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by the end of 1948. Huge investments were made during the war period to meet the demand and to substitute domestic products for the imports formerly received from countries barred from this market by the war. Production in 1948 will be approximately 22,000,000 tons as against an output of 11,000,000 tons in 1938.

The prosperity of the paper industry is bound to the standards of living of its employees to an extent not existent in any other major industry. Every ton of imported paper means an impairment of investment in domestic mills and a reduction of the potential working hours of the workers. In bartering the domestic paper market for doubtful advantages in foreign markets for other industries, the trade-agreement program is importing cheap foreign labor, and exporting our prosperity.

POINT NO. 7. A BALANCED TARIFF POLICY

The previous sections of this statement have been devoted to a review of the actual and potential damage to the domestic paper industry as a result of reciprocal-trade agreements already in effect.

This section outlines not only the safeguards which this industry believes should be retained in the tariff laws but also its belief that action should be taken by Congress to effect certain reforms to strengthen the tariff act as it stands, if this country is to maintain a balanced tariff policy for the protection of American industry.

The views are summarized herewith:

1. The present countervailing duty provision of the tariff act, section 303, providing additional duties to meet export subsidies by exporting nations, should not be weakened as proposed by the State Department negotiators at Geneva. Rather it should be strengthened to make it clear that payments in the nature of tax refunds or distributions out of special funds created by export taxes in terms of sellers markets (as is now being done by Sweden) fall within the category of export grants as described in section 303.

2. The provisions for United States value determination in section 402 (E) of the tariff act should not be weakened as proposed by the Geneva agreement.

3. The provisions for currency evaluation in section 522 of the tariff act should not be weakened as suggested by the Geneva negotiators.

4. The Geneva agreements permit devaluation of currency not to exceed 20 percent. This is equivalent to a reduction of duties at the unilateral instance of a foreign country, not as the result of negotiations, reciprocal or otherwise. Rates of duty provided under the Geneva agreements were based on existing currencies. There should be a provision of law to impose additional duties to compensate for currency devaluation by any foreign country whenever such depreciation would result in the equivalent of a duty reduction to less than 50 percent of the rates of duty in effect January 1, 1945, used as a base in the existing law, which limits reciprocal-trade concessions to 50 percent of those rates.

5. Merchandise shipped to this country by State trading units and/or foreign cartels should be automatically subject to an antidumping duty to equalize the selling price, plus United States duty, with the American selling price.

6. Under existing law, foreign producers evade the American provision for computation of duty on the freely offered price in the country of origin by imposing certain restrictions on sales in the country of origin, thus allowing the foreign mills to set their own export price on which the United States must compute duty. This situation, known as the controlled market, should be corrected by provisions to make any merchandise so controlled subject to duty on the basis of American valuation.

7. All future trade agreements should be negotiated subject to congressional approval, as is the case with all other treaties. The present act fails to provide any review of administrative action which is provided for in all other laws creating administrative procedure. Congress should not delegate its constitutional tariff-making powers without providing for some form of review of the action taken, to assure its conformity to congressional intent.

8. Section 516 of the Tariff Act of 130, providing for domestic manufacturers' protests, should be restored to the Tariff Act. This provision was deleted by the original Reciprocal Trade Agreement Act. Under the present procedure, a foreign producer or his American agent has ready access to the United States courts to rectify any error made by customs officials in the classification or appraisement of imported merchandise. The domestic producer, on the other hand, is denied recourse to the courts to correct any such error which may be to his

disadvantage or to the disadvantage of the Government. A court procedure limited to the foreigner and denied the American is not only absurd and illogical, but is in violation of any theory of justice in this or any other country.

9. The Anti-Dumping Act, now wholly ineffective, should be amended to make the imposition of an antidumping duty automatic upon the finding by customs officials that foreign merchandise is sold at less than the ruling price in the country of its origin. At present injury must be proved to the satisfaction of administrative officials. An example of its working: A domestic paper industry asked an antidumping ruling, which was denied on the ground that the complaint was made by the industry as a whole, and that individual damage to its members was not shown; a later complaint by individual producers involving the same merchandise was denied on the ground that, while injury was admitted to an individual company, injury to the industry as a whole was not shown.

SUMMARY

The American paper industry for years has based its action on tariff matters on the theory that there should be sufficient tariff protection to give the American manufacturer an equal opportunity in his home market with the foreign producer. It asks no more, but believes that any tariff policy which throttles a domestic industry of such magnitude is a danger to the national economy.

The paper industry believes that it is not the part of wisdom to bankrupt a domestic industry involving a production valued at $4,000,000,000 a year to develop prosperity abroad. This country cannot do its share toward maintaining world prosperity if its own economic stability is sacrificed.

Imports of paper and pulp into the United States totaled a value of $618,776,406 in 1947, providing the largest number of dollars for dollar-hungry foreign nations afforded by any single industry.

