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And now, they have allocated to other countries an increased portion, whereas our defense allocation must come out of what we always received, practically.

Mr. COLE. Let me ask one more question, then. If this admendment were made part of the law, and if any commodity is in excess of the amount necessary to meet allocations for defense, stockpiling, and so on, then there shall be no restriction or limitation imposed upon the right of any person to import such commodity from any foreign country; is that right?

Mr. LOREE. That is about what the amendment does, yes.
Mr. COLE. That is all.

The CHAIRMAN. Would that give any preference or immunity to imported goods over domestic goods of the same character?

Mr. LOREE. No; that would not give any preference.
The CHAIRMAN. Would it make them freer from allocations?
Mr. LOREE. It would make them freer from allocations.
The CHAIRMAN. Well, that is a preference, is it not?

Mr. LOREE. No, sir, because that would also apply to the domestic goods beyond the need.

Mr. COLE. Who would make the finding that domestic production is in excess of the amount necessary?

Mr. LOREE. Who would make the finding?
Mr. COLE. Yes, sir.
Mr. LOREE. I believe the President would make the finding.
Mr. COLE. Thank you.

The CHAIRMAN. Well then, those priorities, as far as their use in this country is concerned, would be subject to the Defense Production Act just as other priorities?

Mr. LOREE. That is right, as far as defense and stockpiling and all the rest is concerned, but it would probably save us from having to take out of stockpiles all the time. Here in this morning's paper it is indicated that we are going to have to take another 20,000 tons out of copper stockpiles. We took some 200,000 tons out last year. The picture as we see it is, taking the 1950 figures, our allocation out of 1,300,000 tons, which would come to us out of the copper production of the world is some 520,000 tons of that, and that would have to be allocated for defense, leaving only 780,000 tons to take care of our ordinary domestic commercial needs, which normally took 1,300,000 tons.

The allocation for 1952 of some of our other people in the defense effort, such as Belgium Belgium got a 25-percent increase in its allocation. The United Kingdom got a 4-percent increase. France got a 15-percent increase. The United States got a decrease. And that caused unemployment, which was partly saved by the release by the President, from stockpile, of 200,000 tons of copper.

The Chairman. How would your bill stimulate the increased production in the United States?

Mr. LOREE. Because that would lay open to us the outside supply. The CHAIRMAN. There would be no restriction on that?

Mr. LOREE. No, sir, not after we had provided what was necessary for defense, stockpiling, and for the defense efforts of our friends.

The CHAIRMAN. Who would decide that?

Mr. LOREE. The President would decide what was required for those parts of our economy, and when he had decided we had received all of that we needed, the rest of it would be free for our economy.

Mr. COLE. Mr. Chairman, may I ask another question?
The CHAIRMAN. Mr. Cole.

Mr. COLE. Has the Foreign Affairs Committee done anything with this particular amendment or bill? Have they had any hearings on the point which you are raising?

Mr. LOREE. So far as I know they have had no hearings since the half and a quarter was formed.

Mr. NICHOLSON. Hasn't some committee of Congress looked into this matter of metals, and the importation and distribution of them?

Mr. LOREE. I do not think that there has ever been any reference to any general committee of Congress of the executive branch’s participation in these international controls.

Mr. COLE. I think you have a very important subject here and a very interesting one. I am only concerned about the fact that, personally, so far as I am concerned and I would not be surprised if that were not true of the rest of the members of the committee-we are a little at sea on this proposal and I am afraid you are not going to get the proper consideration you should have. It seems to me to be a subject which would require considerable study. I wish we could give it the study.

The CHAIRMAN. It is a question that is primarily within the jurisdiction of the Foreign Affairs Committee.

Mr. LOREE. With your permission, we would like to submit this same statement to the Foreign Affairs Committee. And perhaps to the military, because it does seem to us that our stockpile is threatened with these international allocations.

The CHAIRMAN. I suggest that you do submit the same statement to the Foreign Affairs Committee and let them study it.

Mr. LOREE. Thank you.

Mr. Multer. Mr. Chairman, I do not want to delay the matter too much because it seems that it does belong before another committee, but I must point out this: Under section 2 of the bill you would vitiate everything you attempt to do in the Defense Production Act. Under that section if the country needed every ounce of copper that was coming into the country for the defense effort, and you wanted to buy abroad, you, individually, or your company, wanted to buy abroad, all the copper you could lay your hands on, to bring into this country and make ashtrays of it, under section 2 you would be permitted to do so.

Mr. LOREE. No, sir, not if I read it correctly. This bill provides Mr. MULTER. Let me read it to you. Section 2 says:

No rule, regulation or allocation under this title shall apply to purchases by any person of any material outside of the United States or its Territories and possessions for importation into the United States of America for his own use or for fabrication by him into other products for resale.

If it does not mean that, I would like to have your explanation

Mr. LOREE. Don't you have to read the first part of this before you get to the second? "If the domestic production

Mr. MULTER. The first section amends section 101 of the Defense Production Act, and your second section amends section 402 of the act.

