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Mr. ANTHONY. H. R. 5505 contains, as section 24, the now familiar GATT caveat referred to by the previous witness which declares that

enactment of this act shall not be construed to determine or indicate the approval or disapproval by the Congress of the Executive agreement known as the general agreement on tariffs and trade,

and we hope it will appear in any final enactment of this bill.

However, the caveat, important though it is, does not come to grips with GATT itself. Before we become more than ever entangled in commitments made on behalf of the United States, but without express congressional approval or review, we urge Congress, as soon as possible, to take such action as will clarify our situation and make us stand forthright in the eyes of the world. As to those principles and provisions of GATT which all of us can approve, can we not say so by the. constitutional process of treaty ratification after congressional hearing and debate? As to those to which we do not wish to be committed,-. should we not repudiate them as soon as possible and thus clear ourselves of these unfounded charges that we are going back on our word?

Senator KERR. Thank you, Mr. Anthony. Are there any questions? Thank you, Mr. Anthony.

Mr. ANTHONY. Thank you, sir.

Senator KERR. Mr. J. Bradley Colburn. Sit right down.
Mr. COLBURN. All right, sir.

STATEMENT OF J. BRADLEY COLBURN, ASSOCIATION OF THE CUSTOMS BAR

Mr. COLBURN. Mr. Chairman, I have a prepared statement which I would ask permission to file and have reproduced in the record. Senator KERR. All right, sir.

Mr. COLBURN. And I would like to confine my oral presentation to high lighting that statement, and adding a few additional comments. Senator KERR. All right.

Mr. COLBURN. I appear here on behalf of the Association of the Customs Bar, which is composed of lawyers throughout the United States who specialize in the practice of customs law.

The statement which has been prepared has been submitted to the members of that association, and represents a composite of their views on this bill.

We have endeavored to confine our comments to the question of the bearing of the proposed changes on the question of judicial review. We have sought to eliminate, so far as possible, any politico-economic considerations.

Senator KERR. You are interested in its administration and not its construction?

Mr. COLBURN. That is right, sir.

Senator KERR. All right.

Mr. COLBURN. We note that it has been stated in the prior hearings before the Committee on Ways and Means by the representatives of the Treasury Department and others that the proposed bill would

not diminish or impair judicial review, as always provided by the Congress in customs matters.

Nevertheless, the bar association feels that some of the provisions of this bill are so vague and so general and sweeping in the language used as to raise at least serious doubts as to whether judicial review would be continued and maintained in historic fashion.

Senator BUTLER. Do you cover those points?

Mr. COLBURN. Those are covered in the presentation, and in each instance, may I say, where we criticize and ask for an amendment we have submitted appropriate language to accomplish that result.

I would like to address myself primarily to the several provisions which seem to be most in dispute, gathered from the comments of the witnesses who have appeared before you, namely, sections dealing with value, section 13, the section dealing with the amendment of entries and undervaluation, section 17, the currency-conversion section, No. 20, and I have added an additional general comment which is not covered in the bill at all, which I, however, think should be considered by the committee, namely, the possible effect on this bill, the question of judicial review of the reorganization plan with respect to the Treasury Department generally that was adopted in 1950.

Now, section 13, as the committee is aware and familiar with the proposals under that, we do not quarrel particularly with the proposed elimination of foreign value. We regard that as a politico-economic question.

Necessarily, of course, the elimination of that basis of value would in a number of instances automatically reduce the amount of duties colle ted by the United States. But if the committee and the Congress, having that in mind, consider that the elimination of foreign value is going to lead into simplification, reduce expenses generally, from a legal standpoint we see no reason to question it.

We do, however, question the use of a new comparative value.
Senator KERR. Say that again.

Mr. COLBURN. The elimination of foreign value would, of course, make export value automatically the primary base to be used by appraising officers.

That is substantially changed in the present law. The definitions of "freely offered" and the statement of various restrictions on sales are attempted to be set forth so as to broaden the application of export value from that which obtains under present law."

We have no particular comments on those, nor on the changes made with the alternative basis of United States value.

However, the bill would propose the interjection as a third alternative basis of a new so-called comparative value. We quarrel quite seriously with that because we think the language is so vague and indefinite and sweeping in character that we are not sure, as lawyers specializing in this practice, that we are going to have a fair review in court if we have occasion to object to an appraiser's finding under that section.

It has been said that the purpose of it is to appraise a 10-inch dinner plate on the basis of an 8-inch dinner plate or to determine the value of a 3-drawer cabinet on the basis of the value of a 4-drawer cabinet. I think those are some of the illustrations that have been used by the Treasury.

Senator KERR. Would you say that it is reasonable to take the position that the basis of the import duty, being value fixed according to some formula, that any relationship between values of articles based on differences of dimensions would be purely coincidental? Mr. COLBURN. I should say so; yes.

Now, one of the witnesses yesterday suggested, and with which observation I must agree, that it would be possible under this bill to arrive at the value of an article of chinaware using an article of earthenware. You can go most any length. There is no line drawn here; there is no real yardstick laid down to govern the action of the appraiser.

Senator KERR. What you are saying is that the proposed method would prevent an accurate appraisal of value rather than contribute to it.

Mr. COLBURN. I think it might well lead to that result, Senator. Certainly, I suggest it would invite bypassing or short-cutting the export and United States value bases and jumping to the comparative value and coming to an arbitrary decision thereunder.

Senator KERR. Which of itself would be another way of saying that it would prevent arriving at an accurate appraisal of real value. Mr. COLBURN. We believe that is so. Therefore, we think that section is bad.

