value or the export value, whichever is higher. In other words, you have a dual computation to make. Failing those, you go to the other two.

Mr. SIMPSON. And under our new method, under this bill, you take the export value.

Mr. GRAHAM. That is correct.

Mr. SIMPSON. Failing that, you take the United States value.
Mr. GRAHAM. Yes, sir.

Mr. SIMPSON. The comparative value and the cost of production. Now we have a choice between foreign value and export value, but under this bill we stick to export alone. We are getting back to where we started and I do not see why you want to change. Today if you cannot determine the foreign value easily you take the export value. Now you say that even if you know what the foreign value is you are going to take the export value. Why?

Mr. GRAHAM. Out of the two choices we have to take whichever is higher.

Mr. SIMPSON. Under the present law that is true, but under the new law you will take the export value, which generally is lower than the foreign value, is it not?

Mr. GRAHAM. I don't believe that it is generally lower.

But may I ask Mr. Johnson just a moment if he can address himself to that point?

The CHAIRMAN. Surely.

Mr. GRAHAM. It relates back to your previous question.

This is W. R. Johnson, assistant to the Commissioner, Mr. Congressman.

Mr. JOHNSON. There are no statistics known to me that would enable me to give you figures on the relative quantities of importations which are appraised at export or foreign value, but I can say with considerable assurance that, in general, export value and foreign value are the same. That is the normal situation. The courts have recognized that by stating that in the absence of other evidence the invoice covering the sale to the United States is evidence of foreign value.

Where there are differences they would generally fall into three categories. No. 1-and up until very recently the most important one would be occasioned by internal taxes making the foreign value higher than the export value. That is no longer the situation because of certain important court decisions holding in specific cases that the particular foreign tax was not a part of foreign value under the statute as it is written today. That eliminated a very substantial portion of the cases in which foreign value was higher than export value.

The second principal reason for foreign value being different or higher than the export value is by reason of the differences in quantities sold for export and the quantities sold in the home market. It is one of the very commonest of business practices to allow quantity discounts, and where large volumes of goods are sold they are generally sold at lower prices than smaller volumes because of the difference in the incidence of overhead and so forth.

Now, as our analysis states, in the smaller countries the volume of goods in the domestic sale will average much less than the volume of of goods in an export sale. For that reason, because the quantity discount is not allowed, the foreign value is apt to be higher.

The third and by far the least category in my experience has very rarely existed, but it certainly could exist, and that is the case where there is a double policy in the industry, of maintaining two prices. There will be a high price at home, usually because of some cartel or monopoly situation-not very often a Government policy, but some industry monopoly or industry cartel will get together and fix prices high at home and have a lower export price.

Our average duty is probably in the neighborhood of 25 percent. So that collecting a quarter of the difference does not tend very strongly to suppress that practice, but our dumping law does because as soon as there is any indication of dumping, the appraisement is suspended, and every finding of dumping is retroactive to every importation that comes in after we first get the breath of suspicion in the case.

Mr. SIMPSON. But now you will have a law which says that the export price, export value, is the one we are using, and that would not be dumping if they use that price.

Mr. JOHNSON. Pardon me, sir, but that is definitely not the effect of this law.

Mr. SIMPSON. Will you point that out to me, please?

Mr. JOHNSON. The Antidumping Act is a different statute. That was enacted in 1921 and it has its own valuation provisions. It says that a dumping duty will be assessed in a dumping case equal to the difference between the purchase price and the fair value. The fair value is defined in the first instance as the price at which the merchandise is sold in the home market.

The dumping law differs from the duty law in that it specifically requires us to make allowance for these internal taxes and for quantity discounts. So it brings the fair value down essentially to a normal export value, not a dumping export value but a normal one. There is nothing in this law that will alter that in any way or will put any blessing on dumping.

Mr. SIMPSON. That is what I am wondering about. We had a law in 1921 and now we have a law in 1951. In 1951 we say that we use as the basis of that the export value, which, after all, is set by the shipper and not by our people. The law says that is your value, that is the figure you use.

How will the antidumping law come into effect there at all, unless it is by way of some administrative ruling?

Mr. JOHNSON. The antidumping law stands in full force and effect. Mr. SIMPSON. I understand that. But how effectively would it be applied if the importer and exporter says, "Here is the export value; we are ready to pay the duty on that"? Who will say that that is dumping?

Mr. JOHNSON. The appraising officers have their general information as to foreign value. Under this situation, the first suspicion of dumping within the administration would come from a sale at less than the previous level of sales.

Mr. SIMPSON. Are you talking about the Treasury Department, or the State Department?