If it is not your intent to accomplish what I say the bill accomplishes, then I think you ought to have the bill corrected. That is my impression from a hasty reading.

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Mr. LOREE. No, I think what would happen--as you know, under the Defense Production Act, there are two methods of control. One by price and the other by allocation.

Take copper, for example. Copper is really not the thing that is of much concern. Actually, up to now, anybody who was engaged in the manufacture of anything with copper could buy at any price he wanted outside the United States, and bring it into the United States, as long as he didn't sell it.

If I wanted to pay Chile $1.50 a pound for copper, I could have done it, and have brought it in and used it to make something that I was manufacturing.

But, if I brought it in, then my tickets on allocation would be reduced, and it would apply against my quota. We are not suggesting that that control be taken away. The only thing that we are suggesting is that we be permitted to buy it, and that we are not subject to the control of the International Materials Conference and its allocations, and that after the Defense Production people have received what they need for defense purposes, then we can be free to buy it and use it.

The CHAIRMAN. Are there further questions? If not, you may stand aside.

(The following statement was submitted for inclusion in the record:) STATEMENT OF STERLING St. John, JR., ON BEHALF OF THE UNITED STATES

FOREIGN-TRADE ZONES BY THEIR JOINT REPRESENTATIVE, Who Is Also CHAIRMAN OF THE SPECIAL COMMITTEE ON FOREIGN-TRADE ZONES OF THE AMERICAN AssocIATION OF PORT AUTHORITIES, OF WHICH ALL UNITED STATES FOREIGN-TRADE ZONES ARE MEMBERS

Mr. Chairman and members of the committee, the United States Foreign-Trade Zones are facilities established, operated, and maintained in domestic ports of entry to expedite and encourage foreign commerce under authority of the Celler Foreign-Trade Zones Act of 1934 (Public Law 397, 73d Cong., 48 Stat. 998) as amended.

At the present time there are six foreign-trade zones operating under grants of the Foreign-Trade Zones Board, which is composed of the Secretary of Commerce, Chairman, the Secretary of the Treasury, and the Secretary of the Army. These six are:

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The functioning of these zones has been seriously interfered with by administrative interpretations of the Defense Production Act of 1950, as amended, by certain public agencies deriving authority therefrom and concurred to by the Departments of Commerce, Treasury, and the Army.

Section 3 of the Celler Foreign-Trade Zones Act of 1934, as amended, reads in part:

“Sec. 3. Foreign and domestic merchandise of every description, except such as is prohibited by law, may, without being subject to the customs laws of the United States, except as otherwise provided in this Act, be brought into a zone and may be stored, sold, exhibited, broken up, repacked, assembled distributed, sorted, graded, cleaned, mixed with foreign or domestic merchandise, or otherwise manipulated, or be manufactured except as other

wise provided in this Act. and be exported, destroyed, or sent into customs territory of the United States therefrom, in the original package or otherwise; but when foreign merchandise is so sent from a zone into customs territory of the United States it shall be subject to the laws and regulations of the

United States affecting imported merchandise;" and section 15 (c) reads:

“The Board (the Foreign-Trades Zones Board) may at any time order the exclusion from the zone of any goods or process of treatment that in its

judgment is detrimental to the public interest, health, or safety.". From the time of their establishment, the grantees and users of the ForeignTrade Zones have predicated their operations upon the basis that the articles prohibited by law from entering the foreign-trade zones were those specifically and absolutely prohibited from entering the territory of the United States; that articles which Congress by law had deemed inimical to the morals, health, or best interests of the Nation if they were so much as discovered within the sovereign limits of the United States were in like manner denied admittance to the foreign-trade zones.

On the other hand, laws and legal regulations thereunder which denied or restricted the introduction of articles into the domestic commerce of the United States have long been considered by zone grantees and users not to be applicable to the bringing of merchandise to foreign-trade zones unless specifically excluded by the foreign-trade zones board under section 15 (c) of the act quoted above.

In construing section 3 of the act quoted above, the zone grantees and users have operated on the assumption that foreign and domestic merchandise of every description properly in a zone was not subject to the customs laws and, further, that foreign merchandise was not subject to the laws and regulations of the United States affecting imported merchandise until and unless such foreign merchandise was sent from a zone into the customs territory.

Now the laws and regulations of the United States affecting imported merchandise are far broader than the customs laws and govern the conditions under which foreign merchandise may enter into the commerce of the United States. Such conditions may be imposed not only under the Tariff Act but by laws under which the Department of Agriculture, the Pure Food and Drug Administration, the Department of Commerce, and other agencies including the emergency agencies are given power to regulate conditions of importation and processes of treatment.

It is with deep concern for the integrity of the Celler Foreign-Trade Zones Act of 1934, and the continued functioning of the United States foreign-trade zones that zone grantees and users have viewed the assumption of jurisdiction over merchandise and processes of treatment within foreign-trade zones by agencies other than the legally constituted foreign-trade zone board.

