier must prepare another 10 copies. We believe that the preparation of these 20 copies is not only wasteful and may delay the shipment many hours by mising an advantageous connecting schedule, but are unnecessary for customs purposes. We believe that the basic customs requirements would demand only 4 copies and not 20. Thus one copy of the entry could be left at San Antonio and three copies proceed with the goods to the port of export. At the port of export the second copy could be marked by the collector and returned to San Antonio to close the case in San Antonio. A third copy could be sent to Washington for control purposes and the fourth copy could be retained at the port of export. Nevertheless, at the present time 20 copies of the In my testimony before the committee I recommended that informal entries be authorized on shipments valued not greater than $500. This amendment could be effected by changing the figure of $250 appearing in line 12, page 28, to $500. In my statement I also called the attention of the committee to the desirability of preclearing aircraft destined to the United States at points ouside of the United States before those aircraft arrived in this country. For the information of the committee, I am submitting the following language which could be placed in a new section of the tariff act which should achieve the desired result. "SEC. 25. Insert after section 439 of the Tariff Act of 1930, as amended (U. S. C. 1946 edition, title 19, sec. 1439), a new section 439 (a) to read as follows: 'Notwithstanding any other provision of the Tariff Act of 1930, as amended, the Secretary of the Treasury may, by regulation, authorize the customs officers and employees at points outside of the United States to accept the entry of, make appraisals, and classify merchandise destined to the United States, and to search persons and baggage, to board aircraft, to accept deposit of duty, and reports of aircraft destined to the United States to the same extent that such entry, appraisal, classification, deposit, or report would be accepted or could be made at a point of entry in the United States. The Secretary may, by regu lation, relieve operators of aircraft, persons, baggage, and other merchandise which have met the requirements imposed by regulation, pursuant to this section, from entry, appraisal, classification, reporting, and any other requirement imposed on arrival at a point of entry in the United States. If any person knowingly and willingly with the intent to defraud the revenue of the United States smuggles or clandestinely introduces into the United States any merchandise contrary to law, or makes out or passes, or attempts to pass, any false, forged, or fraudulent invoice, document, or paper through the points established by the Secretary, pursuant to this section, shall be deemed guilty of violating the Tariff Act of 1930, as amended, to the same extent, and shall be subject to the same penalties as though such action had taken place at a port of entry in the United States.' In my testimony I also requested that the customs laws be amended to relieve the carriers of paying for customs inspections. The following is suggested language to secure that change: Insert a new section 6 on page 28 to read as follows: "SEC. 6. Section 451 of the Tariff Act of 1930, as amended (46 Stat. 715, as amended; U. S. C., 1946 edition, title 19, sec. 1451), is hereby amended by striking out the fourth, fifth, sixth, and seventh sentences and inserting in lieu thereof the following: 'Nothing in this section shall be construed to impair the existing authority of the Treasury Department to assign customs officers or employees to regular tours of duty at night or on Sundays or holidays when such assignments are in the public interest: Provided, That the provisions of this section, sections 1450 and 1452 of this title and the provisions of section 267 of this title, insofar as such section 267 of this title requires payment of compensation by the master, owner, agent, or consignee of a vessel or conveyance, shall not apply to (1) the owner, operator, or agent of a highway vehicle, bridge, tunnel, or ferry between the United States and Canada or between the United States and Mexico, or (2) the master, owner, operator, agent, or consignee of an aircraft, railroad train, or vessel engaged in overseas or foreign commerce (i) when operating pursuant to regular schedules, without regard to the actual time of arrival or departure, or (ii) when operating without schedule if the collector is given reasonable notice as to the expected time of arrival or departure of such aircraft, railroad train, or vessel, nor to the lading or unlading of merchandise, baggage, or persons arriving in or departing from the United States or its Territories by motor vehicle, trolley car, on foot or by other means of highway travel upon, over, or thrugh any highway, bridge, tunnel, or ferry, or by aircraft, railroad trains, or vessels referred to in clause (2). At ports of entry and customs stations where any merchandise, baggage, or persons shall arrive in or depart from the United States by (1) motor vehicle, trolley car, on foot, or by other means of highway travel upon, over, or through any highway, bridge, tunnel, or ferry between the United States and Canada or between the United States and Mexico, or (2) by aircraft, railroad trains, or vessels engaged in overseas or foreign commerce, the collector, under such regulations as the Secretary of the Treasury may prescribe, shall assign customs officers and employees to duty at such times during the 24 hours of each day, including Sundays and holidays as are necessary to facilitate the inspection, passage, and clearance of such merchandise, baggage, or persons. Officers and employees assigned to duty at night or on Sunday or a holiday shall be paid compensation in accordance with existing law as interpreted by the United States Supreme Court in the case of United States versus Howard C. Myers (320 U. S. 451); but all compensation payable to such customs officers and employees shall be paid by the United States without requiring any