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Mr. JACKSON. Definitely. I think all these charts, insofar as fresh and frozen fillets are concerned, show that. And actually, our industry is moving to Canada, in order to become the good neighbors. It is to their advantage to be good neighbors. And a witness from California, from San Diego, before the House committee last week, stated that the American canned-tuna industry is moving to South America. Actually, some have gone, I understand, and others are considering going. Because, of course, capital can move, but fishermen and shore workers can't.
We have one more witness, Mr. Chairman. Since he represents Boston, I don't like to shorten it. It is not very long. It isn't as long as the testimony of the previous witness. But we have reduced our number of witnesses, trying to collaborate with the committee, and we have just one more.
The CHAIRMAN. Yes, sir. It will be necessary, however, that we hear him this morning.
Mr. JACKSON. This is Mr. Tom Fulham.
STATEMENT OF THOMAS A. FULHAM, PRESIDENT, FEDERATED FISHING BOATS OF NEW ENGLAND AND NEW YORK, INC., BOSTON, MASS.
Mr. FULHAM. Mr. Chairman, my name is Thomas A. Fulham, president of the Federated Fishing Boats of New England and New York, Inc. I am also president of Fulham Brothers, Inc., a fishing company doing business on the Boston fish pier.
I am the third generation of my family engaged in the fishing business; and frankly, sir, this is the most serious situation that has ever occurred in the history of our family.
This brief is submitted to the Senate Finance Committee by the Federated Fishing Boats of New England and New York, Inc., and the Massachusetts Fisheries Association, Inc. The memberships of both organizations include fishing-boat owners, processors, distributors, hotel and restaurant supply houses, commission merchants, trucking companies, box manufacturers, can manufacturers, ice producers, salt manufacturers, shipyards, barrel manufacturers, cold-storage warehouses, oil dealers, marine supply houses, and many others who derive their support from the operation of this vast industry. We cannot overemphasize the grave crisis which confronts one of America's oldest and proudest industries. Today, as never before in its history, is the very existence of the fishing industry being so seriously threatened.
May I direct the attention of the committee to the chart described as appendix I attached. Observe that in 1938, 1939, and in 1940 the total imports of groundfish fillets remained slightly below 10,000,000 pounds annually. In 1941, we witness the beginnings of a steady advance in the volume of imports that has continued to mount in an upward direction except for the year 1947 when labor disputes in the major exporting country, Canada, caused a downward trend. The advance was resumed in 1948 and has been maintained ever since. Statistically it indicates an increase of over 500 percent in the amount of imports in the 10-year period from 1938 to 1948.
There are two basic reasons why there has been such a staggering increase in fish imports:
1. The determined desire of foreign countries to obtain American dollars, and
2. The inability of the American fishing industry to compete with foreign producers subsidized and supported by their governments.
Foreign commercial fishery potentials have been so stimulated by governmental assistance in the form of bounties and subsidies that they can dump their products upon the American market with a price advantage up to and including 5 cents per pound under our producing costs. This is clearly demonstrated by the following statistics which have been obtained from statements published by the Fish and Wildlife Service of the United States Department of the Interior.
The situation in Iceland points this up graphically. In October 1944 the new Government announced a program, which included the rebuilding of the fishing fleets, modernization and expansion of industries, and related to fisheries, such as herring oil and meal factories, fishfreezing plants, canning factories, and shipbuilding yards. This program is financed through the use of 300,000,000 kronur ($46,200,000) in foreign credits.
In relation to this transaction, the Icelandic Government had already advanced 1,583,000 Swedish kronur as a down payment on a contract for 45 new fishing boats.
In 1945 a contract was signed in England which authorized the British to build 30 trawlers for the Icelanders. A commission appointed by the Minister of Labor suggested that the Government make available 3,000,000 kronur ($462,000) to 4,000,000 kronur ($616,000) for loans, payable in 5 years on a non-interest-bearing basis if needed as a result of the poor herring catch. The Government allotted 50,000 kronur ($7,700) to gather and prepare material consisting of drawings, boat models, engines, et cetera, for an exhibition.
