occurs at an earlier or later stage of processing. For instance, if gasoline is imported and this cuts into the market for gasoline, and affects the price of domestic crude, the imported gasoline is considered "directly competitive" with domestic crude. Or, if wire rod is imported and this is purchased by independent wire drawers, who sell wire in competition with domestic wire rod firms who are integrated and make wire, the wire rod imports will be considered "directly competitive" with domestic wire. This provision has a superficial appeal; but in view of the tapered integration prevailing in the steel and petroleum industries, the history of squeezes extending from semi-finished to fabricated products-since we could also find, for instance, under this provision, that the import of wire mesh is competitive with the domestic product, wire rod, which is two stages removed from wire mesh-the definition masks a very dangerous extension of the Tariff Commission's powers to find injury and threats to injury. Unless there is also a requirement that the domestic industry be found to be vigorously competitive, the application of the definition might buttress the maintenance of undue oligopoly power. 23. In conclusion we should like to stress the dangers inherent in the passage of this bill if it still contains Chapter I of Title II. This chapter in effect deelares it to be the policy of the United States that domestic producers are to be insulated from foreign competition whenever that competition threatens to reduce output, employment or profits. Yet one of the bases for our high level of productivity and income has been our continuous rise in productivity stimulated by competition both domestic and foreign. To protect our firms against fair competition from imported products is no different from protecting them from a domestic competitor who happens to make a better item for the same money. Chapter I of Title II would result in a stagnant, high cost economy insulated from one of the major stimuli to technical progress. Senator FANNIN. Our next panel will be Mr. Jerome O. Hendrickson, an executive vice president, Cast Iron Soil Pipe Institute; Robert B. Mangum, president, Central Foundry Co.; Frederick Drum Hunt, foreign trade consultant, Cast Iron Soil Pipe Institute. If you gentlemen would please come forward Gentlemen, we appreciate having you with us today. Will the spokesman for your panel introduce the other members of the panel and himself and we will start from there. CENTRAL STATEMENT OF ROBERT B. MANGUM, PRESIDENT, Mr. MANGUM. Mr. Chairman, I am Robert B. Mangum, president of the Central Foundry Co., and president of the Cast Iron Soil Pipe Institute. I have with me Mr. Frederick Drum Hunt, who is foreign trade consultant to us and Mr. Jerome Hendrickson, who is executive vice president of our institute, and Mr. James Welch, who is general counsel for our institute. I am the only member of the panel who will make a prepared statement, but the other gentlemen on the panel will be glad to assist me in answering questions that you may ask. Senator FANNIN. Thank you. If you will proceed, your complete statement will be made a part of the record, and you may handle it as you see fit. Mr. MANGUM. Thank you, sir. The members of our institute produce more than 95 percent of the total cast iron soil pipe and fittings which are utilized in the United States. Our cast iron products are made from recycled metal, such as used automobile motor blocks and bodies and similar items. Every day we see our major source of iron depleted by the transfer of such scrap metal to foreign countries. This has been very hurtful to us. But what really hurts the most, Mr. Chairman, is for that metal to come back into our domestic market as dumped or subsidized products at prices with which we cannot compete, because we have an entirely different type of relationship, both by law and by custom, with our workers than do some nations which have a different ideology and relationship with their workers. In the recent years our industry has been concerned in at least five dumping investigations. The last two involved shipments from Poland. Whatever relief, if any, we have obtained, has been too little and too late. We are convinced that the Treasury and the Bureau of Customs both have taken an inordinate and totally unjustified length of time to provide relief, if indeed they have provided any at all. We have spent years of effort to obtain a ruling that foreign cast iron pipe and fittings must be marked with the country of origin. Why should all products not be so marked? For years foreign-made cast iron soil pipe and fittings were not marked in this respect simply because the Treasury erroneously included them in an excepted category. What reason is there for us to believe that if Treasury is given the broad discretion which is written in the present version of this bill that they will exercise any better judgment than they have in the past? Now, if I may, let me tell you about our most recent unhappy experience with Treasury. Since June 23, 1969, some 4 years and 9 months, we have had pending a petition for the imposition of countervailing duties for cast iron