TABLE I.—FEP workload and case disposition summary, calendar year 1959

1 Includes 15 cases partially approved and partially disapproved; these cases are therefore included twice under actions completed.

Acquisition cost data on 1959 FEP eases are reflected in table II. As indicated in footnote 1 to table II acquisition cost was available to the FEPO in about one-third of the cases. The balance of acquisition cost was computed on the basis of comparisons and estimates.

Table II shows:

Acquisition cost of property covered by FEP import applications received in 1959 was $75 million.

Acquisition cost of property disapproved for importation was $65 million, or 87 percent of the total.

Acquisition cost of property for which FEP import authorizations were issued was $10 million, or 13 percent of the amount applied for.

Acquisition cost of actual entries for consumption was about $3 million, or 30 percent of total authorizations.

The low ratio of entries to authorizations in 1959 is due in part to the fact that FEP import authorizations issued during the last 6 months of 1959 were to a considerable extent not utilized until early 1960. (See table III.) It may also be due in part to the fact that holders of FEP import authorizations are not obliged to import the property covered by the authorizations and may sell it in countries other than the United States if the market is more favorable to such sales.

TABLE II.—Estimated acquisition cost of property included in total applications, denials, authorizations, and entries, calendar year 1959

1 Value estimates were derived from: actual figures which were available in % of the cases, imputation based on similar property of known value in about % of the cases; and by statistical averages for the balance. Estimates are believed to be within 5 to 10 percent of the actual acquisition cost.

Consumption entries only. Does not include entries in bond for reexport.

As appears from table III, imports of foreign excess property between January 1, 1959, and March 31, 1960, amounted to about $51⁄2 million at estimated

acquisition cost. Of this amount a little over $3 million was imported in 1959 and about $2.4 million in the first quarter of 1960.

An examination of unused FEP import authorizations indicates that if past utilization rates prevail, about 60 percent of the 1959 authorizations will have been entered by the time all 1959 authorizations expire on June 30, 1960. On this assumption total consumption entries deriving from 1959 authorizations will approximate $6 million.

The entered value of all foreign excess property currently held in bond for reexport is $602,000. Table IV shows the value of this property by year of entry for each significant commodity classification. The largest group, amounting to $163,000 or 27 percent, is composed of production equipment and parts which includes generators, grinders, compressors, etc. Motor vehicle parts and construction equipment each account for 20 percent of the total. Forklift trucks are another comparatively large item, having an entered value of $69,866 or 12 percent of the total. Next in order of entered value are trucks, 7 percent; electronic equipment, 6 percent; and construction equipment parts, 6 percent.

The entered value of property held in bond for reexport, based on the average returns for the past 3 years from oversea sales, is 7.5 percent of the acquisition cost of the property. On this basis the estimated acquisition cost of all the property now in bond for reexport would be about $8 million.

A small quantity of material admitted in bond in 1956 is still awaiting reexport as efforts of the importers to find oversea customers appear to have been unsuccessful. The largest quantity, 60 percent of the total currently in bond, was admitted in 1959. The entry rate in the first quarter of 1960 continued at

about 1959 levels.

TABLE III.-Foreign excess property import authorizations and entries, Jan. 1, 1959, through Mar. 31, 1960

1 Includes all imports through October 22 only, when FEP Order No. 1, revised, was amended to permit certain metal scrap importation without case by case FEPO authorization.

2 Actual acquisition costs are not available on approximately 20 percent of the FEP entered and therefore figures in the column for these items include estimates.

As shown in table V, at the end of March 1960 there were 149 separate lots of property of which all or part remained in bond for reexport. Of these about 60 percent were entered during the preceding 12-month period. The remaining 40 percent represent property entered before April 1, 1959, for which the original 1-year bond had been extended by authorization of the FEPO.

