Department that there clearly exists a right of review for domestic industry, this has never been established and is subject to serious doubt. Under these circumstances, the Committee should clarify the Act to remove any doubt of the right of judicial review for all parties to an antidumping proceeding. CONTERVAILING DUTIES; RETALIATION FOR DISCRIMINATION AGAINST U.S. EXPORTS We generally support the Trade Reform bill's countervailing duty amendments, including the establishment of mandatory time tables and extension of the law to cover duty-free merchandise. Here also we believe that judicial review should be provided upon petition of any interested party, as provided in S. 323. We also support the Trade Reform bill's provisions authorizing the President to take unilateral action against imports from those countries that maintain unjustifiable or unreasonable barriers to U.S. exports or that otherwise engage in discriminatory acts against U.S. commerce. THE "ESCAPE CLAUSE" We support in general the Trade Reform bill's proposal to liberalize the "escape clause." However, we question the desirability of conferring upon the President total discretion to decline to act upon a recommendation for relief by the Tariff Commission. Under S. 323 a procedure is provided by which the Congress can in appropriate circumstances override a Presidential determination not to follow a Tariff Commission recommendation for relief. PRIVATE DAMAGE REMEDY We also support S. 323's amendments to the Revenue Act of 1916. If a domestic manufacturer unjustifiably sells his product at one price in New York and at another in Chicago and thereby causes injury to competition, he can be held liable for treble damages. But if a foreign manufacturer illegally dumps merchandise in the United States, takes away business by unfair pricing, successfully drives American men and women out of work and damages the prosperity of an industry-even if all this is proved he is not required to make compensation. He doesn't even have his wrist slapped. Meanwhile, he has prospered while our people were on short hours or out of work. We think such a foreign manufacturer should be subject to the same kind of obligation to redress the injury he has caused that domestic manufacturers face. Specifically, we think that the Revenue Act of 1916 should be amended to make it a more realistic vehicle for the recovery of treble damages for injurious international price discrimination. The Act currently makes it possible for an injured U.S. businessman to secure damages only where he can show that dumping was committed "with the intent of destroying or injuring an industry in the United States, or of preventing the establishment of an industry in the United States, or of restraining or monopolizing any part of trade and commerce in such articles in the United States." Apparently no U.S. company has ever succeeded in shouldering this strict burden and establishing this proof. S. 323 would eliminate this onerous intent requirement and permit recovery where the effect of the price discrimination was to injure competition, the same standard that exists in domestic price discrimination cases. The members of our Association believe, as do most American manufacturers, that we can compete with overseas manufacturers in a fair ball game. But, despite the Antidumping Act, there is today little incentive for foreign manufacturers to avoid dumping in the United States when it suits their own interests to do so. Indeed, it is frequently very much to their advantage to dump. Dumping gives them an opportunity to invade our domestic market. One of the responses of the Japanese manufacturers to our antidumping case, we are told, was to form a cartel in Japan. This cartel includes all Japanese roller chain manufacturers and is headed up by the largest chain manufacturer in Japan. The purpose of this new cartel is to establish minimum price levels for their products in the United States which, in their opinion, will avoid dumping. It seems rather obvious that previously they were knowingly and deliberately dumping here in the United States. Why not? They are not held accountable for the damage they have caused. So we especially urge you to consider Title IV of S. 323 which will provide at least the possibility of treble damage suits for dumping. MFN AND EXIMBANK FINANCING In concluding I would like to convey to the Committee our members' views on Title IV of the Trade Reform bill. We strongly urge that the Committee report to the Senate a trade bill that confines itself to trade issues and does not attempt to use trade as a lever to reform the domestic policies of other nations of the world, however much we may disapprove of them. We are persuaded that in the long run the cause of both prosperity and stability is served by promoting free, fair and non-discriminatory international trade. Thank you very much for this opportunity to give you our views on international trade legislation. APPENDIX A-MEMBERS OF AMERICAN CHAIN ASSOCIATION Acme Chain Division, Rockwell International, Holyoke, Mass. FMC Corp. Chain Division, Indianapolis, Ind. Jeffrey Manufacturing Co., Columbus, Ohio Moline Corp., St. Charles, Ill. Morse Chain, Division of Borg-Warner Corp., Ithaca, N.Y. Rexnord, Inc., Milwaukee, Wis. Union Chain Co., Sandusky, Ohio. Webster Industries, Inc., Tiffin, Ohio. [Whereupon, at 12:05 p.m., the committee recessed, to reconvene at 10 a.m., Tuesday, April 2, 1974.] TRADE REFORM ACT OF 1973 TUESDAY, APRIL 2, 1074 U.S. SENATE COMMITTEE ON FINANCE, The committee met at 10 A.M., in room 2221, Dirksen Senate Office Building, Hon. Herman E. Talmadge presiding. Present: Senators Talmadge, Mondale, Bentsen, Fannin, and Dole. Senator TALMADGE. This morning we resume our hearing on H.R. 10710, the Trade Reform Act. Our first witness today will be James J. Reynolds, president, American Institute of Merchant Shipping. We have a long list of witnesses today and we must complete this hearing this morning as the committee has scheduled an important hearing on emergency unemployment compensation for 2 P.M. today. Each witness has been asked to confine his remarks to no longer than a 10-minute summary of his written statement. The 5-minute rule will be in effect for the questioning period. Mr. REYNOLDS, welcome to the hearings and please proceed with a summary of your statement. STATEMENT OF JAMES J. REYNOLDS, PRESIDENT, AMERICAN INSTITUTE OF MERCHANT SHIPPING, ACCOMPANIED BY BARBARA BURKE, LEGISLATIVE ASSISTANT Mr. REYNOLDS. I am James J. Reynolds and I am the president of the American Institute of Merchant Shipping (AIMS), a trade association representing over 60 percent of the U.S. flag fleet of this country. I am appearing today on behalf of our Liner Council, that is the segment of our membership that own and operate the great fleet of dry cargo vessel under the American flag. I have taken the liberty of bringing with me to the witness stand, Mr. Chairman, my legislative assistant, Ms. Barbara Burke, as a representative for AIMS. The purpose of our statement is to