But I must also say that it is the fairest, most widely based, most uniform one that has application beyond a formula which considers just one commodity, and then we have to derive a formula for the next commodity. This formula gives us something to work with, not alone in one situation but in many situations.

Therefore, I say again: It may be ingenious, but it certainly is the fairest and the best that we think can be devised.

Senator CURTIS. Do you contend that it follows the statute even though it meets with the Treasury's self-imposed standards of fairness?

Mr. FLUES. We feel that it does comply with the statute, that this is the thing that the Secretary of the Treasury must do if he is to administer the law.

Senator CURTIS. What are the three or four principal imports from that country into ours?

Mr. FLUES. I don't seem to have those articles before me, Senator. The principal articles or commodities exported into the United States are chiefly wool products or meat products.

Senator CURTIS. Anything else?

Mr. FLUES. I think that would pretty well cover it. However, I must stress again that

Senator CURTIS. Any coffee?

Mr. FLUES. Coffee? From Uruguay? No, sir.

Senator CURTIS. No coffee. Anything on the free list?

Mr. FLUES. Pardon me?

Senator CURTIS. Is there anything on the free list that is of major importance?

Mr. FLUES. I am informed that to our knowledge nothing on the free list, in all probability.

Senator CURTIs. Was this averaging that you have done to find your benchmark, was that concerning all imports to the United States or was it confined to those of major importance that would have an impact on their economy and on ours?

Mr. FLUES. It includes all exports and imports from Uruguay to the world and from the world in commodities.

Senator CURTIS. Regardless of the amount of the export?

Mr. FLUES That's right. And for that reason we have this weighted procedure.

Senator CURTIS. Will you define your weighted average?
How did you weight it?

Mr. FLUES. We took the resulting rates and weighted them by the value of the trade in exports and the value of the trade in imports, and this was done according to each commodity.

Senator CURTIS. How would the value of imports relate to the question of whether or not a particular article was coming into the United States under a favorable arrangement?

Mr. FLUES. We are trying to figure out here, Senator, the true value of the peso, and we could not look at just exports in order to do that.

Senator CURTIS. The true value of the peso is the free value; and that is out so far as an exporter is concerned. That is the way I understand your testimony. For all practical purposes, that is out. Mr. FLUES. It would certainly mean that all countervailing duties would be out.

Now, when we talk about the true vale of the peso, we are talking about the true value of the peso in relation to trade, external trade. Senator CURTIS. How would the value of the peso in regard to imports into that country have any effect on determining whether a particular article had a subsidy or favorable position in being exported to the United States?

Mr. FLUES. By taking the imports as well as the exports, we get a rate that is least susceptible to manipulation. It is a least-biased rate, and it is something that is representative of the whole of the trade structure of the particular country.

Now there are items which can be exported from Uruguay and come back into Uruguay. We want to take all these things into consideration. We feel that in that way we arrive at the true value of the peso as related to trade.

Senator CURTIS. You mentioned that wool products and meat products are the principal exports into the United States.

How do those meat products break down? What are they?

Mr. FLUES. I am sorry, sir; we do not have the details on that. Senator CURTIS. Do you know what the rate of exchange is for a Uruguayan exporter into the United States when he brings his dollars back for having sold his meat?

Mr. FLUES. Yes.

Senator CURTIS. What is that?

Mr. FLUES. That is included, Senator, on the chart in that area: 4.80 through 6.52.

Senator CURTIS. That is meat to the United States alone?

Mr. FLUES. The resulting rate.

No; there are thousands of other things as well.

Senator CURTIS. I am confining my question to meat from Uruguay into the United States. The exporter takes his dollars back. What is the rate of exchange for that?

Mr. FLUES. Of course, that rate of exchange would be true not only of exports to the United States, but of exports to all other countries as well of that particular commodity.

Senator BENNETT. What is the rate?

Senator ANDERSON. Tell Senator Curtis what the rate is. That is what he asked you.

Mr. FLUES. I can only say it is within this range of 4.80 through 6.52. I do not have the detail within that range.

Senator ANDERSON. That is pretty hard on Senator Curtis.