Domestic demand forced the doubling of output between 1938 and 1948, a rate of expansion not equaled in any but emergency war industries. The paper industry protests against the procedure now under way by which the added tens of millions invested in expansion to meet an increased domestic demand may be sacrificed to raise the standards of living abroad.

EXHIBIT No. 2

PARAGRAPH 1401

Printing papers.-The duty rate under the Tariff Act of 1930 was one-fourth of 1 cent per pound and 10 percent ad valorem. This was reduced by the trade agreement with Canada, effective January 1, 1939, to one-fifth of 1 cent per pound and 5 percent. Imports in 1938, prior to the reduction, totaled 9,500 tons, valued at $532,512. In 1939, the first year after the rate was changed, imports rose to 13,400 tons valued at $729,624. In 1947 imports were 74,700 tons, valued at $7,953,055.

PARAGRAPH 1402

Plain paperboard. The duty rate under the act of 1930 was 10 percent with a countervailing rate proviso imposing on any imported board a rate of duty equivalent to that levied by the country of origin. The Canadian rate for such board was 25 percent, and duty was collected on Canadian imports at this rate. By the original Reciprocal Trade Agreement Act this countervailing duty proviso was canceled. Imports of board from Canada in 1933 totaled 1,768,079 pounds, valued at $28,201. Although the countervailing duty rate nullification was not in effect until the Trade Agreement Act was passed, June 12, 1934, Canadian imports in that year totaled 5,906,843 pounds, valued at $92,794. In 1936, the first full year of the Agreement Act, imports were 10,100,342 pounds valued at $139,257. Imports from Canada in 1947 had risen to 25,832,634 pounds, valued at $1,187,821.

Shoe board.-No separate statistics were compiled of this material until 1939, but as a result of the elimination of the countervailing duty Canadian shoe board came into this country in increasing quantities. One Canadian company increased its capacity 50 percent, and an entirely new company was formed, both for increased export business; until a strike was called in Canada in 1947 imports were at double the prewar rate.

PARAGRAPH 1404

Tissue paper.-The rates of duty on various tissue papers were reduced by trade agreements with Canada and the United Kingdom effective January 1, 1939. The new rates, which segregated these papers by weights and values, were a reduction of 50 percent on lightweight and 33% percent on heavier weights. Imports of all tissues in 1938 totaled 1,310,919 pounds, valued at $781,027. Despite the war developments in 1939 when the lower rates became effective, imports increased to 1,763,306 pounds valued at $905,758. In 1947 Imports had risen to 2,902,868 pounds valued at $999,498. It will be noticed that the reduced duty rates caused a large increase in the imports of lower priced papers, such as fruit wrapping and waxing tissue which mills can produce at a greater speed than is possible in the higher grades.

Carbon papers.-A specific example of the effect of the duty reduction is in carbon papers. In 1938 imports totaled 663,122 pounds valued at $330,711. In 1939 when rates were reduced on January 1, the volume rose to 1,120,145 pounds valued at $536,020. In 1947 imports were 853,767 pounds valued at $452,630. Inasmuch as this grade is imported almost entirely from the United Kingdom, England's industrial difficulties explain why the volume has not reached prewar totals.

India Bible paper.-The rate of duty on india Bible paper weighing from 10 to 201⁄2 pounds per ream was reduced by the British agreement, effective January 1, 1939, from 4 cents per pound and 15 percent to 2 cents per pound and 10 percent. Imports in 1938 totaled 33,147 pounds valued at $25,029, increased to 41,479 pounds the first year of the agreement, and despite the war rose to 123,359 pounds in 1941, valued at $68,038. In 1947 imports rose still higher to 160,254 pounds valued at $101,851.

Imports of carbonizing tissue in 1947 were slightly less than 2 percent of domestic production; imports of india Bible paper are estimated to have been about 5 percent of domestic output.

These papers are manufactured by relatively few domestic mills, but to those mills, the output is vital. In 1947 there were about 12 domestic companies manufacturing carbonizing tissue and 7 which produced india and Bible papers. This output is highly important to the mills manufacturing these papers. A loss in production because of imports has an immediate and direct effect upon mill output and its labor force.

Imports of crepe paper on which rates were reduced in 1939 showed no significant change. In 1948, however, under a second rate reduction, imports are at a surprisingly increased rate.

PARAGRAPH 1405

Vegetable parchment.—Under the act of 1930 the duty rate was 3 cents per pound and 15 percent; this was reduced by the trade agreement with Belgium, effective May 5, 1935, to 2 cents per pound and 10 percent and by the Geneva agreements to 1 cent per pound and 5 percent. In 1934, imports were 89,317 pounds valued at $26,283. In 1935, though the reduced rate was in effect only 8 months, imports rose to 176,759 pounds, valued at $43,832, and in 1936 to 266,371 pounds, valued at $41,170 the increased tonnage being in wrapping grades. Imports since the war have been confined to high-priced spinning parchment, foreign mills not having yet returned to volume output of wrapping grades.