Mr. JOHNSON. I am talking about the Treasury Department only. Our appraising officers maintain very complete value records. They have them now and they will continue to have them, and they will know if there is a break in price that will give a suspicion of dumping.

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In addition to that, the industry in the United States watches import prices very closely. From a half to two-thirds of dumping inquiries are initiated by complaints of domestic interests. We receive those complaints. We immediately investigate to determine whether there are any symptoms of dumping that will require perhaps an elaborate foreign investigation. And that will continue the same.

Mr. SIMPSON. So the administration will investigate as to whether or not the antidumping laws have been violated. But my question is a little different than that. Suppose you find there is dumping, in the minds of your administrators, what reply do you have to the importer? He says that the law says the export value is to be used as the base. How do you get around that? Do you just set this aside and apply the 1921 law?

Mr. JOHNSON. Sir, the dumping duty and the ordinary customs duty are two entirely different things. Even today, under the present law, we make a separate dumping appraisal and a separate duty appraisal. That situation will merely be continued as it has existed since 1921.

Mr. SIMPSON. Have you any idea how many dumping complaints have been filed with the Bureau of Customs since 1930?

Mr. JOHNSON. I could not give you anything except a very, very rough estimate.

Mr. SIMPSON. Give me that, please.

Mr. JOHNSON. That very rough estimate would be perhaps 150. Mr. SIMPSON. How many findings of dumping have there been? Mr. JOHNSON. I don't distinguish between complaints and suspicions that arise within the service. I think it would probably be 50-50.

Mr. SIMPSON. And about 150 all together?

Mr. JOHNSON. Yes, sir.

Mr. SIMPSON. How many instances have you found through the Bureau that there was dumping?

Mr. JOHNSON. Since 1930, perhaps 20.

Again, that is a rough estimate; although the figures are readily available.

I don't believe that I can say that figures on the number of complaints are readily available. That would require a survey of a tremendous volume of correspondence.

Mr. SIMPSON. But let us have the figures of the ones who are dumping.

Mr. JOHNSON. I can find you the findings of dumping and I can give you the findings of no dumping.

Mr. SIMPSON. Thank you very much. (The information requested follows:)

Findings on dumping by the Treasury Department since enactment of the Tariff Act

of 1930

NOTE.-As indicated in the testimony, total published findings (109) include the formal findings published in Treasury Department Decisions. In addition, 5 dumping cases covering cameras, safety pins, women's shoes, wool knit berets, and glassware from Czechoslovakia have been processed to the point of issuing "notices of withheld appraisement" and requiring special dumping bonds.

Mr. SIMPSON. That is all I have now.

Mr. NICHOLS. May I add something here?

Mr. SIMPSON. Yes.

Mr. NICHOLS. I think Mr. Johnson said, but I wanted to be sure the point was understood, that the dumping law has its own valuation provisions in it, and those valuation provisions are not touched by any of the amendments we are proposing in the Tariff Act. Those valuation provisions would continue to be employed legally in dumping cases exactly as they are today, notwithstanding whether or not Congress might adopt the changes we are recommending in section 402. That is all.

The CHAIRMAN. Mr. Curtis.

GENERAL DISCUSSION

Mr. CURTIS. Mr. Chairman, I have just a question or two because many of the things I have in mind have already been inquired about and covered.

As I understand, you had a management engineer group initiate the study. Is that right?

Mr. GRAHAM. Mr. Congressman, in 1947 the Eightieth Congress appropriated a sum of money for the Bureau of Customs to employ an outstanding management firm, and one was selected by the name of McKinsey & Co., of New York. They made a very intensive survey of the Customs Service and, as they point out in their report, they contacted a great many other Government agencies and particularly representative outside firms and people who do business with Customs. They made their report to the Treasury and it is on the basis of that report that we have these legislative recommendations.

Mr. CURTIS. This bill, H. R. 1535, is the recommendation of the Treasury Department for changing the law, based upon that report; is that right?

Mr. GRAHAM. Yes, sir. There were about 36 legislative changes which they recommended, and most of those are included in this H. R. 1535.

Mr. CURTIS. Are there any included in the bill that were not recommended by these management engineers?

Mr. GRAHAM. Yes, sir. We picked up some ourselves in going through and evaluating the McKinsey & Co. report. We picked up some that we thought ought to be included for administrative management purposes also.

Mr. CURTIS. In your previous testimony today, have those been identified?

Mr. GRAHAM. No, sir; we have not identified the additional ones. Mr. CURTIS. Would it be difficult to insert a list with your remarks, of those?

Mr. GRAHAM. Not at all, sir. We would be happy to do that. (The material requested follows:)