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STATEMENT OF HON. ALVIN M. BENTLEY, A UNITED STATES REPRE

SENTATIVE FROM THE EIGHTH CONGRESSIONAL DISTRICT OF THE STATE OF MICHIGAN

Mr. BENTLEY. Thank you, Mr. Chairman. I am here to speak on my bill, H. R. 3360. Mr. KRUEGER. I have a similar bill. Mr. ALBERT. You have a similar bill? Mr. KRUEGER. Yes.

Mr. ALBERT. The record will note that our colleague on the committee has a similar bill. What is the number!

Mr. KRUEGER. H. R. 4663.

Mr. BENTLEY. Mr. Chairman, I might say that Mr. McIntosh has a bill, and his bill accomplishes the same purpose, but it was referred to the Ways and Means Committee. I might also say that, first of all, I am going to try to summarize the prepared statement that I have, but I request consent that it be included in its entirety in the record.

Mr. ALBERT. Without objection.
(The statement referred to is as follows:)

STATEMENT OF HON. ALVIN M. BENTLEY, A REPRESENTATIVE IN CONGRESS FROM

THE STATE OF MICHIGAN Mr. Chairman and members of the committee, I appreciate this opportunity to appear before you and to testify regarding my bill, H. R. 3360, which I introduced on January 22, 1957, and which would remove wheat for seeding purposes which has been treated with poisonous substances from the "unfit for human consumption" category for the purposes of section 22 of the Agricultural Adjustment Act of 1933.

I first introduced legislation to this effect in 1955 and then, on January 5, 1956, reintroduced H. R, 8105, which contains the identical language to the bill now before you. This was done at the request of the Michigan Crop Improvement Association for reasons which I shall go into later. An identical bill, S. 3706, was introduced in the Senate by Senator Young, of North Dakota.

The Department of Agriculture stated, under date of July 26, 1956, that the enactment of this legislation would assist in the application of the provisions of the Tariff Act to treated seed wheat. However, the Department, on request of the Bureau of the Budget, did not take an official position at that time.

The Department of State in a letter to the Bureau, on October 15, 1956, opposed the enactment of this legislation because of "adverse international repercussions," presumably with Canada. No further action was taken on this legislation during the 84th Congress.

I introduced the pending bill, H. R. 3360, last year. A companion bill, S. 666, was also introduced in the Senate by Senators Young and Langer, of North Dakota. I understand that this bill has now been reported out of the Senate Agriculture Committee and is pending on the Senate Calendar.

The Treasury Department reported, under date of September 16, 1957, that no administrative difficulties would be encountered if the bill were enacted into law. A change to give time for the notification of customs officers was sug. gested, which the committee may wish to consider as an amendment.

I have in my files a photostatic copy of a recent letter from the State Department to the Bureau of the Budget in which the Department renews its opposition to the enactment of this legislation as being contrary to our international commitments under the General Agreement on Tariffs and Trade and as adversely affecting our relations with Canada. The Department suggested the possibility of administrative relief in the event it were determined that doméstic producers were being injured by increased imports.

The Department of Agriculture reported, under date of February 28, 1958, that it had no objections to the enactment of this legislation, although clarifying

language was suggested which the committee may wish to consider inserting in the bill.

Now, Mr. Chairman, I would like to speak briefly on the pending legislation and my purpose in introducing it. It would state, in effect, that wheat for seeding purposes which has been treated with poisonous substances shall not be classified as “unfit for human consumption."

Wheat which has been so treated is classified by the Bureau of Customs as unfit for human consumption at the present time, and is dutiable at the rate of 5 percent ad valorem, or approximately 10 cents per bushel, as compared with 21 cents per bushel on millable wheat. As the Department of Agriculture said in its 1956 report:

"It appears evident that the provision of a lower duty rate for 'wheat unfit for human consumption' did not contemplate the inclusion of treated seed wheat in this category. It also seems evident that the provisions of Presidential Proclamation 2489 exempting 'wheat unfit for human consumption' from the import quota did not intend the exemption of treated seed wheat, and that the provisions of Presidential Proclamation 2550 were intended to apply to all wheat for seeding purposes, regardless of whether it was treated. It is our opinion, therefore, that the enactment of H. R. 8105 would insure the application of the tariff rate intended under the provisions of the tariff act and would insure the application of the provisions of Presidential Proclamations 2489 and 2550 in accordance with the intended purposes of those proclamations."