Now, outside of the express provisions of the bill if true simplification is to be achieved, and importers and those engaged in foreign trade generally are to know where they stand, it seems to us that a provision should be inserted to require the appraiser, when taking action, to state the basis of his action. That requirement was at one time found in customs regulations, and involved, as far as we have ever been aware of, no great trouble or difficulty. It has now been eliminated. It is done by some appraisers at ports throughout the country here and there, but there is no standard or regular practice.

We believe it should be made a requirement of law so that whichever of the bases provided by law shall be adopted by the appraiser, the importer or other person concerned may know just what value was being used, and challenging it if he cares to do so.

We also believe that there should be attached to this bill some time limit on appraisement action.

We have today, and have had for a number of years, the situation where appraisements are delayed for years and years and years.

Senator KERR. The suggestion here yesterday by a number of witnesses was 120 days.

Mr. COLBURN. We endorse and concur in that recommendation, and the bar association has drafted an amendment which would effectuate that idea.

Senator KERR. And you introduce that here?

Mr. COLBURN. And that is a part of my prepared statement. We suggest, therefore, that consideration be given to that.

Now, on section 17, dealing with the amendment of entries and undervaluation, the bill would do away entirely with the existing right of importers to amend their entries.

Now, it is my understanding that the representatives of the Treasury Department have justified that elimination on the ground that the bill would do away with the present requirement that duties must be

based on the entered or appraised values, whichever is higher; and, therefore, that the importer no longer needs to amend his entry. He is going to get the benefit of the proper or lower value if that be the proper value in any event.

Senator KERR. Would the effect of it be that the fellow who buys it and pays for it would have no position in the matter of declaring its value either on the basis of the information he had when he first received it or which he might later acquire but that, on the other hand, he would be subject to any number of changes that might be effectuated by others who would be permitted to amend or change their idea of what the value was or might be?

Mr. COLBURN. He would be permitted, of course, and required at the time of original entry of his merchandise to declare a value based on the information then in his possession.

Senator KERR. By which he would be bound, but which would not be determinative of the actual result.

Mr. COLBURN. That is right.

Then we think a situation might arise where, as a result of honest differences of opinion between the appraiser and the importer or, perhaps, which unfortunately happens sometimes, because of personal differences or animosity, the appraiser might take the position that the importer has not cooperated to the extent of filing all of the information that this proposal would require him to file, and thereby subject him—make a finding which would result in subjecting the importer to additional duties for alleged undervaluation.

That situation could be obviated if the importer had the right to amend, and we think that should be restored.

Now, also there is a provision proposed to be inserted here to which the bar association is opposed, that, namely, in case an appraiser reports an importer as not cooperating by furnishing information, and which was the basis for the imposition of duties for undervaluation, the matter should then—

Senator KERR. Duties or penalties?

Mr. COLBURN. It is a penalty-well, it is 1 percent for each percentage.

Senator KERR. It is the imposition of a penalty, is it not?

Mr. COLBURN. It is a penalty, in fact. It would then be reviewed by the collector of customs.

We think that is the creation of another administrative review forum. The collector of customs and the appraisers of customs are supposed to be coordinate officers. We do not think it is good practice to subject the determination of values by the appraiser to review by the collectors, nor do we favor the idea of creating another administrative court, so to speak. We believe they should go in case of dissatisfaction with the findings of the appraiser directly to the Customs Court created for that purpose.

We have, therefore, suggested an amendment to take care of that situation.

Again, the right of importers to get notices of appraisement action would, under this proposed bill, be subjected to the discretion of the collector and the requirement that the importer must show a substantial reason or reasons for requesting a notice of appraisement. We think that that smacks of the arbitrary, and the importer should

get it if he requests it, without justifying that on any basis of subsantial reason to the collector or any other officer.

These, and other matters, seem to us to introduce so many doubts into the established fabric of customs administrative procedure that we suggest a safeguarding amendment to existing section 501 of the tariff act to make certain that if despite our criticisms and those that others have advanced, the bill be enacted in substantially unchanged form, that then this amendment to section 501 be made to make sure that nevertheless an importer can obtain redress in established court procedures.

Currency conversion, taking up that proposal, that would change very radically the existing procedure. It would do away with the ascertainment of Mint pars based on gold values entirely, and substitute as the primary basis for conversion of foreign currencies the par values established pursuant to the International Monetary Fund. While that is, perhaps, more of a politico-economic question than a legal one, we are sure the committee will have in mind the policy question of whether we desire to place in the hands of an international organization the final determination of values which are going to be applied in fixing dutiable values in the administration of a purely local or United States statute.

Senator KERR. To a limited extent that surrenders the prerogative of our own exclusive agent to determine the comparative value of our money

Mr. COLBURN. It does, Senator.

Senator KERR (continuing). Over to another agency with reference to which we are but one of many who would control it.

Mr. COLBURN. That is much better stated than I could, sir.
Senator KERR. Is that what the situation is as you see it?
Mr. COLBURN. That is right; it is.

One of the worst features of this proposal, whether or not the International Monetary Fund be agreed to, however, seems to us to be the proposed delegation of determination of values of currency to some international agreement to which the United States may become a party at some time in the future.

If I would be permitted to guess, I suppose that is a remnant from the structure of this proposal at the time the International Trade Organization was being talked about and was before the Congress.

It might make some sense or you could tie it to something definite if that proposal were still in existence. As it is, however, with that having been rejected and withdrawn, I, at least, know of no present proposed international organization or agreement to which the United States may become a party to which this would refer.

Senator KERR. Could this possibly be an attempt to resurrect the substance of that with reference to which the form and substance are both dead?

Mr. COLBURN. I shrewdly suspect it may be, sir.

In any event, I suggest that entirely apart from that, I respectfully suggest it is very bad policy and legislation to delegate away the powers of the Congress to some unnamed, unknown organization, particularly when it is of an international character where we, as a sovereign nation, would have only one voice of many.

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