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and the implementing legislation: Ambassador Strauss and his excellent staff, you, Mr. Chairman, and the members of this committee, on the House side, Mr. Vanik, and the staffs, both of the committees and of the individual members.

The process has worked and the result is outstanding. All of us in the public sector I think, owe all of you in the Congress and the executive branch a great deal indeed.

Thank you.

[The prepared statement of Mr. Carlisle follows:]

PREPARED STATEMENT OF CHARLES R. CARLISLE

Mr. Chairman, my name is Charles R. Carlisle. I am a Vice President of St. Joe Minerals Corporation which has its headquarters in New York City. Today I am appearing on behalf of an ad hoc coalition of 33 industrial and labor organizations (Attachment 1) that has been working for almost two years for an effective implementing bill for the Subsidies/Countervailing Duty Agreement negotiated in Geneva.

With me are Mr. Stanley Nehmer, President of Economic Consulting Services, based in this city, and Mr. Charles Verrill of the Washington law firm of Patton, Boggs and Blow. Both Messrs. Nehmer and Verrill have had extensive experience with the trade statutes and both have represented a number of clients who have filed cases under the 1974 Trade Act and other statutes.

My testimony will be brief and will be confined to Title I of S. 1376, that section of the Trade Agreements Act of 1979 which amends the countervailing and antidumping duties laws.

On balance, we favor the enactment of Title I. Our negotiators in Geneva did a good job of laying the groundwork for the many excellent provisions contained in this bill written in fact by the members of this panel, by the Ways and Means Committee and by the Administration. Our concerns about the countervailing duty statute have been largely met; time periods for investigation have been shortened and proceedings will be more open. The current wide latitude of the administering agency's enforcement discretion will be curtailed by the strict definitions of subsidies and offsets, by the rules for terminating investigations and by the requirements for verifying information received from foreign parties.

I do wish to address briefly certain key amendments to the countervailing duty statute, starting with the question of an injury test. Our coalition started from the position that there should be no injury test imposed on domestic industry in countervailing duty cases because subsidization of exports is a per se violation of fair trade concepts. Indeed, some of the members of the coalition still maintain this position. We reluctantly came to the position that such a test would be acceptable, but only if it were no more stringent than that imposed under the Antidumping Act since 1975.

We understand that the injury definition incorporated in S. 1376 is intended to be no more stringent than the current Antidumping Act test. On the basis of that understanding we consider the injury definition incorporated in the bill to be acceptable.

I should add that that test is reasonable but by no means easy.

We are very pleased with the limitation placed on the use of offsetting adjustments to the amount of a countervailing duty. The Treasury Department has abused its discretion by reducing duties in questionable ways. The definition adopted in the bill will limit the use of offsets to certain taxes and fees and hence much reduce the potential for abuse.

The countervailing duty law will, for the first time since its inception, define what constitutes a subsidy. This is a most important achievement which also will reduce the administering agency's enforcement discretion and will more clearly delineate unacceptable domestic or internal subsidies, such as regional development grants and the covering of losses of state-owned enterprises.

My final specific comments are about terminating investigations. Under the present law there are no provisions for terminating cases in countervailing duty cases. Fortunately, this matter also has been dealt with in a satisfactory way in the bill.

In general, investigations may be suspended if the petitioner withdraws the petition, the exporter agrees to cease exporting, or a foreign government agrees to eliminate the subsidy. The rules governing the agreements should lead to more effective monitoring and enforcement and will open up the proceedings by involving domestic interests to an extent never allowed for previously.

Before I close, and perhaps of paramount importance as the Congress begins to consider the reorganization of international trade functions within the Executive Branch, I would like to mention that while many of the new provisions should lead to more rigorous enforcement of the countervailing duty statute, a great deal indeed depends on the way the statute is administered. We continue to believe that it is vitally important that the responsibility for enforcing the countervailing and antidumping laws be removed from the Treasury Department. We consider such action to be equally as important as the statute before you.

We cannot stress this strongly enough. We have testified previously that Treasury, for example, has frequently missed statutory deadlines, reduced duties in questionable ways, and conducted ex parte meetings with foreign representatives at which allegedly confidential, but often questionable, information has been submitted to the Department. Following our testimony on February 22 before this subcommittee, we supplied for the record an eleven-page list of Treasury's questionable practices.

Today the Administration was to have forwarded its recommendations on reorganizing the trade functions of the Executive Branch to the Congress. I have not seen the proposal. But if it does not recommend the transfer of Treasury's current enforcement functions, it will be a sad admission on the part of the Administration that it does not fully comprehend the damage caused by the Treasury Department to effective enforcement of the countervailing and antidumping duty statutes.

