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1947----

1

1955-------

Bituminous coal production, 194757 Year:

Thousan of tons 1 Year_Continued Thousands of tons 630, 624 1953.

457, 290 1948_ 599, 518 1954.

391, 706 1949 437, 868

464, 633 1950__ 516, 311 1956..

500, 874 1951.533, 665 1957..

490,000 1952-.. 466, 841 1958 (estimate) ?----

* 406, 614 Production to May 10, 1958.--

138, 614 Production same period, 1957--------------------------------------- 184, 3053 Percent decrease 1958 from 1957-------

24.8 1 Based on production to May 10, 1958, of 138,614,000 tons, production in the remaining 3312 weeks, less vacation period and contract holidays and allowing for some increase in industrial activity, is calculated at approximately 8 million tons weekly or a total for the remainder of the year of 268,000,000 tons, which added to the May 10 production figure results in the 406,614,000-ton estimate.

2 Decrease from 1957 of 17 percent.

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lay 10, 100O--------------------

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Prices of residual fuel oil, New York Harbor, and comparative price of coal

equivalent, 194658

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STATEMENT OF DONALD LINVILLE, EXECUTIVE SECRETARY, HARDBOARD

ASSOCIATIATION This statement is filed on behalf of the Hardboard Association, a trade association of domestic hardboard producers, in opposition to H. R. 12591, extending and broadening the President's authority to enter into trade agreements.

Despite the fact that hardboard' is a wood product by composition and use competing principally with lumber and plywood, imported hardboard is classified, administratively, as "pulpboard * * * plate finished," in Tariff Item 1413. Although the original 1930 rate for Tariff Item 1413 was 30 percent ad valorem, that rate was subsequently reduced in trade agreements to where imported hardboard as presently classified now carries a duty rate of $7.25 per short ton, but not more than 15 percent ad valorem nor less than 742 percent ad valorem, which has been estimated to result in an ad valorem equivalent of 8 percent, that 1954

1 Hardboard is the generic term for a hard, dense, grainless board, composed of wood, having high tensile strength and density, and low water absorption. It is essentially reconstituted wood, being wood that has been taken apart and reformed into large, wide boards having great utility, i. e., wood made better that will not split, splinter, or crack.

From a simple origin in 1926 as an American invention of a way to use sawmill slab waste and edgings, hardboard has become a product of hundreds of uses in all walks of life. It is widely used in the merchandising and display, transportation, furniture, and millwork, education, recreation, electronic, and manufacturing fields.

affords a real opportunity to utilize more fully the tremendone quantities of wood waste generated annually in this country in lumbering operations and woodlots. During World War II, hardboard became highly essential to the war effort and literally went to war, virtually the entire domestic hardboard production being pre empted for war uses. Because of this essentiality and utilization of our forest resources. the Federal Government since World War II has encouraged and fostered in various ways the development of a large hardboard industry.

estimate being "based on an estimated average foreign value of 412 cents a pound.”

Although mindful of the basic objectives of the trade agreements program, the domestic hardboard producers are opposed to H. R. 12591 which would extend the Executive's authority to make new agreements for an unprecedented 5-year term and grant him exceedingly broad new tariff cutting authority. .

Interpreted in light of a typical imported manufactured article, i. e., hardboard, the trade agreements program has already resulted in a 73.4 percent reduction in duty, the reciprocity for such concessions being entirely unknown. At the same time, although the maintenance of prohibitory tariff rates abroad has virtually stifled exports of American hardboard, imports of foreign hardboard to the United States are at an all time high, imports from principal exporting country (Sweden) having increased 450 percent in the last 5 years. Our objections to the bill are threefold:

1. The proposed 5-year extension is clearly excessive. In effect, it is an authority having effect for as many as 10 years, because of its provisions permitting negotiations involving the full 5-year period of reduction up to the moment the legislation expires.

Such a lengthy abrogation of congressional control of tariff making authority to the Executive is particularly obnoxious now. If enacted, Congress will have placed itself in a position where it cannot consider objectively the nearly completed Tariff Commission's recommendations for correcting anamolous and illogical tariff classifications, due next January. If enacted, Congress will be unable to correct deficiencies that develop in procedure, to adjust tariff policy in light of periods of slowing economic activity and growing unemployment, to redefine import policy in light of national security and agricultural programs requirements, etc. Obviously, Congress should review the trade agreements program annually or biannually.

