The golf car industry began about the middle 1950's and continued to grow at a modest rate to about 1970. There are some 17 manufac=turers in the industry now, or were about a year ago, at least. The peculiarity of this industry is primarily in the fact that practically all sales of golf cars throughout the world as of this moment occur in the United States. There is a small market in Canada, it is probably less than 10 percent of our own. There is the beginning of a small market right now in Japan. But this has only been going on the last 6 months

or so.

As of this moment, there are very few golf cars actually in existence in Japan. There is a sprinkling of golf cars in the United Kingdom, but only a very few. The golf car is the product of an affluent society that is quite interested in the game of golf. As a result, the only true market for golf cars in the world right now is in the United States. The manufacture of golf cars was limited to United States manufacturers until recently. In 1970 all the manufacture was domestic. Beginning immediately thereafter, a golf car began to be imported into the United States that was manufactured in Poland. The golf car is a direct copy of one of our principal competitors; in fact, the copy is so great that it is difficult to tell them apart even if you are in the industry.

In 1970, there was no foreign import. By 1973, this had grown to 15 percent of the industry by our estimate. Incidentally we calculated quickly as best we could the employment involved in the manufacture of golf cars, and we estimate that each worker in the golf car industry produces about 200 units a year. Total shipments of new golf cars annually are about 55,000.

So this would indicate that there are some 2,200 to 2,500 employees within the United States who rely on the golf car industry for their employment.

As I mentioned a moment ago, we estimate right now that the Polish golf car is 15 percent of our total sales in 1973. We project that they will probably reach 22 to 25 percent in 1974, and I shall explain briefly why that is true.

The rate of growth of golf courses within the United States is about 3.5 percent annually, and has continued at that rate for the last 8 to 10 years. However, there has been one significant change in the type of golf courses that have been established in the last few years. In recent years, they are far more likely to be involved in a land development operation rather than to be an independent country club. This means that the management of the club is far more profit-oriented than they are concerned about the comfort and desires of the membership.

This has implications on the purchase of golf cars, which I shall explain briefly. One other statistic you should know first. Golf car sales are quite unlike the automobile industry, for instance, because only 15 percent, according to our returns, are sold to individuals. In other words, 85 percent of all golf car sales are in fleets to country clubs. Now, the Polish golf car normally sells at $150 to $200 less per unit delivered to the club than domestic models, and if you multiply that by the size of the average fleet, which is about 30 golf cars, you find that we are quoting of a differential of $4,500 to $6,000 per fleet. To a land development company who is just beginning their own golf course, these are quite important figures, and they very frequently buy the less expensive golf car.

We also estimate that sales of Polish golf cars should skyrocket in the next 2 or 3 years if something is not done, because once they get a good parts availability and service availability within this country, many clubs who would not consider them at the outset may very well do so later on.

We have two basic recommendations, gentlemen. The first recommendation, and by far the preferred one from our point of view, is the Curtis bill, S. 2374. This bill provides that the fair market value for the purpose of assessing antidumping duties would be based on the ex-factory U.S. sales price of golf cars.

Now, you may say at the outset that this is in contravention to our general attitude of obtaining costs in the country of origin, and it is a good point. The problem there is that the only good cost figures that we are likely to be able to develop are cost figures that you would develop in this country.

Our second recommendation would be to give the Treasury explicit authority to calculate a constructed value in the controlled economy country, and this would require an amendment to the Trade Reform Act. As I mentioned a moment ago, these figures could be very difficult to obtain. The controlled economy countries, as I understand them, are not necessarily operated on a profit-making basis, and it is quite possible that they do not even develop a product cost in their accounting procedures as we know them in our country.

Therefore, our request could be something that they do not even

have.

Second, if they have it, it might be quite difficult to obtain it, and if we obtained it, there would be some question as to its accuracy.

Our third recommendation would be under title IV of the Trade Reform Act that the market disruption section be strengthened and that it apply to all controlled economies, whether they are most favored nations or not. They specifically should include Poland and Yugoslavia. We feel that this was a serious drafting mistake in the original draft of the bill.