license, bond, obligation, financial undertaking, or payment in connection therewith on the part of any (1) owner, operator, agent, master, or consignee of any such (i) highway vehicle, bridge, tunnel, or ferry or (ii) aircraft, railroad train, or vessel operating pursuant to a regular schedule without regard to the actual time of arrival or departure, or with respect to those which operate without schedule when notice of the expected time of arrival is given as provided herein or (2) other person. As used in this section the term "ferry" shall mean a passenger service operated with the use of vessels which arrive in the United State in regular schedules in intervals or at least once each hour during any period in which customs service is to be furnished without reimbursement as above provided.'" We understand that the committee has requested the Treasury Department to indicate the extent to which the recommendations contained in the McKinsey report filed with the committee in January of 1948 have been adopted and the extent to which the bill H. R. 1535 includes the legislation changes needed to put these recommendations into effect. With respect to that inquiry we would like to bring the committee's attention that we undersand the McKinsey report recommended several of the proposals which we have made in our testimony and statements to this committee and we urge that those suggestions be considered favorably and amendments made in the bill to give effect to them. Thus we understand the McKinsey report favors increasing the value of goods which are subject to informal entry to $500. Second, we understand the McKinsey report recommends that preinspection of American-bound aircraft at points outside of the United States be tried to determine its value. Third, we understand that the McKinsey report recommends that carriers be authorized to make iuformal entries because of the greater expedition and efficiency which such entries permit. Fourth, we understand the McKinsey report recommends that transportation entries (CF 7512) be combined in such a way as to eliminate the necessity for preparing the numerous copies which are now required by regula tion of the Customs Bureau. Fifth, we understand the McKinsey report recommends that the present requirements that carriers pay for overtime inspection services be reexamined to eliminate inequities and hardships. Sixth, we understand that the McKinsey report recommends the elimination of the consular invoice in favor of a commercial invoice prescribed by the Secretary of the Treasury. We strongly urge that the committee pursue the inquiry it has commenced and evaluate our proposals in the light of the recommendations of the McKinsey report. STATEMENT BEFORE THE COMMITTEE ON WAYS AND MEANS ON BEHALF OF THE UNITED STATES BRANDY INDUSTRY IN OPPOSITION TO SECTION 24(D) of H. R. 1535 The United States brandy industry produces brandies from grapes and also from tree fruits such as apples, peaches, and plums. The principal production is grape brandy, primarily in California. Other brandy-producing States are Oregon, Washington, Virginia, and New Jersey. Annual sales are about 2 million tax-gallons a year utilizing about 65,000 tons of grapes and other fruits. Proposed Section 24(d) of the Bill Paragraph (1) of section 24(d) proposes to eliminate, from section 2800 (a) (1) of the Internal Revenue Code, the present requirement that all imported and domestic spirits pay excise tax on a wine-gallon basis when tax paid at less than 100 proof. Paragraph (2) of section 24(d) proposes to eliminate the similar present requirement of paragraph 811 of the Tariff Act of 1930 that imported spirits pay duty on a wine gallon basis when duty paid at less than 100 proof. Practical effect of this proposal Foreign brandies have traditionally been bottled at a proof of 84-86, averaging about 85. This proposal means that foreign brandies bottled abroad will, in the future, pay both excise tax and duty on the basis of 85 proof instead of on the basis of 100 proof as has been customary for a great many years.' This means a reduction of 15 percent in both excise tax and duty. At the present time, foreign brandies pay excise tax of $9 per gallon and duty of $1.25 per gallon. Thus, enactment of proposed section 24 (d) means a tax reduction of $1.35 and a duty reduction of 184 cents-or a total of $1.53 per gallon before release to the distributing trade. One dollar and fifty-three cents per gallon is 28 cents per gallon more than the present duty rate of $1.25. It is 3 cents per gallon more than the $1.50 increase in spirits excise tax now under consideration by the Congress. Thus, section 24 (d) must be looked at either (1) as an elimination of proposed excise-tax increases, or (2) as being more than equivalent to putting these products on the free list so far as duty is concerned. Foreign brandies sold in the United States do not need a gift of $1.53 per gallon During 1936-40, sales of foreign brandy in the United States averaged 718,000 gallons annually or 29 percent of total brandy sales. The Tariff Act of 1930 had set a duty rate of $5 per tax-gallon but this had been reduced to $2.50 per gallon in the 1936 French trade agreement. In 1947, the United States Government negotiated a further reduction at Geneva down to $1.25 a gallon, which was the maximum reduction permitted under the Trade Agreement Act and which is the duty rate currently in effect. Sales of foreign brandy in 1947 were low (326,000 gallons) but constituted 22 percent of the then existing American market. Increases followed each year (to 519,000 gallons in 1948; to 603,000 gallons in 1949; to 791,000 gallons in 1950). Sales in the first 4 months of 1951 have increased sharply and are running at the projected rate of about 1,000,000 gallons for this year-equal to about 33 percent of the total amount of brandies sold here in 1950. Foreign brandies in this last year, and prospectively, have not only more than regained their prewar position, but there is a serious question whether a definite deterioration in the position of United States brandies in relation to foreign brandies in the American market