Simplex decalcomania.—The duty rate of 5 cents per pound and 10 percent was reduced to 22 cents per pound and 10 percent by the British agreement, effective January 1, 1939. Imports in 1938 were 31,717 pounds valued at $6,004. In 1939, the first year under the agreement, imports rose to 114,529 pounds, valued at $19,685. In 1947 the imports were 356,344 pounds, valued at $92,005. The rate has been cut again under the Geneva agreement to 14 cents per pound and 5 percent. This material is made by a single English company. One American company produces the bulk of the domestic product as one of its most important lines. Establishment of this industry was only possible through the protection originally provided.

PARAGRAPH 1407

Reductions in duty rates on bristol, hand-made and drawing papers were effected prior to 1940, but no changes of consequence resulted in these small tonnage, high-priced grades.

PARAGRAPH 1409

Kraft wrapping paper.-The rate in the act of 1930 was 30 percent. This was reduced by the trade agreement with Sweden, effective August 5, 1935, to 25 percent, and was further reduced to 20 percent by an agreement with Finland, effective November 2, 1936. Imports in 1934 were 4,300 tons valued at $317,809. In 1935, even though the reduced rate was only in effect 5 months, imports were 12,340 tons, valued at $815,790. In 1936 imports were 24,000 tons, valued at $1,536,148. Imports in 1937 were 16,600 tons, valued at $1,176,711, and in 1947, 10,900 tons valued at $1,766,939.

Sulfite and other wrapping paper.-The rate in the act of 1930 was 30 percent. This was reduced by the Swedish agreement to 25 percent effective August 5, 1935. Imports in 1934 were 520 tons, valued at $37,374. In 1935 imports were 550 tons valued at $42,876, and in 1936, 660 tons valued at $52,740. In 1947, however, imports were 11,080 tons, valued at $1,856,584.

Hanging raw stock. The duty rate was reduced from 10 to 71⁄2 percent by the agreement with Canada, effective January 1, 1939. Imports in 1938 totaled 151,862 pounds, valued at $4,346, but had reached a total of 941,101 pounds, valued at $50,791 in 1947.

Inasmuch as there was no segregation of statistics for straw paper and filtering paper of special types prior to the reduction of duty on some grades, it is impossible to give details of the known increases in shipments due to the lower duty rates.

Blotting paper imports have been in such small volume that increases in · imports are without significance.

PARAGRAPH 1413

Paperboards vat-lined surface colored or otherwise processed. The duty was reduced by the agreement with Sweden effective August 5, 1935, from 30 percent to $14.50 per ton, but not less than 15 percent or more than 30 percent. That rate on January 1, 1948, was cut in half again. Imports in 1934, the year before the agreement became effective totaled 1,422,960 pounds, valued at $36,423. In 1936 the total was 3,602,159 pounds valued at $85,818, and in 1947, while the tonnage was almost identical with that of 1936, the value had risen to $195,566, indicating that the reduction in rate had encouraged the importation of much finer grades of board.

Stereotype matrix board.-There are no figures to show the increase in imports resulting from a reduced rate because no segregation of such board was made statistically, until the rate was reduced.

Ribbon fly catchers.-A duty reduction from 35 percent to 271⁄2 percent, effected through the agreement with Belgium in 1935, resulted in such an increase of imports at low prices from Belgium and even larger quantities from Japan that the United States company which invented this article has been forced to discontinue its manufacture. All available supplies are now understood to be of foreign origin.

PARAGRAPH 1672

Standard newsprint.-Placed on duty free list in 1913. The previous duty rate was 3/16¢ per pound on paper valued at not over 21⁄2¢ per pound, with a higher rate on better grades. Imports totaled 315,000 tons in 1913; in 1947 imports totaled nearly 4,000,000 tons.

PULPBOARD FOR WALLBOARD

Pulpboard for use in the manufacture of wallboard is in two classifications, plain and vat-lined under paragraphs 1402 and 1413. The duty rates were reduced, effective January 1, 1936, from 10 to 5 percent on the plain, and from 30 percent to $7.50 per ton, or approximately 15 percent on the vat-lined. All of this material is shipped from Canada to a single American company which owns the Canadian plant, thus giving this company a definite competitive advantage over its dozen or more domestic competitors. There was no statistical segregation of these imports prior to 1936. In 1936, under the reduced rate of duty, imports were 11,200 tons, valued at $432,905, and in 1947 the total was 31,000 tons, valued at $2,062,538.

EXHIBIT NO. 1.-Rates of duty on paper under Act of 1930 and various reciprocal trade agreements

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