2. The proposal to authorize the Executive by negotiation to grant concessions leading to the lowest duty possible under three alternative approaches—which can readily lead to reductions in present reduced tariff rates far in excess of 25 percent and up to almost 100 percent in many instancesis alarming in its implications.

The 25 percent reduction authority is grossly excessive in light of their generally being only about 25 percent left of the 1930 rates. However, the alternative authority to reduce any rate by “2 per centum ad valorem below the rate existing on July 1, 1958" is even more far reaching and is a tremendously broad new power.

This latter alternative is particularly discriminatory to commodities now subject to a specific rate or to a combination of rates including a specific rate.

As applied to such an article as hardboard, which is subject to a combination of rates including a specific rate, this 2 percent provision is to apply "on the basis of the ad valorem equivalent of such rate or rates, during a representative period (whether or not such period includes July 1, 1958)," which representative period is apparently to be determined by the President.

The extraordinary effect of first converting such a specific rate to an ad valorem equivalent rate, and second reducing that ad valorem equivalent rate by 2 percent ad valorem, in accordance with H. R. 12591, without more, can amount to as much as 57.1 percent reduction in the present reduced duty on a product like hardboard.

Where values on imported hardboard can and regularly do vary from different countries and from different producers in a country-where, for example, Swedish hardboard values are as low as 60 percent of Canadian values for the same type hardboard the required conversion from a specific rate to an ad valorem equivalent rate can itself lead to major reductions in duty of from 10440 percent. Such a step is the equivalent of averaging apples and bananas, and is grossly unfair to imports from Country A and overly beneficial to imports from Country B. And, if Country B is dumping, the ironic result of H. R. 12591 is to reward that dumping.

2 See Tariff Commission Report of March 1955 on Hardboard, p. 27. An estimated average foreign value of 416 cents per pound is the equivalent of $33.75 per 1,000 square feet, of 18-inch standard hardboard (750 pounds).

3 The 1930 rate of 30 percent ad valorem has been reduced under the program to an estimated ad valorem equivalent of 8 percent (see note 2), or a 73.4 percent reduction.

4 Although our reduced ad valorem equivalent rate may be as low as 8 percent, Mexico imposes a 50-percent ad valorem rate, France and Brazil 30 percent, Venezuela 33 percent, Italy 26 percent, Belgium 24 percent, Canada 21 12 percent, and the United Kingdom and Cuba 20 percent. Many of these countries also apply import or exchange restrictions to hardboard imported from the United States. See Tariff Commission Report of March 1955 on Hardboard, table 2, p. 31.

Then reducing the converted rate by an additional "2 percent ad valorem," in accordance with H. R. 12591, would be a further reduction in excess of 25 percent on any ad valorem equivalent rate that 742 percent or less.

Why a 2 percent ad valorem alternative reduction, instead of some other or any such percentage? In view of the great number of tariff rates that have been reduced during the past 24 years to 8 percent ad valorem or less, this innocent appearing “2 percent ad valorem” alternative could eliminate all vestige of protection of such rates.

Such an alternative is especially anomalous in view of the complete lack of benchmarks in H. R. 12591 to guide the Executive in exercising such powers. He is given no direction, and has unbridled discretion to grant concessions, without regard to national security considerations, reductions heretofore made, sensitiveness of the industry to imports, relative wage rates, conservation of natural resources, etc. There is not even a benchmark for determining a repre. sentative period in converting specific rates to ad valorem equivalents.

Such standards, the lack of which cannot be cured by the escape clause, are needed not only to insure constitutionality, but to avoid individual industries being sacrificed in furthering our foreign relations and to make the impact of tariff concessions fall evenly on our whole economy.

3. The proposed amendments to the escape clause are wholly abortive. Such amendnients would ironically change the constitutional control of tariffs by Congress by a majority vote to one that can be exercized only by a two-thirds vote.

Such an obviously ineffective escape remedy is not cured either by authorizing a larger restoration of tariff concessions, or by authorizing imposition of Executive established duties on "free list" commodities, a highly questionable power under the Constitution, in those instances where the Executive decides to follow an escape clause recommendation of the Tariff Commission. That would have heretofore aided only 9 industries in the 11-year history of the escape clause.