Thank you for this opportunity to present our views.
Amalgamated Clothing & Textile Workers Union, AFL-CIO.

American Apparel Manufacturers Association.

American Footwear Industries Association.
American Pipe Fittings Association.

American Textile Manufacturers Institute.
American Yarn Spinners Association.
Bicycle Manufacturers Association.
Cast Iron Soil Pipe Institute.
Clothing Manufacturers Association.

Copper and Brass Fabricators Council, Inc.

Industrial Union Department, AFL-CIO.

International Ladies Garment Workers Union, AFL-CIO.

International Leather Good, Plastics & Novelty Workers Union, AFL-CIO.

Lead-Zinc Producers Committee.

Luggage & Leather Goods Manufacturers of America, Inc.

Man-Made Fiber Producers Association.

Metal Cookware Manufacturers Association.

National Association of Chain Manufacturers.
National Association of Hosiery Manufacturers.

National Cotton Council.

National Federation of Fishermen.

National Handbag Association.

National Knitted Outerwear Association.

National Knitwear Association.

National Outerwear & Sportswear Association.

Northern Textile Association.

Retail Clerks International Union, AFL-CIO-CLC.

Scale Manufacturers Association, Inc.

Synthetic Organic Chemical Manufacturers Association.

Tanners Council of America, Inc.

Textile Distributors Association.

Valve Manufacturers Association.

Work Glove Manufacturers Association.

Senator RIBICOFF. Mr. Greenbaum will be the last witness this morning. We will resume after Mr. Greenbaum tomorrow afternoon at 2 p.m.

STATEMENT OF LEE A. GREENBAUM, JR., PRESIDENT, KEMP & BEATLEY, INC., FIRST VICE PRESIDENT, AMERICAN IMPORTERS ASSOCIATION, WASHINGTON, D.C., ACCOMPANIED BY GERALD O'BRIEN, EXECUTIVE VICE PRESIDENT, AIA; AND DAVID PALMETER, COUNSEL

Mr. GREENBAUM. Mr. Chairman and members of the committee, my name is Lee Greenbaum. I am accompanied by Gerald O'Brien, executive vice president of the American Importers Association; and David Palmeter of the law firm of Daniels, Houlihan & Palmeter.

AIA is a nonprofit organization formed in 1921 to foster and protect the importing business in the United States. As the only association of national scope representing American companies engaged in the import trade, AIA is a recognized spokesman for importers throughout the Nation.

We welcome this all too brief opportunity to present our views on S. 1376, the Trade Agreements Act of 1979, and ask that our full statement appear in the record.

Our board of directors faced a very difficult policy decision because the Trade Agreements Act contains some provisions beneficial to U.S. international trade interests but also proposes an array of shortsighted measures damaging to those interests and of the interests of the American consumer, to the American economy in the long run, and to international peace and prosperity.

The decision adopted by the board was to support passage of the implementing legislation. This decision was reached not because we endorse most of the provisions of the bill, but because we felt that failure to pass the implementing bill would cause more serious disruption to world trade than that which will be engendered by the implementing legislation itself.

We appear before you today to point out what, in our judgment, are the major defects of the implementing legislation, as well as its punitive features directed at American importers. At the same time, we would like to forewarn the Congress of the adverse implications of this legislation for the years ahead.

In the Trade Act of 1974 Congress expressed its concern that barriers to international trade were preventing the development of open and nondiscriminatory trade among nations. Accordingly, Congress authorized the President to enter into trade agreements providing for the harmonization, reduction, or elimination of these barriers and distortions.

The results of those negotiations as they will be implemented into U.S. law are now before us. In addition to those changes which would be required in U.S. law to conform to the negotiated codes, the administration and the Congress have chosen to include drastic revisions in the present countervailing duty and antidumping law as part of the implementing package.

These changes, in major part, represent a giant step backward from trade liberalization and, in our judgment, will create major problems not just for American importers but also for American exporters in the years to come. This is not an example of mature world leadership.

This testimony is not intended to cover all of the provisions of the bill that we find objectionable, but simply to highlight those which we consider most serious.

Our strongest objections center around the changes made in the antidumping and countervailing duty laws. These changes by and large compromise the fairness of the administrative proceedings at the expense of importers and will likely result in increased restrictions on trade with eventual matching restrictions against U.S. exports by our trade partners.