Senator MILLIKIN. Which Government was that?
The British Government in late August of that year granted permission to build and deliver the 30 trawlers which had been ordered by the Icelandic Government earlier in the year. The President of Iceland issued a temporary law authorizing the Government to buy these trawlers and to take a loan of 60,000,000 kronur ($9,231,000), to be repaid when the vessels have been sold to individuals or corporations. In April 1946, the Icelandic National Planning Board, charged with the administration of the Government's reconstruction and revitalization program, let domestic contracts for 31 motor fishing boats ranging in size from 35 to 55 tons.
Senator MILLIKIN. Does the fishing industry in this country make any loans from the Government? Mr. FULHAM. No, sir.
Iceland's three leading financial institutions have as their main purpose the support of the fishing industry and commerce. The majority of the shares of the Fishing Bank of Iceland, Ltd., one of these banks, is held by the Government.
In May 1946, the Althing Session appropriated nearly 1,000,000 kronur for fishing affairs; they also passed laws regarding a state canning factory for herring, as well as a law regarding bait freezing for fishing operations.
The United States is directly responsible for the largest, newest, and most unusual addition to Iceland's fishing fleet—a 6,900-ton floating fish factory. This acquisition, which has no equal in America, was purchased under ECA's $2,300,000 loan to Iceland. Furthermore, this loan will support the purchase of additional fish-processing equipment. No doubt the products of this modern fishery operation are intended for our American market.
The Canadian Government offers another striking example of the generous way in which foreign countries have provided their fishing industries with the means by which they can undersell American competitors.
Canadian Government, in support of its fisheries, provided the following:
May 1936: Federal Government voted $500,000 to aid fishing industry: (1) $300,000 for furnishing new gear to needy fishermen; (2) $200,000 to increase consumption of fish.
Senator MILLIKIN. Was that a loan or an outright grant?
July 1937: $100,000 to extend foreign markets.
June 1939 : $200,000 for a fish advertising campaign. Fifty thousand dollars for extension of educational work in cooperative producing and selling.
April 1942: Government subsidy to build fishing craft in British Columbia amounting to $165 per gross ton toward construction costs.
June 1944: Subsidy for small draggers and long line boats amounting to $165 per gross ton toward construction costs.
August 1944: $25,000,000 appropriation to insure price security for fishermen.
March 1945: Scholarships sponsored by Department of Industry and Publicity Fisheries Division of Nova Scotia.
Senator MILLIKIN. Do we have any price supports for our fish?
March 1946: Initial fund of $150,000 for a fisherman's loan board to build boats, buy gear and engines in order to lengthen the fishing season and increase catch.
May 1946: Fisheries schools planned in Nova Scotia, and appropriation authorized to teach scientific aspects of industry.
Current activities: The Dominion Government of Canada subsidizes fishing-boat construction by giving $165 per ton.
A 200-ton dragger is given a subsidy of $33,000.
The provincial Government gives loans without interest up to 70 percent of the total cost of a vessel. On a 100-ton boat costing about $200,000, the loan is $140,000, and the subsidy is $33,000; hence the builder needs only $27,000.
The significance on American economic life of this assistance by foreign governments to their fishing enterprises becomes readily apparent. In applying these benefits, bounties and grants, our foreign competitors can build low-cost producing units which enable them
to produce raw material at a very low base price. American industry, however, must find the capital among private resources to maintain and expand its facilities. Foreign government aid specifically provides for complete amortization of a newly constructed fishing boat within a period of 5 years while American fishing boat owners must amortize their fishing boats over a period of 20 to 25 years.
In the United States, fishing-boat operations could be maintained provided its greatest cost, labor, which amounts to 65 percent of the total operating cost, could be reduced to the standard of fishermen in competing countries. Lower labor cost is the only adjustment available to us unless our Government provides measures enabling us to compete on equal terms.
We do not believe that lowering the wage standards of our workers and fishermen to the levels prevailing in foreign countries is the solution to our problem.
