CHERRY GROWERS & INDUSTRIES FOUNDATION

Submitted by J. Walter Hebert, president, Corvallis, Oreg.

This statement is filed in behalf of the Cherry Growers & Industries Foundation, a trade association of more than 18,000 growers, shippers, and processors of sweet cherries grown in the States of California, Oregon, Washington, Idaho, Utah, Michigan, and New York. The foundation's main office is located at 302 North 29th Street, Corvallis, Oreg.

We propose an amendment to H. R. 12591 for the purpose of correcting a serious deficiency of the peril-point and escape-clause provisions of the present Trade Agreements Act, which H. R. 12591 as it passed the House does not correct. This proposed amendment is as follows:

"Add to section 5 of H. R. 12591 a subsection reading substantially as follows:

"Subsection (e) of section 7 of the Trade Agreements Extension Act of 1951, as amended (19 U. S. C. 1364 (e)) is amended to read as follows:

"(e) As used in section 1352 (a), (c), 1354, and 1360-1367 of this title, and section 624 (b) of title 7, the terms 'domestic industry producing like or directly competitive products' and 'domestic industry producing like or directly competitive articles' mean that portion or subdivision of the producing organizations manufacturing, assembling, processing, extracting, growing, or otherwise producing like or directly competitive products or articles in commercial quantities, and the terms 'like or directly competitive products' and 'like or competitive articles' shall include among other products or articles raw or processed agricultural or horticultural products from which there is manufactured, extracted, or processed a product or article which is like or directly competitive to any product or article upon which a concession is granted or proposed to be granted under a trade agreement. In applying the preceding sentences, the Commission shall (so far as practicable) distinguish or separate the operations of the producing organizations involving the like or directly competitive products or articles referred to in such sentences from the operations of such organizations involving other products or articles." [New matter is indicated by italic.]

The present peril-point and escape-clause provisions (19 U. S. C. 1360, 1363, 1364) purport to be means of avoidance or escape from "serious injury" resulting from a tariff reduction or other concession under a trade agreement. The perilpoint and escape-clause procedures, however, apply only to "the domestic industry" which produces articles which are "like" or "directly competitive" to the imported article involved (19 U. S. C. 1364 (e)).

In an escape-clause proceeding in the year 1952 relating to glace cherries, the majority report by the Tariff Commission declared that:

"The domestic industry producing glace cherries cannot properly be considered as including the cherry growers or the primary processors of domestic cherries who put up sulfured (brined) cherries." (Tariff Commission's Rept. No. 185, 2d series, Glace Cherries, October 1952, p. 7).

Under this view, the Commission's determination of whether or not glace cherry imports were causing or threatening serious injury to the "domestic industry" had to be confined to the effects of those imports upon the 20 to 25 domestic companies which were then manufacturing glace cherries. The serious effects upon the many thousands of cherry growers and briners dependent in large measure upon the glace cherry outlet were thus considered to be immaterial. This apparent exclusion from peril-point or escape-clause proceedings involving manufactured products, of growers and other producers of raw materials from which the processed or manufactured products are derived, who do not themselves manufacture the raw materials into the final form in which they compete directly with the imported commodities, was pointed out to the Congress at the time the trade-agreements legislation was up for extension in 1955. At that time the Senate adopted an amendment expressly for the purpose of rectifying this situation, but the amendment was eliminated by the conference committee, evidently on an assumption that the definition of the term "domestic industry producing like or directly competitive products" which was then inserted into the act would be sufficient to accomplish the same purpose. That definition now in the present statute (19 U. S. C. 1364 (e)) reads:

"The terms ‘domestic industry producing like or directly competitive products' and 'domestic industry producing like or directly competitive articles' mean that portion or subdivision of the producing organizations manufacturing, assembling, processing, extracting, growing, or otherwise producing like or directly competitive products or articles in commercial quantities."