He will excuse the expression, but a recent candidate for President on the Democratic Party ticket one time talked about two people. One had $50,000 a year and the other had nothing; so they averaged $25,000.

Now you have got an average in here; Senator Curtis wants to know the specific rate on meats. Can you furnish it now or must you supply it for the record?

Mr. FLUES. We would have to supply that for the record.

I do want to say, however, that all of them are included within this range of 4.80 through 6.52, and this chart was prepared for the convenience of this committee. We did not put every little detail in it. We didn't feel that you would want to spend the time in going into every little detail.

Senator ANDERSON. Could you get that by telephone, Senator Bennett suggests.

Mr. FLUES. Yes; we could.

Senator ANDERSON. After all, we are dealing with wool.

Mr. FLUES. Yes.

Senator ANDERSON. Meat isn't too far removed from wool. It isn't completely extraneous.

Mr. FLUES. As I say, we came to talk about wool top and we are getting into the meat problem.

Senator ANDERSON. Get that figure on the meat.

Mr. FLUES. We will get that, Mr. Chairman, for the Senator. Senator CURTIS. What was the rate of exchange on wool tops before it was changed to 4.10?

Mr. FLUES. In May of 1953, it was 2.19 pesos per U.S. dollar. In February of 1954 it was 1.97 pesos per U.S. dollar. And December 30, it was 4.10 pesos per dollar, December 30, 1958.

Senator CURTIS. Now during those years, has the rate of exchange on all other exports from that country to ours gone up also?

Mr. FLUES. I cannot give you the details on that, Senator, but I think possibly you are aware that Uruguay has had a consideration inflation.

For instance, their free rate moved from 2.86 in May of 1953 to 3.03 in February of 1954, and has now gone up to 10.20 at the end of 1958. Senator CURTIS. Did you ever consider imposing a countervailing duty in the past on canned corned beef?

Mr. FLUES. Have we?

Senator CURTIS. Did you ever consider imposing a countervailing duty in the past on the import of canned corned beef?

Mr. FLUES. The question has not been raised, Senator.

Senator CURTIS. But it did have a higher exchange rate over other commodities in the past; didn't it?

Mr. FLUES. Senator, those are the details we are trying to get for you. That would be included in this range I have spoken about on our chart, and we are trying to get them for you right now, if possible.

Senator CURTIS. According to your own formula, if the exchange rate on canned corned beef exceeded this benchmark, this weighted average at any time in the past, it would have been your duty to impose a countervailing duty; wouldn't it?

Mr. FLUES. Not necessarily, because the question would be, is there a subsidy?

Senator CURTIS. Is it your contention that a more favorable exchange rate is not a subsidy?

Mr. FLUES. Not necessarily a subsidy.

Senator CURTIS. All right, then, in what situations is it a subsidy and in what situations is it not?

Mr. FLUES. Well, here are some factors we would look at as we looked at them in connection with wool top.

In 1953, we found that wool top was coming into the country in rapidly increasing quantities; so the volume of the imports would be something we would look at.

We would look at the decrees and the regulations of the Uruguayan Government to find out if there is anything we could get out of them which would indicate the purpose for the particular rate. Now, if there were indications of a Government policy to promote sales, that is something we would take into consideration. We would look at the

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history of the particular rate, whether it was something that had been in effect for a long time or whether it was just a new rate. We would look at the background surrounding each particular commodity and its rate. These are things which we look at.

Senator CURTIS. You look at the background as to each particular commodity? You specialize as to a particular article in that case. But in applying the question of whether or not the exchange rate is a favorable one that constitutes a subsidy, you take in the whole realm of world trade, imports and exports to all countries; is that correct?

Mr. FLUES. We use the benchmark as the measuring stick.

Now, if there is a less favorable rate, then we can assume there is no subsidy. If there is a favorable rate over and above that benchmark, which would make it appear that there could be an advantage being given to the export of the particular commodity, then we would look further to determine whether in fact there was a subsidy. The things that I have mentioned, we would take into consideration at that point.

Senator CURTIS. What edicts or regulations or announced policies of that Government can you point to that indicate the reason for the exchange rate on wool being established at 2.81?