It would be unpardonable if what was intended to be a workable escape from individual hardship resulting from trade agreements were to remain for 5 more years as an empty, theoretical remedy. We strenuously oppose substitution of the implicit "foreign relations" test for the traditional "serious injury" test for escape from improvident concessions.

For these reasons, i. e., because of the excessive duration, the broadened novel powers to further reduce present reduced rates, and the absence of a workable escape clause, the domestic hardboard producers oppose passage of H. R. 12591.

UNITED STATES SENATE,
COMMITTEE ON INTERSTATE AND FOREIGN COMMERCE,

July 2, 1958.
Hon. HARRY F. BYRD,
Senate Office Building,

Washington, D. C. DEAR SENATOR BYRD: For many years now (since 1949) both a Senate majority and I have been convinced that our trade agreements program must be made to conform with the domestic agricultural policy and farm programs laid down by the Congress and administered by the Secretary of Agriculture-in other words, we must write into the trade agreements legislation an effective means of preventing the State Department from so administering the trade agreements program as to interfere with our domestic farm policies and programs.

5 In recent years, the volume of imports from Sweden to the United States, as a percent of all hardboard imports. has grown from less than 10 percent in 1952 to well over 50 percent in 1957. Moreover, such Swedish imports have been and are being sold for extremely low prices in this country, as is evidenced by the August 26, 1954. finding of dumping with respect to Swedish hardboard. Such Swedish hardboard is being valued for duty as well as dumping duty purposes for as little as $19.40 per thousand square feet

(49 inch untreated) which is to be compared to the $33.75 per thousand square foot figure used in the 1954 ad valorem equivalent estimate (see note 2).

As Swedish values are reduced, the lower the duty that would result from an ad valore equivalent.

If we do not have a prompt and effective mechanism of preventing imports of agricultural commodities from interfering with our various agricultural price support programs, we put ourselves in the position of trying to support the world price of agricultural products; or we multiply the cost of programs, designed to put the American farmer on a par with the income and earning power of other segments of the United States economy.

We have had on the statute books, section 22 of the Agricultural Adjustment Act, since 1935. It was clearly designed to provide for mandatory limitation on imports at any time imports threatened or tended to interfere with a price support program or any other farm program administered by the Secretary of Agriculture. However, in spite of repeated amendments to strengthen this statute and to restate the mandate of Congress that the trade agreements be made to conform thereto, the statute has been continuously honored by the State Department and the President only in its breach rather than its enforcement.

The repeated assurances of both Republican and Democratic administrations that section 22 would be more effectively administered have come to naught. The time has now come, therefore, when the Congress must so amend the procedural provisions of section 22 and the Trade Agreements Act as to put section 22 entirely under the control of the Secretary of Agriculture as is the control of our price support and other farm programs. Only in this fashion can we prevent circumvention of section 22 by the State Department and the gradual erosion of the farm policies and programs laid down by Congress.

When the Secretary of Agriculture administers a price support, marketing agreement or other farm program with respect to an agricultural commodity he should have parallel authority over both the domestic supply and the import supply. If he is in a position to deal effectively with only one source of supply it is obvious that his program cannot be effective. Domestic production plus imports constitutes the overall supply in the domestic market with which the Secretary must deal. It is self-evident that he cannot deal effectively with one without having parallel and simultaneous authority over the other.

Since we have section 22 on the statute books, why do we now need an amendment to the Trade Agreements Extension Act? The answer is, we must have such an amendment because in spite of the repeated congressional mandates, the State Department has continued to circumvent the congressional intent expressed in section 22 and has clearly indicated its intend of continuing to do so unless Congress makes it impossible. A little background will be helpful to your committee in considering this problem.

In both 1949 and 1950, the Senate passed amendments which I, along with other Senators, offered to section 22. These amendments would have transferred the administration and the fact-finding functions under section 22 from the Tariff Commission and the President to the Secretary of Agriculture. Also they provided that our domestic farm programs and section 22 should prevail notwithstanding any foreign trade agreement to the contrary.