soil pipe and fittings imported from India. No relief is yet in sight, although we have furnished positive evidence of subsidization by the Government of India. You can easily understand, therefore, our industry's deep concern with respect to title III of the pending bill. An article dealing with our petition appeared in the press following testimony before the House Ways and Means Committee in 1973. This article was published in the "American Metal Market" on August 14, and is submitted for the record as exhibit No. 1. It gives an objective and fair résumé of the events which have transpired since our petition was first filed in 1969. I request that a copy of it be received into the record. I also submit for the record a copy of one of the documents which we presented to Treasury and which makes it abundantly clear that India does, in fact, make a substantial subsidy available to exporters of Indian-made cast iron soil pipe and fittings to the American markets. I invite your attention to exhibit No. 2. Senator FANNIN. Without objection, they will be made a part of the record. [The material referred to above follows:] [From the American Metal Market] EXHIBIT 1 POTOMAC PULSE FOUR YEARS DOES SEEM A BIT LONG (By Jeff Wood) WASHINGTON.-Back in 1969 the Cast Iron Soil Pipe Institute filed a complaint with the Treasury Department alleging that imports of pipe and fittings from India were being heavily subsidized by the Indian government. The trade association sought the imposition of countervailing duties to offset the subsidies, which it claimed, amounted to as much as 25 percent of the value of the imports. Four years later the CISPI is still waiting for a decision in the case and it's getting damned impatient. So much so that Congress has been asked to nudge the Treasury Department into taking action. In recent hearings on trade reform before the House Ways and Means Committee Dan Gerhardstein, vice chairman of the import study committee of the Association, outlined the background of the case. The complaint was filed in June of 1969. With it was what Gerhardstein described as a "wealth of evidence" that the government of India was giving cash assistance to exporters of cast iron soil pipe and fittings sent to the United States. The case was so clear cut, according to Gerhardstein, that it could have been determined within a few days. The association waited and waited for a decision but none was forthcoming. It began to gather more evidence and in August of 1972 received confirmation from the U.S. embassy in Calcutta of the subsidies that India grants its exporters. The incentives, gleaned from the Engineering Export Promotion Council, consisted of a direct 25 percent cash subsidy on cast iron pipe and fittings, plus 25percent of the railroad freight from plant site to port of shipment and 5 percent import replenishment. The Association pointed this out to the director of the Office of Tariff and Trade Affairs and again told him that the case was so simple that he need only draw up the necessary document for the signature of the assistant treasury secretary. "The director insisted that there was a matter of policy' involved." After hearing Gerhardstein's testimony, Rep. James Burke (D., Mass.) directed the chief counsel of the Ways and Means Committee to write Treasury Secretary George Shultz and find out what the delay was all about. On July 12, Shultz replied to the Ways and Means Committee, but the answer turned out to be a non-answer. He acknowledged that treasury has had the complaint under inquiry "for some time," but pointed out that it has a policy of not publicly discussing antidumping and countervailing duty complaints while they're in process. Shultz added that the administration is prepared to explain the handling of the countervailing duty complaint in executive session of the committee on ways and means. If it ever reaches the executive session stage, treasury officials are likely to tell committee members that the complaint has been shelved, in effect, for diplomatic reasons. One Treasury Department source told this newspaper that he feels the main reason for the footdragging is that, "India is a developing country and we're reluctant to go ahead with cases like this when a developing country is involved." It's hard to swallow this kind of reasoning. The law, Title 19, Section 1303 of the United States Code, stipulates that countervailing duties should be imposed whenever any country pays its exporters any bounty or grant for merchandise imported into the U.S. It says nothing about giving developing countries a break. The Treasury Department's options are clear. If there is evidence of subsidies, as the cast iron soil pipe producers claim, then the countervailing duties should be slapped on Indian imports. If not, the case ought to be dropped. 1 EXHIBIT 2 CAST IRON SOIL PIPES AND FITTINGS I. Minimum export prices for U.S.A. shipments effective June 1, 1972 1 Per metric ton, less 10 percent commission to the agent. Above prices are cost and freight, Atlantic ports. II. Incentives Cash subsidy based on f.o.b. value.. 25 percent. Rs 40 per metric ton. Railroad freight from the plant site to the port of shipment, when applicable. 