Mr. FLUES. You mean the Uruguayan Government?

Senator CURTIS. Yes.

Mr. FLUES. There are the decrees here. We have the last two decrees. The rest of them are in Spanish. We didn't have time to get them translated but it is that type of document that we look at. Senator CURTIS. What do those decrees say?

Mr. FLUES. They just give the specific rates of exchange for commodities, for particular commodities.

Senator CURTIS. Then you have no evidence that the lower exchange rate on wool waste and greasy wool was for some purpose such as raising revenue.

Mr. FLUES. These decrees and these regulations are checked by Government representatives in Uruguay and they make a search of the circumstances and advise us. That is the way we determine whether these considerations should be things that weigh against a subsidy or not.

Senator CURTIS. Who are the principal foreign buyers, what countries are the principal foreign buyers of greasy wools in Uruguay? Mr. FLUES. I am sorry; we do not have that information, Senator. Senator CURTIS. Did you have the information as to what countries are the principal buyers of wool wastes in Uruguay ?

Mr. FLUES. I do not have that information.

Senator CURTIS. What country is the principal buyer of wool tops from Uruguay ?

Mr. FLUES. We will try to get that information for you. (The following was later supplied for the record :)

URUGUAYAN EXPORTS OF WOOL

The latest official figures we have are for the first half of calendar year 1958. They show the largest purchasers from Uruguay to be as follows: greasy wool, Russia; wool top, Holland; wool waste, United States.

Figures for calendar year 1957 show the largest purchasers from Uruguay to be as follows: greasy wool, Holland; wool top, Holland; wool waste, United States.

Mr. FLUES. The exchange rates for the principal meat products are as follows:

Frozen beef, 5.25 pesos per dollar; frozen lamb, 5.99 pesos per dollar; canned beef, 6.52 pesos per U.S. dollar.

Senator ANDERSON. May I just ask there-those are all above the average, so you have countervailing duties on all those, do you not? Mr. FLUES. First of all, frozen beef and frozen lamb are not exported into the United States.

Senator CURTIS. They are not exported into the United States? Mr. FLUES. No; frozen beef and frozen lamb are not exported into the United States.

Senator BENNETT. This is frozen, not canned?

Mr. FLUES. I am not speaking of canned beef. I am speaking of frozen as opposed to canned.

Senator CURTIS. Where do they export the frozen?

Mr. FLUES. Where do they export their frozen lamb and frozen beef? That I don't know, but I think because of the possibility of hoof-and-mouth disease we do not let it come into this country. Senator BENNETT. Do you have any figures on any meat products that do come into the United States?

Mr. FLUES. Canned beef.

Senator BENNETT. What is the rate on that?

Mr. FLUES. 6.52. I gave that, Senator.

Senator CURTIS. That is above your weighted average.

Mr. FLUES. That is true. I understand that frozen beef and frozen lamb are exported in substantial quantities to Great Britain.

Senator ANDERSON. Do you have a countervailing duty on this

corned beef?

Mr. FLUES. Canned beef?
Senator ANDERSON. Yes.

Mr. FLUES. We do not.

Senator ANDERSON. Why not? It is above the average.

Mr. FLUES. The question has not been raised on that.

Senator ANDERSON. It is raised now. What is your policy on that? Mr. FLUES. Sir, that would have to be looked into.

Senator ANDERSON. What?

Mr. FLUES. That would have to be looked into.

Senator BENNETT. Mr. Chairman, I wonder if countervailing duties do not come into being at the request of an industry that considers itself injured. So long as there is no request for countervailing duty, I doubt that the machinery is set in operation to impose it. Senator ANDERSON. I thought the law was plain.

Whenever any country, dependency, colony, province, or other political subdivision of government, person, partnership, association, cartel, or corporation shall pay or bestow, directly or indirectly, any bounty or grant upon the manufacture or production or export of any article

and so forth, "such article *** is dutiable," and in all such cases they shall have a countervailing duty.

You know about it now; what are you going to do about it? Senator CURTIS. I think if you need a request, as a Senator who represents in part the greatest meatpacking center in the world, I probably could get a request for you, if that is all you need.