This definition, however, clearly does not meet the situation as to the growers and briners of cherries which are normally sold to manufacturers for processing into glace cherries. The Tariff Commission readily could again rule that even under this added definition the cherries grown by the cherry growers and the brined cherries produced by the briners are not "like or directly competitive" to the imported glace cherries which may be involved in any future peril-point or escape-clause proceeding.

Consequently, the United States cherry gowers and briners may be precluded, under the present Trade Agreements Act as it would be continued by H. R. 12591, from obtaining peril-point protection as to any future proposed tradeagreement concession involving glace or other finished cherries, or from instituting, or even appearing as interested parties in, any escape-clause proceeding relative to the present or any future trade-agreement concessions on such finished cherries.

The domestic sweet cherry industry is gravely concerned by this situation, for the industry is highly vulnerable to imports of cheaply produced foreignbrined cherries and finished cherries such as glace and maraschino cherries. Forty percent of the United States annual production of sweet cherries is now normally brined for use as the raw material in manufacture of maraschino, candied, and glace cherries. In some producing districts, such as in Michigan and New York, and the Willamette Valley in Oregon, more than 80 percent of the sweet cherry production is marketed in brined form.

The brining market for United States cherries is of key importance to the orderly marketing of the entire domestic sweet cherry production, whether marketed in fresh form, canned, or otherwise processed. Brining is the only method whereby supplies which cannot be taken by the fresh markets, the canners or other users of the fresh fruit can be carried over from year to year and utilized. Any substantial reduction of the brined market for United States cherries would inevitably create a seriously surplus condition, as the other available markets could not possibly absorb any appreciable portion of the volume now brined, and demoralization of all cherry markets would quickly follow. The domestic cherry industry has no present or potential foreign market, but is dependent wholly upon the domestic United States markets.

Access to the peril-point and escape-clause procedures under the trade agreements legislation afford every industry a measure of protection against serious ments legislation is thus of critical importance to the cherry industry. The industry's present position is made especially precarious by the fact that many if not most of the manufacturers who previously purchased domestic brined cherries for the manufacture of glace cherries have ceased such domestic manufacture and now handle exclusively the substantially cheaper imported French glace cherries, the tariff rate on which has been substantially reduced under the existing trade agreement with France.

If the domestic industry producing articles like or competitive to the French glace cherries is confined to the manufacturers of glace cherries, the disappearance of the domestic glace manufacturing industry by reason of the tariff reductions on the imported cherries may deprive the American cherry growers and briners of any peril-point or escape-clause protection or relief, no matter how seriously they may be affected and injured by the imports of the foreign finished cherries.

The purpose of the proposed amendment hereinbefore set forth is to rectify this grossly unfair situation, and to make good the Government's frequent assurance that the peril-point and escape-clause provisions of the trade agreements legislation afford every industry a measure of protection against serious injury from excessive imports resulting from trade agreement concessions.

With further reference to Section 5 of H. R. 12591, we urge amendment of subparagraph (a) thereof so as to make clear that the term "any interested party" is intended to include agricultural producers. Section 5 (a) of H. R. 12591 would then read as follows:

"SEC. 5. (a) The first paragraph of subsection (a) of section 7 of the Trade Agreements Extension Act of 1951, as amended (19 U. S. C., sec. 1364 (a)), is amended by striking out 'any interested party' and inserting in lieu thereof 'any interested party (including any organization or group of employees or agricultural producers)'". [Italic indicates new matter.]

We further urge that the trade agreements legislation not be extended at this time for any period greater than 2 years. We concur in the widely expressed view that United States tariff policy and legislation ought to be carefully and thoroughly reviewed and reappraised, in order that they may be better adapted to changed world conditions and serve the best interests of the United States. Extension of the trade agreements legislation for a period longer than 2 years would, we believe, unreasonably deter and postpone a much-needed reexamination and revamping of the United States foreign trade policies and procedures.

Hon. HARRY F. BYRD,

SENECA WIRE & MANUFACTURING Co.,
Fostoria, Ohio, June 26, 1958.