Section 405 of the bill provides that the Tariff Commission provide remedies if there is market disruption, and the definition of market disruption is that. (a) it be substantial; (b) there be a rapid increase both in percent of market and in absolute units; and (c) that the sale be at substantially lower prices. The bill also provides that material injury be proved.

We feel that this provision is unnecessary, and history indicates that those who have attempted to seek relief under this section have found material injury very difficult to prove. We feel that the material injury section should either be removed entirely or made to apply on the basis of a de minimis injury standard.

I timed that pretty well apparently. I want to thank you gentlemen for your time. I shall be happy to answer any questions you might have.

Senator CURTIS. May I say that you are the final witness on this panel this morning. If you have something further you were about to add before the bell, please proceed.

Mr. BORDER. No, sir; I had just finished.

Senator CURTIS. I would like to get a clear picture of this situation. These Polish golf carts retail, or sell rather for $150 below comparable products in this country?

Mr. BORDER. It is common in the industry to quote each country club separately. It is virtually impossible to say that it is a specific figure each time. But the range is from $150 to $200.

Senator CURTIS. Yes.

Now, at the present time, what duty, tariff, is applied to a Polish import?

Mr. BORDER. 3 percent.

Senator CURTIS. And what is that based on?

Mr. BORDER. The automotive category is my understanding, sir. Senator CURTIS. That is its origin in the Tariff Act, the automotive tariff?

Mr. BORDER. Yes.

Senator CURTIS. But 3 percent of what figure?

Mr. FISHER. Golf carts presently are classified as a recreational vehicle, and the 3 percent tariff is levied on the price that it is delivered into the United States, to the port.

Senator CURTIS. I see.

In other words, it is based upon what the Polish say their price is? Mr. FISHER. That is right.

Senator CURTIS. Now, in countries that have a free economy, private enterprise economy, is it possible to ascertain a reasonable amount of figures as to what their costs and prices really are?

Mr. BORDER. It would be possible, sir, but the level of believability would be quite questioned for this reason: certain components of that product are very technical, very difficult to build. I shall give you two examples. Either an engine or a differential are very difficult to manufacture, and if you went to a company and said, what would it cost you, hypothetically, to build this product, they could not really give you an accurate answer unless you were prepared to spend thousands of dollars to employ their engineering and production staff to really look into it; precisely how they would build each one of these components, how they would assemble them, how they would test them.

Senator CURTIS. What I am trying to do is build an example here of just what actually takes place when this Polish golf cart arrives here subject to a 3 percent tax on what they say is the price

Mr. BORDER. That is correct.

Senator CURTIS. And at least in a controlled economy, there is no practical way you can question what that price was?

Mr. BORDER. That is our feeling, yes.

Senator CURTIS. And that is the price that they offer to dealers, or do they use dealers?

Mr. BORDER. They use distributors-that is their term. Four of those distributors are actually importers. They divide the United States geographically, and it is up to them to either sell directly or establish other distributors.

Senator CURTIS. Now, what is the range of price that you would estimate one unit that they would apply that 3 percent tax to?

Mr. BORDER. Those figures are available, sir, because the only automotive products imported from Poland are golf carts.

30-229-74-pt. 4—19

Senator CURTIS. What does it amount to?

Mr. FISHER. The average price of the Polish cart moving into the United States through the importer last year was $383.

Senator CURTIS. $383?

Mr. FISHER. Yes, sir.

Senator CURTIS. About $11.50 tariff?

Mr. FISHER. Yes, sir.

Senator CURTIS. Now, if we enact the bill that I have introduced. S. 2374, what would be the results of the-how much tariff would be charged?

Mr. FISHER. Well, under your bill?

Senator CURTIS. Take it through step by step.

Mr. FISHER. Sure. Under your bill, you would permit the calculation of the home market value to be based on what it would cost to produce a similar product here in the United States. So let us say in the case-I think it is around $800 to $900 here in the United States. So that 3 percent tariff would be levied on-well, the point is that the 3 percent tariff would continue to be levied for whatever the Polish people moving the golf carts into the United States say that their price is. However, your bill goes to the problem of dumping, the antidumping law of the United States. We have two levels here.