This problem of tariff evasion was dramatically called to the attention of the House by my colleague, Mr. McIntosh, of Michigan, in a speech on February 5 of this year, in which he said:

“Beginning in fiscal year 1954, foreign importers began to color their seed grain or treat it with chemicals in such a way as not to impair the premium quality for seed wheat purposes and insisted on the classification of such grains as being unfit for human consumption because of its color or chemical treatment. By this method of classification, seed-wheat exporters, were able to send into the United States increasing volumes of seed wheat qualifying for the 5 percent ad valorem duty and escape the 21 cents per bushel tariff rate.

"The important advantage of using this classification is clearly evident from the import figures, showing the rapid jump in volume of such wheat imports. From 1953, seed-wheat imports jumped from 6,297,000 pounds to 13,456,000 pounds in 1954. During 1955, imports nearly trebled to 38,105,000 pounds. In 1956, imports more than trebled again to 135,303,000 pounds. Imports dropped slightly in volume in 1957. But, for the first 5 months of the 1958 fiscal year, imports were nearly trebled again over the figures for the corresponding months for the previous years."

My own figures, Mr. Chairman, show similarly startling uprisings in seedwheat imports, both for the State of Michigan and for the country as a whole.

When I introduced this legislation in 1956, I sent copies to our three major farm organizations and requested their comments. The only one replying, the American Farm Bureau Federation, stated that some corrective action would be desirable in the matter of Canadian seed-wheat imports. However, the Farm Bureau recommended Executive action to amend proclamation 2489 to include treated seed wheat within the quota. They did recommend an amendment to paragraph 729 of the Tariff Act of 1930 to make treated seed wheat subject to the full rate of duty. I understand that the Farm Bureau may present a more recent statement to the committee on this matter.

The basic purpose of my bill, Mr. Chairman, is to raise the duty on seed wheat only, but not on wheat that could be used for feed. In other words, if my bill should pass, wheat that has been treated will be removed from the 5 percent ad valorem bracket and moved into the same tariff range as now occupied by milling wheat. Other wheat that is unfit for human consumption but can be used for feed will remain at the lower duty.

I understand that certified seed of soft white winter wheat imported from Canada delivered at various points in Michigan was between $2.35 and $2.40 per bushel and in other States may be as low as $2.10. Our certified seed-wheat producers cannot compete with such prices and, therefore, a large portion of our certified seed wheat goes under Government loan at current support prices. According to Mr. Harry E. Rohlfs, of Akron, Mich., in a letter dated September 25, 1954, the net cost of Michigan farmers of certified wheat delivered to the jobber is not less than $2.60 per bushel.

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wheat,” provided that, for lots of seed wheat of more than 100 bushels, the written approval of the Secretary of Agriculture is obtained. In its report to the President dated March 20, 1942, upon which Proclamation 2550 was based, the Tariff Commission stated that "the suspension of quota restrictions could be made with respect to * * * seed wheat ***, provided sufficient safeguards against abuse of suspensions were provided." It would appear, therefore, that, at the time these proclamations were issued, it was contemplated that seed wheat would be subject to the provisions of Proclamation 2489 as to "wheat" and of Proclamation 2550 as to "seed wheat." We understand that the practice of entering treated seed wheat as "wheat unfit for human consumption," at least on a large scale, developed subsequent to the issuance of these proclamations, and, in fact, only within the last few years. Prior to that time almost all seed wheat imported from Canada was entered as certified seed wheat.

The enactment of H. R. 3360 would take seed wheat out of the exemption under Proclamation 2489 of wheat unfit for human consumption and have the effect of making it subject to the certified or registered seed wheat provisions of Proclamation 2550. It would not necessarily result, however, in materially decreasing imports of seed wheat, except insofar as the increased rate of duty might tend to have a restrictive effect upon imports.