Senate Office Building, Washington, D. C. DEAR MR. BYRD: We must register ourselves against the bill now known as H. R. 12591 in its present form. We feel that we should even go as far as to increase the tariff rate considerably on material such as fine wires.

We realize there is a lot of heavy steel and other items being exported by our country that contains very little labor, but the damage is to the smaller people who must necessarily put in a lot of labor to manufacture such an item as our fine wire. That is where we are being hurt, as well as labor is being hurt, because of the high number of labor hours put into such fine products.

A good example of what is taking place is 32 gage oil tempered brush wire which is selling domestically by our domestic producers at around $62 per 100 pounds and it is being brought in and delivered in Chicago at $33.67 per 100 pounds. This, of course, is due to the cheap labor contained in foreign imports, and we just cannot compete with this situation. The same thing is existing in other fine-wire items, such as broom wire, mattress wire, stapling, box stitching, bookbinders, flat, gutter-broom wire, weaving wire, etc.

Our sales are now down about 20 percent as compared to last year. Not all of this is due to foreign imports, but the foreign imports are an important part of this. It is hard to estimate just how much of the reduction is due to foreign imports, as importation of items is also in other items that are imported and that require wire. So the effect is snowballing.

Reciprocal trade, of course, is a good goal, but Cordell Hull's idea has been turned into a foreign aid program, while the interests of small manufacturers in this country have been shoved to the background.

We feel it is important that Congress reassert its constitutional responsibility. If nothing is going to be done to increase the tariff on such items as we manufacture, and other high labor content items, then these small manufacturers, manufacturing these finer goods, should be compensated for losses.

It would be practically impossible for a single company or industry to obtain a two-thirds vote of both Houses of Congress to override any Presidential decision in an escape clause case, as provided by the bill.

The 5-year extension is entirely too long as it ignores possible changing economic conditions and such an extension certainly should not go beyond the present Presidential term, rather than binding the hands of a future administration.

The present Reciprocal Trade Act and this bill certainly will encourage new plants and facilities to be located in foreign lands, rather than here to provide future employment for our expanding labor force.

What is going to be done to replace such fine wire drawing equipment that will be scrapped as the result of no domestic demand, in the event of a future war? We are already dumping all of our round tempered brush wire at a heavy sacrifice and discontinuing its production, as the result of the present program.

Respectfully yours,

H. L. MARTIN, Vice President and General Manager.

THE ATLANTIC WIRE Co., Branford, Conn., June 26, 1958.

Subject: H. R. 12591.

Hon. HARRY F. BYRD,

Chairman, Senate Finance Committee,

Washington, D. C.

DEAR SENATOR BYRD: AS Chairman of the Senate Finance Committee I would like to urge that you amend the subject legislation to include the following provisions:

1. Reduce the term of the Extension Act from 5 to 2 years because none of us can judge at this time what the economic climate will be in this country or in the world 5 years from now. To commit our country to a 5-year program in this field may not only be regretted but might even be disastrous by 1963.

2. Reduce the tariff-cutting authority from 25 percent or more to 10 percent or less. The reductions which have already been made in our import duties have injured many domestic companies rather severely. We manufacture fine and specialty steel wire and have had our production operations reduced and our employment figure reduced because many of our customers can purchase similar quality from abroad at considerably lower prices. This, of course, is due not only to lower wage costs abroad but an indirect subsidy program on the part of some foreign governments, particularly the Benelux countries.

3. Restore the responsibility in determining escape clause relief to the Congress where it does belong and not to the President. We feel that it is entirely academic and certainly not workable to expect that the Congress could muster a two-third's majority to override a Presidential veto in the event the Tariff Commission sincerely felt a domestic industry was going to be injured or wiped out of existence by low tariff duties. We hope that you will exert considerable influence in bringing about these amendments.