Senator CURTIS. Yes.

Mr. FISHER. Now, that is the problem conceptually. So the 3 percent tariff will continue to apply to whatever the Polish are selling it to the importer here in the United States for.

However, step two is for the purposes of the antidumping law, the home market value that we would use in order to calculate the margin of dumping, which is the difference between the foreign market price and the U.S. market price, would be the price in the United States. In other words, under your bill, we would construct a home market value in Poland based on what it would cost to produce a similar product here in the United States.

So if there were an affirmative dumping determination, you would have, No. 1, the 3 percent duty which is presently under the antidumping laws in the United States; and No. 2, we would have a dumping duty equivalent to the margin of dumping, which we would then be able to calculate under your bill.

The problem presently is that under the dumping laws in the United States, if you have an alleged dumping situation from a controlled economy, the Customs will permit you to construct a value based on what that similar product sells for in a noncontrolled economy. And usually they pick a country in Western Europe, France, or Germany. The problem here is we have a unique situation. We only have two producers in the world, Poland and the United States. Therefore, there is no other third country on which a constructed value abroad could be made. And we have a vacuum or a void here in the law that has been pointed out by commentators and people who are in the field.

What we are saying is let us amend the dumping laws one way or another. We prefer your bill because your bill gives us certainty, and it is easy to prove because we can be sure of our figures in the United States.

Senator CURTIS. Senator Packwood?

We have a rollcall, but I think we can make it after the second bell.

Senator PACKWOOD. I do, too.

What you are suggesting is that we implement an American selling price for these carts based on manufacturing costs, because we have no other basis on which to compare it?

Mr. BORDER. Yes.

Senator PACK WOOD. Who else sells golf carts besides Cushman? Mr. BORDER. There are 17 manufacturers. Several of the larger manufacturers would include Harley-Davidson, Easy-Go.

Senator PACKWOOD. Are you the largest?

Mr. BORDER. We are one of the largest, sir.

Senator PACKWOOD. Let me get some quick figures from you. You indicate that in 1973, 6,000 Polish golf carts—which is 15 percent of the market?

Mr. BORDER. Correct.

Senator PACKWOOD. I calculate that has to be about 34,000 remaining sold?

Mr. BORDER. About 55,000 totally sold every year.

Senator PACKWOOD. 55,000?

Mr. BORDER. Totally; you have 34,000 on top of the 6,000.

Senator PACKWOOD. That is 40,000.

Mr. BORDER. 55,000 is the total number of golf carts sold in the United States, gasoline and electric. Polish golf cars account for 15 percent of the U.S. electric golf car market.

Senator PACKWOOD. Let me get into the last part of your statement about material injury and disruption of the market.

In 1970, the Poles had none of the market. In 1973, they have 6,000 of whatever is sold. How much have the domestic sales gone up from 1970 to 1973?

Mr. BORDER. Virtually none at all.

Senator PACKWOOD. Not at all?

Mr. BORDER. NO.

Senator PACKWOOD. How does it happen that the Japanese have never gotten into this?

Mr. BORDER. The Japanese produced a couple of prototypes. They actually put them into this country and nothing came of it. Perhaps the market is not big enough to interest them; I do not know.

Senator PACKWOOD. I should think they would take a wheel of a small Toyota.

I have no other questions, Mr. Chairman.

Senator CURTIS. I regret that we have to go to the floor for a rollcall vote, but following through the questions that I was proposing to show just what would take place if this measure were enacted, if there is any further addition or clarification to make-because our staff and the other members of the committee will be looking at this record when this matter is called up-I would be very pleased if you would add any material that you choose to show in dollars and cents what you face now and what you are seeking and an explanation of it. We thank you very much for your attention.

Mr. BORDER. Thank you. We appreciate your time.

Senator CURTIS. The committee is recessed until tomorrow morning at 10a.m.

[The prepared statement and a letter to Senator Packwood of Mr. Border follows. Hearing continues on p. 1329.]