propose an amendment to the legislation under consideration, the Trade Reform Act, which will assure adequate participation of the U.S. liner fleet in our international commerce. I think in the interest of clarity, it would be well if I read the attached amendment, and then we can focus on it a little more intelligently. The language of the proposed amendment is this: In order to further the purposes and policies of this Act and of Section 101 of the Merchant Marine Act, 1936, as amended, it is hereby declared to be the policy of the United States that, where appropriate and beneficial to our national interest and to U.S. cargo carriers, cargo sharing agreements in U.S. trades shall be made which provide opportunity for the carriage of substantial and relatively equal shares of the liner trade between nations involved by their respective national flag liner vessels. Such cargo sharing agreements may be made either by governmental or private action or agreement. The Secretary of Commerce with such assistance as he may request of appropriate agencies of the government shall foster the development, accomplishment and implementation of such cargo sharing agreements. Upon application by any operator of U.S. liner vessels, the Secretary of Commerce shall determine what, if any, form of cargo sharing agreement is in the national interest for any essential trade route as defined in Sec. 211(a) of the Merchant Marine Act. 1936; and prior to final adoption of such determination shall cause it to be published and shall permit interested parties 30 days to comment thereon in writing. Any such determination by the Secretary shall be prima facie evidence of the national interest in any proceeding relating to the approval or modification of such cargo sharing agreements. The Secretary of Commerce shall report annually to the Congress regarding the effectiveness of such cargo sharing agreements. This concludes the language of the proposed amendment. The national policy of the United States is to foster the development and encourage the maintenance of a merchant marine sufficient to carry a substantial portion of the waterborne export and import foreign trade of this country. This policy, originally adopted in 1936, was grounded in the economic and military necessities that faced the United States as a major world power. These same considerations underlay the resounding reaffirmation of this national policy in October of 1970 when the Congress passed legislation to modernize the 1936 Act. The U.S. operator who builds vessels in the United States and employs citizen seamen, is at a substantial cost disadvantage vis-a-vis foreign flag liner operators who build ships abroad and employ lowcost foreign labor. In recognition of this, the Congress has adopted a number of programs to put our operators on a general cost parity with their foreign competitors so that they can charge similar rates for liner services. The words liner services mean services on the essential trade routes of the Nation, carrying the general dry cargo of our country. This parity based subsidy system has worked well and generally accomplished its purposes. However, parity with regard to costs is meaningless unless there is also parity of opportunity to compete equally for commercial cargoes. U.S. flag liner operators are denied this right in many of our trades and new legislation must be adopted to correct the unfair situation. This can be done by adopting a national policy that would authorize our liner operators or our Government, where necessary, to enter into cargo-sharing arrangements. The U.S. liner fleet is the most modern and efficient in the world and its vessels operate to every corner of the globe. The laws, practices, and problems in these myriad trades are as diverse as the more than 100 countries involved. Thus, there is no one single cargosharing proposal that is appropriate for all of these trades. The amendment to H.R. 10710 which we propose, you will note, would require the Secretary of Commerce to determine what, if any, form of cargo-sharing arrangement is in the national interest and the interest of our liner fleet. Prior to the final adoption of any such determination by the Secretary, he shall cause it to be published and thereafter give interested parties 30 days in which to comment thereon in writing. The Secretary will give careful consideration to any comments but a hearing shall not be required prior to his final determination. Hearings may, of course, be held by other interested agencies as required by law. Such determination by the Secretary shall be prima facie evidence of the national interest of the United States in any proceeding seeking approval of a cargo-sharing agreement. Where the Secretary of Commerce determines that an agreement is necessary, the Secretary would be required, in cooperation with other appropriate Government agencies, to seek the prompt adoption and implementation of such an arrangement. The activities of the Secretary under this necessarily broad authority would be subject to annual review by the Congress. There are those who will argue that the United States should not adopt a national policy of encouraging cargo-sharing arrangements where necessary because such agreements are contrary to the principles of a free market system, to our antitrust laws, and to the wishes of our trading partners. The facts are, Mr. Chairman, that the laws of free enterprise economics so fundamental to our own industrial system simply do not work or operate when a private U.S. liner company has as its competitor a State-owned fleet of the Soviet Union or some other nation. The attempt to export our antitrust concepts beyond the 3-mile limit cannot succeed because they cannot be effectively enforced against foreign shipowners whose governments endorse and support contrary concepts for regulation of shipping. We have listed a number of the problems that arise and are created by policies of a number of our trading partners who have specific decrees and laws requiring the carriage of cargo on vessels flying their flags. The less developed countries of the world (LDC's) have continually enunciated in the United Nations Committee for Trade and Development that they desire and indeed demand cargo sharing. These nations are all actively supporting a proposed new Code of Conduct for Liner Conferences this very minute in Geneva, which would provide that trade be divided between vessels of the trading partners on a 50-50 or 40-40-20 basis. Different forms of cargo sharing are supported in practice by many of the Communist nations and some of the Western nations, with whom we have a very large number of trading regulations. The last portion of this statement is a discussion of the background and current status of the Code negotiations. Let us now examine some of the problems that require the adoption of cargo-sharing legislation: 1. CARGO CONTROLLED BY GOVERNMENTS In the Communist and to a lesser extent, the Socialist countries, all imports and exports are bought and sold by government agencies. |