Sincerely yours,

W. E. HITCHCOCK, JR., President.

STATEMENT OF OPPOSITION TO H. R. 12591 BY GEORGE P. BYRNE, JR., LEGAL COUNSEL, UNITED STATES WOOD SCREW SERVICE BUREAU REPRESENTING 65 SCREW MANUFACTURERS

INTRODUCTION

This statement is submitted on behalf of the United States Wood Screw Service Bureau, a trade association representing approximately 65 manufacturers of wood screws, machine screws, cap screws, socket screws and rivets. These producers, their stockholders and employees have a direct interest in proposed legislation H. R. 12591 (Trade Agreements Extension Act of 1958) because imports of screws into the United States have increased in such quantities as to cause or threaten to cause serious injury to them and their employees. A list of these producers is attached to this statement.

Vincent J. Roddy, president of the American Screw Co., and I testified before the House Ways and Means Committee strongly opposing this legislation. We are unable to testify before your honorable committee but are submitting this statement and a copy of Mr. Roddy's statement before the House Ways and Means Committee to register the screw manufacturing industry's strong protest against H. R. 12591. Our principal objections are:

1. Five years is too long for this law to go unchanged. Of course, the law can be changed at any time. But from the standpoint of our industry, which has suffered intensely from tariff cutting and unfair administration of the escape clause by the executive branch of the Government, we know from disastrous experience that a 5-year blank check will leave small industries without help or recourse during this long period. The screw manufacturing industry has exhausted its remedies for all practical purposes with relief procedures now in existence or those proposed under H. R. 12591. This industry, as well as many other small businesses, such as handtools (which we also represent) have no other source of relief except through Congress.

2. We object to the further power given to the President to reduce tariffs at the rate of 5 percent per year for the next 5 years. Advocates of the bill say, "the President won't cut tariffs in your industry if it is being presently injured. The peril-point procedure will safeguard you." The screw industry knows this is not true and has seen tariffs reduced consistently since 1948 even though injury to this industry has been clearly established. More tariff reductions will occur in the future under this law, if passed, even though we vigorously protest and establish injury beyond any possible doubt.

3. This bill fails to provide any effective change in the law which will insure aid to seriously injured industries under the escape clause which until now has not been administered as originally intended by Congress. We submit below reasons why the domestic fastener industry needs help from Congress and why enactment of H. R. 12591 will merely continue the deplorableinequities that have arisen under previous extensions of the Trade Agreements Act.

EVIDENCE OF INJURY TO DOMESTIC INDUSTRY

As an example of what has happened in the domestic wood screw industry, we attach hereto a chart showing the huge volume of imports since 1950. Note that although in recent months imports have declined somewhat, so also have domestic sales volumes, due principally to the current business recession. Using a monthly average import figure for 12 months from April 1957 through March 1958, imports of wood screws amount to 26.10 percent of domestic orders received during that same period.

From charts attached, showing imports as well as domestic sales, it can be observed that domestic shipments have declined from an average of over 4 million gross per month during 1950-51, when imports began, to an average monthly shipment of 2,400,000 gross in 1957 and 2 million for the first 5 months of 1958. The combination of adverse business conditions and huge imports in relation to domestic orders is causing a major catastrophe in the wood screw industry and is in danger of wrecking it as an essential domestic industry. During World War II no screws were available from abroad. Our domestic industry was expected to produce them on short notice by the trainload for vital war needs. In peace as well as war other articles cannot be fastened together without screws.

NEGATIVE ESCAPE-CLAUSE EXPERIENCE OF WOOD SCREW INDUSTRY

Small domestic industries, such as the screw and rivet manufacturing industry, have not received the kind of protection envisaged by Congress in the Trade Agreements Extension Act of 1951, as amended, which made the escape-clause proceedings a matter of legislative directive. Domestic wood screw manufacturers contend that they have been seriously injured by imports and that remedial action can only come from imposition of an import quota. In the face of imports of the relative volume shown on the attached chart, here is what happened to the wood screw industry when it applied for escape-clause relief (from United States Tariff Commission survey on outcome or current status of applications filed with the United States Tariff Commission for investigations under the escape-clause of trade agreements, as of July 2, 1956):