Low-cost manufacturing because of cheaper labor costs far below our domestic minimum-wage standards enable our competitors to sell manufactured goods, such as fillets, at prices below our production costs. The combination of low-cost production units, low case raw material costs and low manufacturing costs—the direct consequence of foreign governmental assistance-provides a barrier that American industry cannot of itself overcome.
We offer you a few pertinent facts relative to our present position. National cold-storage holdings as of January 1, 1949, were 23,000,000 pounds above the 5-year average.
I might interpolate here, sir, that about 12,000,000 pounds of that is frozen fish fillets.
According to the estimates of the best minds of the industry, this figure is likely to prevail at the beginning of our current production year which commences about April 1.
It is generally recognized throughout the industry that cold storage holdings should be reduced to a minimum by the end of the winter period. An excess of 23,000,000 pounds at the beginning of the producing period will create an extremely unstable condition in the domestic industry by tying up the fleet and causing widespread unemployment. This condition is the result of oversaturating the domestic market with a tremendous influx of imported fish fillets. The present tariff rate offers no check rein to regulate the volume of imports in relation to domestic consumption; hence, this situation can repeat itself year after year,
We must face the fact that the American consumers market is the primary objective of the foreign manufacturer of fish fillets. The price of goods produced and manufactured under an all-embracing low-cost formula should be reflected at the retail level in lower prices to the consumer. In comparing the retail price of American manufactured fillets to those on display, produced by a foreign competitor the disparity in price is negligible. The retail price of the American fillet is the retail price of the foreign fillet, hence the housewife is unable to buy foreign merchandise at a reduced price because there is no retail price differential.
The present Trade Agreements Act of 1948 offers only a partial solution to the acute problem which confronts the commercial fisheries of America. It provides for the determination, by the Tariff Commis: sion of a peril point below which a foreign industry enjoys a distinct and unfair advantage over a domestic industry. In that instance, upon a recommendation made to the President of the United States, an increase up to and including 50 percent of the current tariff rate may be applied.
While this may be the solution for some industries, at best it provides meager protection for the commercial fisheries. It does, however, serve a purpose in that elimination of the procedure of H. R. 1211 would deprive the domestic producer of the right to his “day in court" to seek relief, even though it is a limited relief. It is our contention that this procedure should be retained and be made a part of the Trade Agreements Extension Act of 1949.
We have no confidence in the effectiveness of the escape clause as outlined in the general agreement on tariffs and trade negotiated at Genera under which an American producer harassed by foreign competition is allegedly entitled to seek relief. An industry whose tariff rate was reduced in trade agreements prior to 1943 and not reduced in following agreements, and a domestic industry against whom the Government has granted a concession cannot legally petition for relief under the escape clause. This applied particularly to the domestic fishing industry. The tariff on fish products was reduced in the 1939 agreement but has been untouched in subsequent agreements.
No Government concession has been levied against commercial fisheries. Experience has also shown that a domestic producer must sit on the Government's doorstep for many months before he knows whether or not he has a legitimate case. Then follow more months of bargaining between representatives of the governments concerned, offers and counteroffers, withdrawals, concessions, et cetera. Any remedy which might be granted could conceivably come too late to do any good.
An outstanding example proving this contention was a denial issued by the United States Tariff Commission on January 3, 1949, of an application for relief under the escape clause filed September 7, 1948, by the United States Distillers Tariff Committee. Regardless of the merits of the case, 4 months elapsed before this group knew its fate. Restricting the effectiveness of the Tariff Commission and the inability of the escape clause to provide a speedy, equitable solution to a tariff problem, leaves the fishing industry with no legislative protection or recourse for relief.
We present these facts as the basis of our contention that the fishing industry of the United States must have access to some governmental formula which will equalize the sphere of competition between the domestic producer and his foreign competitor. We do not apologize for our ability and technical skill in operating our industry. We ask only for the establishment of a fair competitive policy, one that is not weighted against any American producer. In the absence of any other legislative remedy, we recommend the retention of the peril-point provision contained in the Trade Agreements Extension Act of 1949, and further, that H. R. 1211 be so amended.
Senator MILLIKIN. If you were to have relief by a tariff, how much relief would you have to have? Mr. FULIAM. You would need approximately 8 cents per pound.