is not to be anticipated. CONCLUSION H. R. 1535, as we understand it, is intended only for customs simplification. Its proposed section 24 (d), however, has no legal or practical objective whatsoever other than to reduce the present revenue obligations of foreign bottled brandies by $1.53 a gallon. We respectfully submit that such a proposal has no proper place in this legisIation. We have not attempted to argue here the competitive effects upon the United States brandy industry of such a reduction, since we do not believe the committee wishes us to introduce detailed evidence in this regard in these hearings on this particular bill. We most respectfully urge that subsection (d) of proposed section 24 be eliminated from H. R. 1535. WINE INSTITUTE,2 717 Market Street, San Francisco, Calif. By: EDWARD W. WOOTTON, Washington Office, 900 National Press Building, Washington, D. C. 1 The assessment principle here involved is very old. It was first enacted for excise taxes in 1868. With respect to duties it appears first to have been applied in its present form in the Tariff Act of 1883, but it may be older. Excise taxes were first made applicable to imports in 1917; but, as stated, the present method of assessment goes back to 1868 in the case of spirits excises and to at least 1883 in the case of spirits duties. 2 Wine Institute is the trade association for the California wine growers who are also engaged, to some extent, in the production of fruit brandies. The statements herein are made on their behalf and on behalf of others similarly situated in other parts of the country. STATEMENT OF R. E. S. DELICHER, VICE PRESIDENT OF SALES, AMERICAN AIRLINES, INC. To: The House Ways and Means Committee, on H. R. 1535. On the occasion of the hearings by the House Ways and Means Committee on H. R. 1535 of the Eighty-second Congress, I desire to invite your attention to an entirely new concept in the execution of customs formalities prior to your final consideration of the proposed Customs Simplification Act of 1951. You already have before you the testimony of Mr. Stuart G. Tipton, general counsel of the Air Transport Association of America, which was presented on August 13, 1951. Mr. Tipton pointed out that, in addition to the customs procedures which the Treasury Department recognizes as requiring new legislation, there are others not dealt with which should receive attention in this legislation. The first of these procedures discussed by Mr. Tipton related to the preclearance of aircraft outside the United States when they are destined to points in the United States. As American Airlines is the United States-flag carrier concerned principally with this matter of preclearance, and since we have been in the process of continuous negotiation with the Customs and Immigration Services in an attempt to achieve preclearance, I believe it is appropriate that I expand Mr. Tipton's remarks for your more complete understanding and appreciation of a new conception in border clearance. You are familiar no doubt with the usual process faced by a traveler from Canada or Mexico to the United States. He is first examined by the authorities of the country which he is leaving. Then, upon arrival, he is again examined for entry purposes by Immigration, Customs, and sometimes Public Health personnel when he debarks in the United States. We in the airline business have long been jealous of the much more efficient United States examination procedures enjoyed by the international railroads and ferries. Examination of passengers while en route is undoubtedly the best way to clear passengers from one country to another, but due to limited capacities of airplanes it is not practical for our purpose. Here we are as airlines, offering what we believe to be the last word in rapid transportation. Nevertheless, our passengers, while traveling at many times the speed they are able to travel by surface means, actually lose valuable time in undergoing the exit-and-entry formalities of the governments concerned. I do not exaggerate when I say that these formalities involve more of the passenger's time than the flight between Toronto and Buffalo, and at least half the time it takes to fly between Toronto and New York. We fully appreciate the need for a government to carry out exit-and-entry examinations. Our experience as an international operator has indicated that the legal requirements in this regard have been carried out efficiently and courteously by the Government inspectors involved. Our position is not to take issue with the necessity of the examinations, or with the manner in which they are conducted by the personnel concerned, but to recommend a procedure to facilitate transborder air travel. Our recommendation is a simple one. We propose that the Commissioner of Customs be authorized to assign inspectors to airports outside the United States for the purpose of clearing aircraft and the passengers and cargo carried therein, into and out of the United States whenever it is in the public interest to do so. With such a procedure permitted under law, travelers could enjoy simultaneous baggage examinations by inspectors of both governments instead of submitting to one examination prior to boarding and another upon leaving the aircraft. Likewise, aircraft could be cleared at a single foreign point such as Toronto prior to departure for the United States and permit Customs to reduce its staffs for this purpose in such cities as New York, Buffalo, Chicago, Cleveland, and Tampa. As a result of our negotiations with the bureau heads concerned on this matter, the Commissioner of Immigration had authorized the preinspection of all passengers at Toronto who are destined to the United States. This has worked out admirably to the complete satisfaction of passengers, the Immigration Service, and the airlines involved. Just recently the Commissioner of Customs has determined that authority exists under current law to permit the preexamination of passengers' baggage at points outside the United States. We are now in the process of working out the details for conducting this procedure on a trial basis at Toronto. |