H. R. 3360 is applicable only to wheat for seeding purposes which has been treated with poisonous substances. It is suggested that after the word "substances," there be added the words “or otherwise made unfit for human consumption." This would tend to avoid a possible loophole whereby seed wheat might be treated or mixed with a substance that is nonpoisonous but would still render it unfit for human consumption.

In order to clarify that the bill is intended to make seed wheat subject to the higher rate of duty on wheat under the Tariff Act of 1930, as amended, it might be desirable to add, after the words "unfit for human consumption” in the last line of the bill, the words "but shall be classified as wheat."

Enclosed is a copy of a letter from the Bureau of the Budget and one from the Department of State to the Bureau of the Budget indicating the position of these agencies on S. 266, a similar bill.

As indicated in their letter, the Bureau of the Budget has no objection to the submission of this report. Sincerely yours,

E. T. BENSON, Secretary.

EXECUTIVE OFFICE OF THE PRESIDENT,

BUREAU OF THE BUDGET,

Washington, D. C., January 10, 1958.. The honorable the SECRETARY OF AGRICULTURE.

W 1 (Attention: Mr. Carl R. Sapp, Chief, Legislative Reporting, 105-A - Administration Building) - MY DEAR MR. SECRETARY: This will acknowledge Budget Officer Joseph C. Wheeler's letter of April 8, 1957, transmitting copies of a report which the Department proposes to present to the chairman of the Senate Committee on Agriculture and Forestry on S. 666, a bill to remove wheat for seeding purposes which has been treated with poisonous substances from the "unfit for human consumption" category for the purposes of section 22 of the Agricultural Adjustment Act of 1933.

You are advised that while there is no objection to the submission to the committee of such report on S. 666 as you deem appropriate, the Bureau of the Budget is opposed to its enactment for the reasons set out in the attached copy of a letter from the State Department commenting on the bill. It is requested that a copy of this letter be submitted to the committee along with your report. Sincerely yours,

ROGER W. JONES, Assistant Director for Legislative Reference..

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DEPARTMENT OF STATE,

Washington. DEAR MR. BBUNDAGE: The Bureau of the Budget has requested the comments of this Department on the report of the Department of Agriculture with respect to S. 666, a bill which specifies that seed wheat treated with poisonous substances shall not be classified as "wheat unfit for human consumption" for the purposes of the Tariff Act of 1930 and Presidential Proclamation 2489, issued pursuant to section 22 of the Agricultural Adjustment Act of 1933.

The Department of State recommends against the enactment of S. 666. The effect of the proposed legislation would be to increase the duty on seed wheat treated with poisonous substances to 21 cents a bushel and to make it subject to quantitative import restrictions. The proposed legislation would be contrary to our international commitments and would adversely affect our relations with Canada.

In the General Agreement on Tariffs and Trade, the United States agreed to maintain the duty on wheat unfit for human consumption at 5 percent ad Falorem. As wheat for seeding purposes which has been treated with poisonous substances is clearly wheat unfit for human consumption and has been so classified for customs purposes, an increase in the duty through the proposed legislation would be contrary to our GATT undertaking. Similarly, the effect of the proposed legislation in placing seed wheat treated with poisonous substances under the quota for millable wheat, or making it subject to the provisions of Presidential Proclamation 2550 regarding imports of seed wheat, would be contrary to the general prohibition in the GATT against the imposition of quantitative restrictions.

It would be possible to increase the duty on the product or impose quantitative restrictions on imports without violating our GATT obligations if there were a determination that the domestic industry is being injured by increased imports, or that imports are interfering with a program of the Department of Agriculture. Procedures for determining injury from imports are provided in the escape-clause provisions of the Trade Agreements Extension Act of 1951, as amended ; procedures for determining interference with a program of the Department of Agriculture are specified in section 22 of the Agricultural Adjustment Act of 1933, as amended.

Canada is the principal source of United States imports of wheat in various forms. In 1955–56 approximately 2 million bushels of seed wheat treated with poisonous substances were imported from Canada. Imports of millable wheat from Canada are limited to 795,000 bushels pursuant to restrictions imposed under section 22. Therefore under the proposed legislation the volume of millable wheat and wheat treated with poisonous substances could be reduced from approximately 2,795,000 bushels to 795,000 bushels, or by about $4 million. If there were to be any imports in excess of 795,000 bushels they would be limited to quantities approved by the Secretary of Agriculture under the authority conferred upon him by Presidential Proclamation 2550. This proclamation permits the entry of certified or registered seed wheat for use for seeding and crop improvement purposes. Such imports would also be subject to a higher rate of duty.