Under section 107 of the Defense Production Act of 1950, as amended, the Production and Marketing Administration of the Department of Agriculture defines “import” in section 1 (g) of their regulation DF0-3 as follows:

“ 'Import' means to transport in any manner into the continental United States, Puerto Rico, the Virgin Islands, or any territory or possession of the United States from any foreign country. It includes shipments into a free port, free zone, or bonded custody of the United States Bureau of Customs (bonded warehouse) in the continental United States, Puerto Rico, or the Virgin Islands and shipments in bond into the continental United States, Puerto Rico, or the Virgin Islands for transshipment into Canada, Mexico, or any other foreign country.” (Italics supplied.] This assumption of jurisdiction is taken despite the Secretary of Agriculture's statement of policy in his Determination Relating to Imports Under the Defense Production Act (Fed. Reg. of Aug. 11, 1951):

"It is hereby determined that imports (other than by the Government of the United States) into the commerce of the United States of the commodities and products hereinafter listed, except as herein specified, would with respect to each such commodity or product (a) impair or reduce the domestic production of a commodity or product specified in said section 104 below present production levels, (b) interfere with the orderly domestic storing and marketing of a commodity or product specified in said section 104, or (c) result in an unnecessary burden or expenditure under a Government pricesupport program.” [Italics supplied.)

The receipt in a foreign-trade zone of butter, cheese, and the other products of section 104 cannot possibly be considered as having entered the commerce of the United States and to exclude these products from the zones could not have been

intended by Congress under the Defense Production Act or by the Celler ForeignTrade Zones Act.

The second Government agency which has assumed jurisdiction over merchandise in foreign-trade zones under the Defense Production Act is the National Production Authority. Their definition of "import” (regulation M-8 as amended April 2, 1951), which it is to be noted differs from that of the Production and Marketing Administration although arising out of the same statute, follows:

'Import means to transport in any manner into the continental United States from any foreign country or from any territory or possession of the United States. It includes shipments into a United States foreign-trade zone, or bonded custody of any United States collector of customs (bonded warehouse) in the continental United States and shipments into the continental United States for processing or manufacture in bond for exportation. 'Import' does not include shipments in transit in bond through the continental United States without processing or manufacture to Canada, Mexico, or any other foreign country, or shipments through United States foreign-trade zones to a foreign country without processing or manufacture. However, if any material in such shipments in transit in bond is because of a change in plans, to be sold or used in the continental United States, or subjected to processing or manufacture in the continental United States, it becomes an 'import' for the purposes of this order and requires the reports specified in section 14 of this order.". This definition, too, is not consonant with the Celler Foreign-Trade Zones Act, for it brings within the jurisdiction and control of NPA foreign merchandise that is processed or manufactured in a zone. The NPA has stated that its authority goes beyond regulating the importation of articles into the customs territory of the United States that have been processed or manufactured in a foreign-trade zone. It claims the authority to prohibit or control manufacture and processing of any commodity, domestic or foreign, within a zone.

It is again pointed out, however, that the Celler Foreign-Trade Zones Act excludes foreign merchandise from the application of import laws and regulations until such merchandise is brought into customs territory, despite the broad application of the Defense Production Act, and it is the firm belief of the zone grantees and users that the NPA should not control the processing and manufacture of foreign materials within zones. It'may be within their realm to control the bringing of foreign products into the customs territory and so control, indirectly, processing and manufacture within a zone; but under the Celler Act, foreign merchandise brought to a zone has not been imported into the commerce of the United States nor such importation signified by the making of a customs entry.

The third Government agency which is presumed to have authority within foreign-trade zones under the Defense Production Act is the Office of Price Stabilization. This agency, too, has a definition of “import” which differs from those of the Production and Marketing Administration and the National Production Authority. The OPS definition as found in CPR 31, section 2, follows:

"A commodity is imported which is transported from a place outside the continental limits of the United States to a place inside the continental limits of the United States, its territories, and possessions. However, commodities shipped into the United States, its territories, and possessions from outside thereof and entered in a foreign-trade zone or under general order or in a bonded warehouse for transshipment and actually transshipped to a destination outside the continental limits of the United States shall not be

deemed to be 'imported'.' Of the three agencies, the Office of Price Stabilization has gone farthest to preserve the purpose of foreign-trade zones and the status of foreign merchandise therein. It does not presume to impose its control regulations upon sales of foreign merchandise in zones. The OPS takes the position that when such merchandise is sent from a zone into customs territory, then it comes within the jurisdiction of the OPS. If the merchandise is transshipped to a foreign country, the OPS has no interest.

To summarize, we have the situation of having three separate Government agencies taking their authority from one statute, the Defense Production Act, writing three separate definitions for imported merchandise, each one different from the other, although all three have claimed full jurisdiction over zone merchandise for such purposes as they choose to exercise. The foreign-trade zones board has supported these agencies in their application of authority to zones and zone merchandise. Foreign-trade zone grantees and users do not subscribe to this view of diverse authority. They maintain that the Cellar Foreign-Trade

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