We list the following areas where changes have been made, which we believe are harmful to our international trade interests:

In the antidumping law: (1) Shortened time limits for preliminary determinations; (2) overlapping consideration of injury and final determination of LTFV margins; (3) retroactive suspensions of liquidation; (4) deposit of estimatd dumping duties; (5) expansion of constructed value; (6) expanded discretion to compute foreign market value; and (7) disclosure of confidential information.

In the countervailing duty law: (1) shortened time limits; (2) suspension of liquidation; (3) overlapping of final determination of subsidy and injury determination; and (4) calculation of net subsidy.

We strongly endorse the requirement of a material injury finding in these cases and consider this to be a major improvement over present law. We urge this committee to reject any attempts to compromise the term's definition in the language of the committee's report.

We consider the following to be objectionable provisions:

One, the so-called snapback of textile tariff reductions should the multifiber arrangement not be extended only adds insult to injury. The uneven and, on average, shallow, textile and apparel tariff cuts are meaningless, since the United States will still maintain the highest level of tariff protection of any of our major trading partners.

Two, while we applaud the long overdue elimination of the American selling price method of valuation, the high level conversion of tariffs on low-priced shoes-levels far above those recommended by the International Trade Commission and not subject to Presidential reduction-are a scandalous assault on the Nation's poor.

Three, the authorization to auction import licenses, while limited in its presently proposed application, is an unfortunate precedent, easily expanded at a later date. Auctioning places small importers at an extraordinary disadvantage. The effect of such a scheme is further concentration of an industry once dominated by small companies and reduced competition for those products under license.

Retail and wholesale costs of licensed products will increase further as parties in the United States enter the import transaction chain to broker quota licenses.

This bill was written under the philosophy that U.S. corporations need extensive protection from foreign competition. AĨA takes issue with this philosophy and laments the opportunity this bill has rejected to turn our concentration from attempts to prolong the life of yesterday's U.S. industrial structure to a concerted effort to move into tomorrow's high technology industries.

Maintaining market-oriented trade policies requires that our industries adapt to changes in foreign competition, just as they adapt to internal domestic competition. The Nation's interests are not served by freezing resources in industries that are increasingly uncompetitive in the international marketplace.

Government restrictions on imports are Government restrictions on competition-the proclaimed centerpiece of American economic policy. S. 1376 has, on balance, opted for restrictions on competition. The immediate effects may seem beneficial as protected industries reap the benefits of lessened competition; however, the ultimate effect on consumer prices and the increased inability of our industries to compete in international markets may never be traced back to the choices made in writing this bill. Until this causal relationship is recognized, our economy will continue to bear this self-imposed burden.

Senator RIBICOFF. Thank you very much.

[The prepared statement of Mr. Greenbaum follows:]

PREPARED STATEMENT OF LEE A. GREENBAUM, JR.

SUMMARY

I. Introduction

On June 28, the Board of Directors of the American Importers Association met to decide what_position AIA should take on the implementing legislation before this committee. This decision was a difficult one for us because the Trade Agreements Act which contains many provisions beneficial to U.S. international trade interests also proposes an array of shortsighted measures damaging to those interests and to the interests of the American consumer and to the merican Economy in the long run. The decision adopted by the Board of Directors was to support passage of the implementing legislation. This decision was reached not because we endorse most of the provisions of the bill, but because we felt that failure to pass the implementing bill could cause more serious disruption to world trade than that which will be endangered by the implementing legislation itself.

II. Antidumping and countervailing duty amendments

Our strongest objections center around the changes made in the antidumping and countervailing duty laws. These changes by and large compromise the fairness of the administrative proceedings at the expense of importers and will likely result in increased restrictions on trade with eventual matching restrictions against U.S. exports by our trade partners. We believe that the changes in the following areas are harmful to our international trade interests:

In the antidumping law:

1. Shortened time limits for preliminary determinations;

2. Overlapping consideration of injury and final determination of LTFV margins; 3. Retroactive suspensions of liquidation;

4. Deposit of estimated dumping duties;

5. Expansion of constructed value;

6. Expanded discretion to compute foreign market value;

7. Disclosure of confidential information.

In the countervailing duty law:

1. Shortened time limits;

2. Suspension of liquidation;

3. Overlapping of final determination of subsidy and injury determination;

4. Calculation of "net subsidy".

We strongly endorse the inclusion of a "material" injury finding in all cases and consider this to be a major improvement over present law.

III. Other objectionable provisions

1. "Snapback" of textile tariff reductions;

2. Arbitrarily high footwear ASP conversion rates;

3. Authorization to auction import licenses;

4. Pressure to move the U.S. to a c.i.f. valuation basis;

5. Failure to amend the effective date of annual GSP program changes.

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