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The Presidential Proclamation 2489, although it is referred to here, was later modified by Presidential Proclamation 2550, which said that Presidential Proclamation 2489 does not apply to seed wheat, certified seed wheat. So that, apparently, our interpretation was essentially correct, although I think your point is well taken, that it will stand a little further examination, and that it should be certainly clarified in the committee report, presuming the committee reports the bill-to indicate this is not to have the effect of placing seed wheat under the wheat category of Presidential Proclamation 2489.

Mr. ALBERT. Of course, the truth of the matter here is, from the standpoint of our relations with Canada, they would still have a price advantage, because Canadian wheat sells cheaper than American wheat, but they would not have the additional duty advantage. There would be much less likelihood of section 22 being invoked if this change was made.

Mr. BEALE. I have not considered that angle, so I cannot answer that.

Mr. ALBERT. Would not that be true? Is that a sound observation or not?

Mr. BEALE. Would you mind putting it again, sir? Mr. ALBERT. Well, the Canadian producers of this type of seed wheat will still have a price advantage over American producers because Canadian wheat, under their method of supporting prices, their wheat sells at a lower price than American wheat. In other words, it will compete at a price below the American price. It will lose the duty advantage, it will come in at 11 cents more a bushel, approximately. So it will lose that much advantage. But they still will have some price advantage, and it would seem to me that if they lost this little advantage and still were able to sell their wheat cheaper than we are able to sell our wheat, that our competitive position would be a little better, and therefore there would be less likelihood of an action under section 22 being sustained by the Tariff Commission. Do you understand my question?

Mr. BEALE. Yes, sir. Mr. ALBERT. Is that a sound observation or not? Mr. BEALE. Well, sir, that asks me to make a guess at what the Tariff Commission will find under section 22 investigation, and I just would not hazard a guess on that, on what the situation would be.

Mr. ALBERT. Well you just follow the thing down. If you give them a much greater advantage, if we eliminate all quotas and if they could produce wheat much cheaper, you could get down to a point where you could put American producers out of business, and the closer you get to that point the more likely is a section 22 action to be sustained; is that correct?

Mr. BEALE. That is correct.
Mr. ALBERT. Would that be true?
Mr. BEALE. The closer you get to that point, certainly—

Mr. ALBERT. What would you recommend we do in view of what our people are asking us to do on this matter and in view of the facts that have been brought out by the Department of Agriculture ?

Mr. BEALE. Well, sir, I would hesitate to recommend that you should not report legislation favorably, but I would like to ask that if it is your desire to do so that the Department be given an opportunity to negotiate out the situation that we would find ourselves in because we would have to admit there is a violation of our general agreement.

Mr. ALBERT. Speaking for myself, I would prefer to go to the Canadians first, before we attempted to report the bill, that would be my preference in the matter.

I do not want to jeopardize our relationships with Canada if we can avoid doing so, without injuring our own people.

I think that we should approach every problem with Canada in a candid manner and with a view of finding ways, of trying to eliminate problems rather than creating problems.

Mr. BEALE. Well, sir, there is no approach we can make to the Canadians-well, if I may put it this way-on which we would not have to say that to enter seed wheat unfit for human consumption in any other way would be a violation of our commitment, of course we can go to the Canadians and say that, if the decision is made to enact such legislation, we can go and negotiate compensation for a concession that no longer exists.

Mr. ALBERT. What about the statement that the Department of Agriculture officials have made or at least that Mr. Burmeister has made, that when the negotiations were made they were dealing with something entirely different, they were thinking of two categories of wheat; of good wheat which would come in under a quantitative limitation or at least under a duty, a certain duty; and feed wheat which would come in under another category.

Now, if that was understood, then that indicates either the Canadians are getting around it by shipping in this wheat under a classification not contemplated when our agreement with Canada was made.

Mr. Beale. I would agree, sir, Mr. Burmeister's statement, although I have not checked the records of the negotiations, that the negotiators contemplated seed wheat would be entered under the 5 percent rate.

Mr. ALBERT. If you can go into the proceedings, would it be impossible to point out the Canadians that they did in fact I would not say violate, but were getting around the intent of the GATT agreement ?

Mr. BEALE. Well, under the way in which we proceed under that agreement, it is that when a concession has been made on a particular item, if subsequently a new item is developed that comes under that same-is determined to come under that same tariff classification, then the concession applies to the new item.

Mr. ALBERT. This is not a new item, they have been shipping this wheat into the country but shipping it in under another category.

Mr. BEALE. Well, let us put it this way, if I may, new items from the standpoint of tariff classification, because that is what determines the extent of the concession.

