gan certified seed wheat which are substandard to Michigan grades and also duty free.

"I want to register my dislike of such matters and urge you to do whatever in your power to have corrective measures taken whether it be on import duty or grade standards that compare with Michigan grades and labeled as such." Mr. Chairman, I could continue on this subject but I believe that I have furnished the committee with sufficient facts to show the importance of corrective measures such as the pending bill contains. Again I thank you for affording me the courtesy of a hearing on this subject and I respectfully urge the committee to report out H. R. 3360 with such amendments as you may care in your wisdom to adopt.

Mr. BENTLEY. Finally, Mr. Chairman, before I start summarizing the statement, in the report from the Department of Agriculture and from the Treasury Department, certain suggestions were made in the language of H. R. 3360 to clarify a bill, and yesterday I introduced a bill incorporating these suggestions, which bill is H. R. 11581 and which has been referred to the committee, although I understand technically you are considering H. R. 3360 at this moment.

Mr. ALBERT. Yes. Now, we have reports from the Department of Agriculture, from the Bureau of the Budget, from the Department of State, and from the Treasury Department which will be copied into the record at this point.

(The reports referred to are as follows:)

Hon. HAROLD D. COOLEY,

DEPARTMENT OF AGRICULTURE, Washington, D. C., February 25, 1958.

Chairman, Committee on Agriculture,
House of Representatives.

DEAR CONGRESSMAN COOLEY: This letter sets forth the views of the United States Department of Agriculture with respect to H. R. 3360, 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 for Presidential Proclamation 2489, issued pursuant to section 22 of the Agricultural Adjustment Act of 1933, as amended.

The Department has no objections to the enactment of the bill. While the bill has 2 parts, 1 dealing with duty rates under paragraph 729 of the Tariff Act of 1930, and the other with Proclamation 2489, establishing import quotas on wheat and wheat products, both would remove from the classification "wheat, unfit for human consumption." As such, it is considered dutiable at the rate of 5 percent ad valorem, or approximately 10 cents per bushel, as compared with a duty rate of 21 cents per bushel for wheat, and is also deemed not to be subject to the quota restrictions imposed on wheat and wheat products by Proclamation 2489.

At the time of the enactment of the Tariff Act of 1930, only two classifications were set up for wheat; i. e., "wheat," and "wheat, unfit for human consumption." "Wheat, unfit for human consumption" was given a lower duty rate than "wheat," because this classification was then considered applicable mainly to wheat which was unsuited for milling and had value only as animal feed. Prior to the Tariff Act of 1930, wheat for seed shipped in international trade was not commonly treated with toxic substances. Therefore, all seed wheat was entered at full duty.

Presidential Proclamation 2489, issued May 28, 1941, pursuant to section 22 of the Agricultural Adjustment Act, as amended, established quotas for "wheat," not including wheat unfit for human consumption. At that time the exempted category, "unfit" wheat, was regarded as meaning feed wheat. This is shown by the following statement of the Tariff Commission in its report to the President, dated May 19, 1941, upon which the proclamation was based: "The evidence now before the Commission does not warrant findings with respect to feed wheat or feed flour (i. e., wheat and wheat flour unfit for human consumption) ***"

Proclamation 2550, issued April 13, 1942, suspended the quota provisions of Proclamation 2489 insofar as they applied to certain items, including "seed

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. (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..

DEPARTMENT OF STATE,
Washington.

DEAR MR. BRUNDAGE: 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 valorem. 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 of this 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 Secretary (For the Acting Secretary of State.)

Hon. HAROLD D. COOLEY,

Chairman, Committee on Agriculture

TREASURY DEPARTMENT, Washington, September 16, 1957.

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.

Now, over the last 3 or 4 years we have seen what is really an alarming increase in certified wheat importations into this country. The figures are: For 1953, 6 million pounds; and in 1954, 13 million pounds; 1955, 38 million pounds and 1956, 135 million pounds; and I understand that for the first part of the 1958 fiscal year the imports of certified seed wheat are still on the increase.

The whole thing about it is, Mr. Chairman, that apparently certain people have been taking advantage of a loophole in the tariff provision and have been treated as certified seed wheat and then listing it for customs purposes as "wheat unfit for human consumption" and shipping it without any regard as to either the duty or the rate, the lower rate of duty and also without any regard to the quota provisions. I believe the quota provision for wheat imports from Canada are 797,000 bushels per year and I believe the last figures that I have seen show nearly 2 million bushels of this treated seed wheat has been coming in.

Pricewise, that prevents our certified seed wheat growers in this country-it puts them into an almost impossible situation from a competitive standpoint. In Michigan this wheat has been selling at between $2.35 and $2.40 a bushel, being this imported wheat and in other States it may be as low as $2.10. Our farmers cannot deliver seed wheat to the jobber at less than $2.60 a bushel.

The whole purpose of the legislation is to require that this treated seed wheat, and now we are not talking about damaged wheat or wheat that is used for seed but only the treated seed wheat, that it must conform to the tariff provisions and the quota provisions applicable to milling wheat which the Department of Agriculture says was the original intention of the Presidential proclamations all along.

I have communications from individuals and organizations which I have cited in my statement but I think that this summarizes the bill rather quickly and briefly and I would welcome any questions that I can answer at this time. I do not want to take the time to read my statement but would like to have it incorporated in the record.

Mr. ALBERT. It has been, Congressman. Bentley. Thank you very much for your statement.

Now, Congressman Bentley, your bill, as I understand it, undertakes to reclassify wheat for labeling purposes so that the label "unfit for human consumption" would not appear.

Mr. BENTLEY. That is right.

Mr. ALBERT. And therefore will not be subject to the cheaper duty. Mr. BENTLEY. And also so that it will not be subject to unrestricted importations for purposes of the quota.

Mr. ALBERT. Of course, it will still be unfit for human consumption?

Mr. BENTLEY. Well, yes.

I might say that the bill as originally drafted at the suggestion of the customs and also the Department of Agriculture is about the only way, without a great deal of revision of the tariff laws, for this to be effective.

I might say that one of the amendments which we have by the Department of Agriculture which I have incorporated in the bill introduced yesterday was the addition of the words in line 8 after "un