25 percent. Import replenishment license based on the f.o.b. value. 5 percent. NOTE.-F.o.b. value to be calculated after deducting ocean freight, bunkering charge, and Suez surcharge: Per metric ton $30. 50 2.95 3.81 Mr. MANGUM. When we pursued this matter, Treasury officials stated that a matter of policy was involved, but they never shared with us what that policy was. Members of the House Ways and Means Committee inquired as to why the Secretary of the Treasury had not acted, but they were not given a meaningful answer either. Upon pursuing the matter further, top ranking administration officials advised us that they hoped to gain such wide latitude in discretionary areas under the bill which is now pending before you that they do not propose to take any action under the law as it now stands. The law currently provides for the mandatory levy of countervailing duties once the Secretary of the Treasury has announced that the country of origin has provided a subsidy. Unfortunately for us, however, the law does not set any time limit within which Treasury must complete its investigation as to whether or not there has been a payment of such subsidy. This permits Treasury to avoid the levy by not making the announcement. In our case there is really no need for any substantial investigation— certainly not one of almost 5 years' duration-because Treasury could have confirmed the information which we provided for them within a matter of days. We believe that the executive branch of the Government is not going to make such findings, but on the contrary, will keep the investigation on the back burner until it is granted the discretionary power which it is now seeking, and when this is done the discretion will be exercised to the detriment of American manufacturers. The House, in its consideration of the bill, decided to delete the provision for the exercise of this discretionary power, but still per mitted a suspension of the countervailing duty requirement for a period of 4 years during negotiations. We are greatly concerned. that the Administration will attempt to interpret this suspension as granting it authority to exercise its own discretion as to whether, if at all, and in what situations, if any, the imposition of countervailing duties will be undertaken. That appears to be what it actually is doing now, rather than enforcing the existing legislation. Now I would like to speak specifically to several amendments which we believe to be required to protect American industry from what may be serious curtailment of the protection which Congress has obviously intended to provide. Section 303 (a) (1) provides that the Secretary of the Treasury shall determine within 12 months after the date on which the question is presented to him, whether any bounty or grant is being paid or bestowed. This section should be amended so as to require the determination to be made within 6 months rather than 12. There is no reason why the time element should be so long-and there are many-why it should not be as short as possible to minimize the disruption of the American market. We are much more deeply concerned, however, with section 313 (a) (4), which provides that whenever. the Secretary concludes from information presented to him that a formal investigation is warranted, he shall forthwith publish notice of the initiation of such investigation in the Federal Register. Please note that there is no time limitation whatever as to when, if ever, the petition must be presented to the Secretary for consideration. Publication as to the initiation of the investigation should be required within some statutory period of time. We suggest that such publication, in fairness to all parties, take place within 30 days after an industry files a petition for the levy of a duty. We are driven to the inescapable conclusion that Treasury wants to have complete freedom to take whatever action it wants to, whenever it wants to, or to take, indeed, no action at all. It must not be so permitted to thwart the will of Congress. We also believe that section 321 should be amended so as to require publication of notice of the initation of an investigation within 30 days following the filing of a petition. The Tariff Commission already has a statutory limitation of only 3 months to investigate and to decide the question of inquiry in those cases in which the Treasury has found that dumping exists. Business judgments must be made expeditiously. Why cannot the Treasury accomplish its task within 7 months? We also believe that section 321(b) should be amended by omitting the words, or in more complicated investigations within 9 months. I do not know exactly what the term more complicated investigations is intended to mean. I suspect that it may be interpreted to mean that the Treasury should be granted a substantially longer period of time to complete investigation regarding imports from socialist countries. From our experience with dumping cases involving Polish exports, we see no justification whatever for granting this additional period of time. The present law does not differentiate between nations and there should not be any special circumstances such as unwillingness to |