We find that problem particularly arises, that that situation has arisen in the past in connection with the so-called basket clauses which sometimes appear at the end of tariff schedules in the Tariff Act of 1930, and we find that an item comes in there which we had not previously known as the result of some new industrial or agricultural development.

Mr. ALBERT. Is there anything else?

Mr. HEIMBURGER. Well, Mr. Chairman, this subject appears to me to get more complicated rather than less, the more we get into it.

I have just been handed a document by Mr. Higman of the Customs Bureau which certainly adds to these complications. It is put out by the Foreign Agricultural Service of the Department of Agriculture in a mimeograph signed by R. H. Roberts, Director of the Foreign Trade Division of the Department of Agriculture. It is dated August 20, 1954. It is a notice to Customs officers and importers and here is what the first paragraph says:

ENTRY OF WHEAT FOB SEEDING PURPOSES Wheat imported for seeding purposes which is classified by the Bureau of Customs as "wheat unfit for human consumption" is not subject to the wheat quota and a permit issued by this office is not required for its importation.

Now, in all of this discussion up to this time I had assumed and I believe it has assumed by others that this wheat coming in, although classified as unfit for human consumption came in under the exception to the Presidential proclamation providing for seed wheat and that it was so certified by the Secretary and that the Secretary had never refused that certification.

Here now is a statement of 1954 from the Department of Agriculture, that poisoned seed wheat does not even require certification, isn't that correct, and that is the still the present ruling of the Deparment of Agriculture

that is exactly what you were talking about, Mr. Smith.

Mr. SMITH. That is right. Mr. ALBERT. Well then, would you say it would serve no useful purpose to go to the Canadians before we consider this matter further?

Mr. BEALE. Well, I would like to have the opportunity to do so and discuss with them the problems and let you know the result. I cannot at this time say what we will propose to them.

The discussion with the Canadian Government would have to be, of course, sir, on a completely informal basis. Mr. ALBERT. That is right.

Mr. BEALE. Because nothing could be done except in the context of the GATT concessions, reference to an intercessional meeting and all the rest, and could only follow after the positive action.

Mr. ALBERT. But do you think it would serve a good purpose for you to have informal discussions with the Canadians?

Mr. BEALE. At least where we can express our concern.

Mr. ALBERT. And that we are considering a bill and seriously considering a bill which would make this seed wheat come in at a higher duty and as far as we are concerned, I think the committee would not have any intention of making it a part of the quantitative quota under which millable wheat comes in. I believe that is all. Anything further from anyone?

Mr. HEIMBURGER. Might I ask Mr. Higman a question? Mr. ALBERT. Yes. Mr. HEIMBURGER. Mr. Higman, just so we can get it on the record: When a similar bill was reported on to the Senate by the Treasury Department certain recommendations as to amending the bill were made. We have before us here two bills, H. R. 4663 and H. R.

1158 and I understand that H. R. 11581 does contain the amendments recommended by the Department of the Treasury; is that correct?

Mr. ALBERT. We are going to go into executive session in a minute.

Mr. HIGMAN. Would you repeat your question, please, Mr. Heimburger!

Mr. HEIMBURGER. My understanding is that H. R. 11581 contains the amendments recommended by the Treasury Department.

Mr. HIGMAN. Well, as I remember the Treasury Department recommendation, there was an effective date to be put in the bill which is in this bill, it would be lines 1, 2, 3, and 4 on page 2.

Mr. HEIMBURGER. Yes, sir. Mr. Higman. And the Treasury suggested that the bill specify where this poison wheat shall be classified but did not suggest any particular classification.

Mr. HEIMBURGER. I see.

Mr. Higman. Then this bill does of course supply a classification as wheat but I think that was the recommendation; but no recommendation specifically that it be given a classification as wheat.

Mr. HEIMBURGER. Thank you very much.

Mr. ALBERT. If there is nothing further, thank you one and all. The committee will now go into executive session.

(The committee then retired into executive session at 11:40 a. m.)

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H. R. 3987, H. R. 10169, H. R. 10193, H. R. 10204, H. R. 10228, H. R. 10241, H. R. 10269, H. R. 10837,

and H. R. 12112

IMPROVED FARM PROGRAM

H. R. 4637, H. R. 5308, H. R. 7815, H. R. 7939,

H. R. 8059, and H. R. 10203

APRIL 22, 23, 24, AND 25, 1958

Printed for the use of the Committee on Agriculture

Serial PP
PART 2

UNITED STATES
GOVERNMENT PRINTING OFFICE

WASHINGTON : 1958

22856

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