To refresh your memory in this connection, I am enclosing a copy of a statement I made in support of our amendment before the Senate Agricultural Committee in 1950 and a copy of my statement on the Senate floor in support of this amendment which was then contained in section 3 of the Commodity Credit Corporation bill, H. R. 6567. This amendment in 1950 was approved unanimously by the Senate Agricultural Committee and adopted on the Senate floor without objection. A copy of the amendment appears in Senate Report No. 1375 of the 81st Congress, 2d session, and in H. R. 6567 as originally passed by the Senate.

However, both in 1949 and in 1950 our amendment to section 22 was either dropped or reversed in conference with the House, based upon assurances of the State Department and the administration, then in power, that section 22 would be more promptly and effectively administered.

In 1950, on the Senate floor, I moved to reject the conference report because I was skeptical of these assurances. My motion was lost by a tie vote, which was broken in favor of the State Department by the then Vice President.

Following that, in 1951 I proposed a similar amendment at the time the Trade Agreements Act was up for extension and your committee very wisely recognized the problem and included in section 8 of the Trade Agreements Extension Act of 1951 an amendment to section 22 which was designed to accomplish my purpose of making the trade agreements program subservient to our agricultural programs and section 22. But you did not include an amenriment improving and expediting the procedure as I had proposed. The amendment included by your committee, enacted into law by the Congress and signed by the President, provided as follows:

(f) No trade agreement or other international agreement heretofore or hereafter entered into by the United States shall be applied in a manner inconsistent with the requirements of this section."

You will recall at that time you and I discussed the matter and we concluded, in view of the again repeated assurances of the State Department, as to more effective and more prompt administration of section 22 and assurances that the trade agreements program would be made to conform to section 22, that the amendment approved by your committee would be adequate.

In consequence, on the floor I did not insist on the balance of my amendment which would have transferred complete administration and control over section 22 to the Secretary of Agriculture. However, again, the State Department assurances were not honored.

In view of the record up to this point, in 1953 I, along with other cosponsors, proposed amendments which would have expedited the procedure of section 22 and would have made the findings of the Tariff Commission final and binding upon the President. At that time, the need for further strengthening and proce dural improvement in section 22 was most ably stated by Secretary of Agriculture Benson as follows (taken from the Secretary's statement before the House Ways and Means Committee during its consideration of H. R. 429, the Trade Agreements Extension Act of 1953, pp. 726–728 of the printed record of such hearings) :

"I recently recommended to the Senate and the House Agricultural Committees that the Reciprocal Trade Agreements Act be extended.

“At the same time I indicated that import controls should be provided for those United States agricultural products which were under price support, and recommended that section 22 of the Agricultural Adjustment Act of 1933 be strengthened so as to make this possible. Let me review for you the conditions that made these recommendations advisable.

"We in Agriculture have in operation, as a consequence of congressional action, various price-support programs. Many of the commodities included in these price-support and marketing-order programs are subject to substantial import competition. In many cases the price-support level is substantially abore the world market price, even after allowance for the customs duties assessed against imports. When that happens, imports are attracted to this country from all over the world, including areas whose products would normally be exported in whole or in part to other countries where they may be badly needed. But the price-support level in this country acts like a powerful magnet to draw these commodities out of their normal flow in international trade. When we seek to limit the effect of this influence, we are simply seeking to diminish or avoid the distortion of trade by the stimulus of an artificial influence, such as a price-support program.

"I am sure the Congress would not enact a statute making mandatory the support of the world price of agricultural commodities at 90 percent of American parity. Yet that is what the present mandatory supports mean if we do not have a readily available and effective method of controlling imports of those commodities or products whose prices are maintained here above world levels by price-support or marketing-order programs. Our price-support activities, already costly, would become much more expensive.

"In recognition of the fact that a stimulation of imports can impose an intoler. able burden on a price-support program, the Congress enacted section 22 of the Agricultural Adjustment Act. This section provides for the imposition of import quotas or import fees whenever imports of any agricultural commodity or product thereof render or tend to render ineffective or materially interfere with any price-support or marketing order (or certain other) pogram. This is permanent legislation.

“Although section 22 was originally enacted in 1935, it was very little used. It calls for investigation by the Tariff Commission after recommendation by the Secretary of Agriculture. Only 5 such investigations have been instituted in the past 17 years. Experience has shown that these investigations are usually long drawn out and this procedure, has proved to be wholly ineffective to meet the problem.

"Because of the failure of the executive branch to use section 22 in such a manner as to achieve the objectives of its enactment, Congress enacted section

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