There is a large concentration of activity involving foreign excess property in a few ports of entry. This is typified by the material in bond for reexport where over 90 percent of these temporary entries are handled in four ports. Los Angeles with 59 of the active cases accounts for 40 percent followed closely by New York with 35 percent. In the past year, however, New York has led with 34 new entries or 39 percent of the 87 recorded by all ports combined.

TABLE V.-Number of entries in bond for reexport as of Mar. 31, 1960

Mr. RINTELS. The administration of section 402 has been troublesome in the extreme. There have been sharp divergences between the interests of the domestic manufacturers and the professional importers occasioned by their directly opposed economic interests, which have resulted in exposure of our Department to severe criticism from every group which believed it was receiving the less favored treatment, and in some cases from both groups simultaneously.

The criteria expressed in section 402 have been difficult to interpret and apply. The Department placed itself on record to this effect at a series of hearings which were held by the Executive and Legislative Reorganization Subcommittee of the House Committee on Government Operations. These hearings took place in July of 1958 and June of 1959, and most recently, on March 1, 1960, when H.R. 9996, the House counterpart of this bill, S. 3154, was under consideration by that subcommittee.

The bill was very carefully considered on that occasion. Testimony was received from several groups which had substantial interests, including Government agencies, importers, and domestic manufacturers and distributors.

I might add that the witnesses on that occasion were in very great degree the same individuals, representing the same interests, who have had the privilege of testifying at this hearing today.

As a result of the evidence which was adduced on that occasion, and the deliberations of the subcommittee and of the full House Committee on Government Operations, H.R. 9996 was modified to correspond rather closely with the recommendations of the Department of Ĉommerce in terms of new criteria for determining or deciding whether foreign excess property might be imported. We were then and are now critical of the provision of the bill which is pending before you under which it would be unlawful to import such property only if the respective Secretaries determine that its importation would be injurious to the economy of this country.

We testified that the Department of Commerce has no objection to importation of foreign excess property if such property would not have an injurious impact on domestic production or employment. We pointed out on that occasion the difficulty of interpreting and implying as broad a standard as "injurious to the economy.'

We also pointed out that the effect of the amendment in the form originally proposed—and I refer to both bills in their original formmight well be to compel the Department of Commerce to examine the entire inventory of Government property likely to be disposed of abroad, as well as some already disposed of, which would require innumerable determinations, all of which would have to be updated from time to time. Much of this activity would be unproductive.

In the light of the considerations presented at the hearing, the House bill was amended in committee to change the criteria to the following form:

But it shall be unlawful to import such property into the United States after such sale or other disposition, unless the Secretary of Agriculture, in the case of any agricultural commodity, food, or cotton or woolen goods, or the Secretary of Commerce, in the case of any other property, determines that the importation of such property would not result in undue loss of production or employment in the United States.

We believe this amendment to be highly desirable and urge your committee to make a similar change in S. 3154.

The term "undue loss of production or employment in the United States" is the subject of discussion in Report No. 1638 of the House of Representatives which accompanied H.R. 9996 when it was reported by the House Committee on Government Operations.

The report makes it clear, we believe, that findings based upon the statute should take into account not only the significance of the importation to the importer and to the industry immediately concerned, but also the effect on employment and production in other industries, including possible beneficial effects of the imports.

We subscribe to that, and we welcome this explanation.

We wish to point out, however, that in measuring loss of production or employment in the United States it will be necessary to use the particular producing industry as a primary unit of measurement, since in an economy as vast and diversified as our own any other yardstick would be so speculative and so conjectural as to be of little or no value.

The other changes in the bill are of a technical nature. Many of them originated within our own Department. They do not appear to be controversial, and in general I would like to take the liberty of referring the chairman and the committee to our former testimony for comments on these other proposals.

We also have a report on our operations and activities during calendar 1959 which has already been made available to the House committee under Chairman Dawson, and we would be very happy to furnish that to this committee, to the chairman, if it would be helpful in any respect.

Now, I have a few comments on some of the testimony and some of the things that have been said here today, and with the permission of the chairman I would like to mention a few of those points. Senator GRUENING. Go right ahead.