Wheat is Canada's principal agricultural export. The Canadian Government is, therefore, particularly concerned about measures which might limit or otherwise affect Canada's exports his commodity. It has made strong representations on many occasions to the effect that the United States surplus disposal program has seriously reduced Canada's wheat exports and this has been an important factor contributing to the accumulation of record surplus wheat stocks in Canada. The new Canadian Government has also manifested special interest in the operation of our surplus disposal programs and has voiced public complaints regarding their effects on Canada's wheat trade. It has also protested strongly against other United States actions which it considers have or threaten to have adverse effects on Canada's exports of rye, lead, zinc, and alsike clover seed and has expressed the hope that no new restrictions will be imposed on our imports of seed wheat.

Enactment of the proposed legislation would therefore introduce a new irritant in United States-Canadian relations which might further impair the cooperation which has proved so beneficial to both countries. Sincerely yours,

WILLIAM B. MACOMBER, Jr.,

Assistant Seoretary (For the Acting Secretary of State.)

TREASURY DEPARTMENT,

Washington, September 16, 1957. Hon. HAROLD D. COOLEY, Chairman, Committee on Agriculture

House of Representatives, Washington, D. C. MY DEAR MR. CHAIRMAN : In your letter of March 8, 1957, you requested a report on H. R. 3360, a bill to remove wheat for seeding purposes which has been treated with poisonous substances from the "unfit for human consumption” category for the purposes of section 22 of the Agricultural Adjustment Act of 1933.

The proposed legislation will exclude wheat for seeding purposes which has been treated with poisonous substances from classification under the provision in paragraph 729 of the tariff act for “wheat unfit for human consumption," but does not state under which tariff provision it shall be classified. If it is desired that the wheat in question shall be classified as "wheat" under the provisions of paragraph 729, Tariff Act of 1930, as modified, and for quota purposes under the provisions of the Presidential proclamation of May 28, 1941, issued pursuant to section 22 of the Agricultural Adjustment Act of 1933, as amended, it is suggested that a positive provision to that effect be included in the bill.

The Treasury Department believes that it would be desirable for your committee, if it has not already done so, to consult with the Department of Agriculture because of its concern with basic wheat policy and with the Department of State with respect to the relationship of the proposed legislation to the international obligations of the United States.

It is recommended that, if the bill is to be enacted, the language "This act shall apply only with respect to articles entered, or withdrawn from warehouse, for consumption on or after 30 days after the date of enactment of this act" be added to afford the Department an opportunity to advise customs field officers of the change in the law before such change takes effect.

The Department anticipates no unusual administrative difficulties if the proposed legislation is enacted with the change suggested.

The Department has been advised by the Bureau of the Budget that there is no objection to the submission of this report to your committee. Very truly yours,

DAVID W. KENDALL,

Acting Secretary of the Treasury. Mr. BENTLEY. As I say, Mr. Chairman, I will try to summarize the statement as briefly as I can because I know that you and I are all pressed for time.

The pending bill was originally introduced in January 1956 and reintroduced January 1957.

It has been reported on by the Department of Agriculture favorably; it has been reported on by the Department of the Treasury, there is no objection; and it has been reported on by the State Department which is opposed and by the Bureau of the Budget which is opposed following the position of the State Department.

Very briefly what the bill says is that wheat for seeding purposes which has been treated with poisonous substances shall not be classified as "unfit for human consumption.”

At the present time wheat which is classified by customs as "unfit for human consumption" is dutiable at the rate of 5 percent ad valorem or about 10 cents a bushel and millable wheat is dutiable at 21 cents.

The Department of Agriculture has taken the position that by Presidential proclamations back in 1941-42, No. 2489 and the second one, No. 2550, were never intended to apply to this treated wheat, or never intended to exempt treated wheat from the inclusion of that provision.

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