they are, therefore, having a "field day" in buying whatever surplus equipment comes up on bids overseas, and are buying it for next to nothing. If American buyers were given the opportunity to compete for these machines, the net return to the Government would obviously be higher because of the greater competition involved. V. The present law is predicated upon the further misconception that machine tools and production equipment located overseas are available in enormous quantities, which is not the case. It might be conceded that if American-built machine tools and production equipment became surplus at oversea bases in enormous quantities, their impact upon the domestic economy if brought back here might be severe; however, the facts are that the amount of such equipment now being sold overseas is practically negligible. I have gone through literally hundreds of Government bid invitations at oversea bases, and in a typical sale running anywhere from 100 to 200 lots of assorted material, it is unusual to find more than two or three machines of any kind in the sale. On this point, there is a further anomalyeven assuming that there was a large quantity of equipment available overseas (which is not the case), then why cannot our Government, using the same reasoning that has gone into the making of our present law, prohibit the sale here in the United States of surplus machinery and equipment which it has for sale at domestic military and naval installations? In other words, if the basic desire of Congress is to protect domestic industry, then why not go whole hog and take all of our surplus machine tools and dump them out in the ocean to prevent their being sold on the market? Why select only surplus Americanbuilt equipment which by an accident of geography happens to be located at a U.S. base overseas instead of being at a U.S. base in Maryland or California? To sum up, we feel that the present law does not accomplish what it is intended to accomplish and actually works to the detriment of the very American industries which it was presumably designed to protect. The proposed law (S. 3154) will correct this situation, and we are behind it 100 percent. Thank you very much for the courtesy you have extended me today. Senator GRUENING. Thank you very much, Mr. Vinson. Are you familiar with the amendments that have been placed in the companion bill in the House, H.R. 9996? Mr. VINSON. Yes. Senator GRUENING. Do you favor those amendments or not? Mr. VINSON. Actually, I have not had an opportunity to discuss them with our committee in detail, but I am sure that the intent and feeling of our committee is that they are good amendments. The language may require a little bit of correction in that. I am not so sure. Senator GRUENING. Then you would not agree with Mr. Kampelman and Mr. Nathan? Will you be kind enough Mr. VINSON. I will be happy to report back to you. Senator GRUENING. Will you be kind enough to submit your views? (The material requested follows :) MACHINERY DEALERS NATIONAL ASSOCIATION, Reference S. 3154 and H.R. 9996 (Rept. No. 1638). Hon. ERNEST GRUENING, Senate Committee on Government Operations, DEAR SENATOR GRUENING: It was kind of you to permit me to consult with our committee on your question, "Do you favor those amendments in the companion bill H.R. 9996?" So that you may have the exact words of a machinery dealer who is directly affected by the bill and is chairman of our committee, I am pleased to again quote Mr. Alex Zeeve, Jr., as follows: "It is our feeling that the change proposed by the Department of Commerce would to a large extent nullify the basic intent of the proposed bill. If it is adopted, it would result in the Department of Commerce having to pass on each application just as they presently do under the present law, with no clear and definite criterion other than what they interpret as to what 'would result in undue loss of production or unemployment.' "One can easily visualize what might very well happen. Each time someone wished to reimport some foreign excess property, it is entirely possible that the Department of Commerce would contact the original manufacturer and ask whether the reimportation would result in undue loss of production or unemployment; now, this would be a difficult question for the original manufacturer to answer. Many manufacturers, as you well know, take the stand that each and every unit sold as used or surplus equipment represents one less new item that they themselves could furnish (even though we, of course, know that this is not so). Such manufacturers would, therefore, undoubtedly tell the Department of Commerce that the reimportation would result in undue loss of production, and the Department of Commerce might, therefore, very well then reject the reimportation application. "We feel this would negate the entire purpose of the proposed bill. It seems to us that the original language of this bill is much more to the point and presents a much fairer criterion as to what will govern the Department of Commerce in passing on reimportation applications. The original language states that the reimportation would have to be proven to be 'injurious to the economy of this country,' which means that anyone objecting to the proposed reimportation would have to make out a case showing not only that his own business might possibly be adversely affected but that the entire economy of the country would likewise be adversely affected, and we feel this should be the true test. "I cannot help but add that the entire background on the subject of foreign excess property shows that the Department of Commerce themselves have never once initiated any action to change the present unfair law. It would, therefore, seem that their feeling has been that the law has been fair, which we, of course, know it has not been. It therefore seems to me that their present request to change the wording on the proposed House bill is a further manifestation of their desire to continue acting as 'policeman,' when that should not be their function at all. From personal experience with their personnel down in Washington, I draw the conclusion that they have not been, nor will they be, sympathetic to reimportation of foreign excess property unless the proposed change in the law is so clearly written that they will be prohibited from acting as the arbiter in each and every case. "I further cannot help but observe that the unfortunate appellation 'Foreign Excess Property,' which has been given to American-built equipment, machinery, etc., sold by U.S. agencies overseas has somehow or other permeated the thinking of Department of Commerce officials who have associated it with some sort of evil connotation, as if it were 'bootleg' or 'clandestine merchandise.' The true facts are, of course, that the equipment involved should have no such connotation attached to it at all-it was produced by American labor in American plants and paid for with American dollars and by an accident of geography happened to become surplus at American bases overseas instead of becoming surplus at a domestic base. The original American manufacturers presumably made satisfactory profit margins on this equipment when they built it, and while it is understandable that they might prefer that it not be put back into the domestic market, there is not the slightest reason why it should not be made available to American users now. We feel it is almost criminal to forbid this material from being brought back here for sale, knowing that the Hoover Commission reports have plainly indicated that a large quantity of this foreign excess property has undoubtedly wound up behind the Iron Curtain, which is the last place it should wind up. Any change in the present law should be so clearly and strongly written as to make it as difficult as possible for any Government agency to prohibit the reimportation of this property. We therefore feel that the House bill, as originally written, contains the most desirable language; however, if the Department of Commerce's wording is adopted, we see strong possibility of the present law being continued instead of changed." With the hope this information will be helpful to you, I am Respectfully yours, R. K. VINSON, Executive Director. Senator GRUENING. Our next witness is Mr. William C. Weber, Jr., executive director, Electronics Representatives Association. Mr. Weber, have you a prepared statement? Mr. WEBER. Yes, I do, Mr. Chairman. Senator GRUENING. I am wondering whether, in the interest of time we have a lot of witnesses-whether you would not summarize your views and allow us to put your full statement in the record following your remarks? Mr. WEBER. I will be glad to do that, Mr. Chairman. STATEMENT OF WILLIAM C. WEBER, JR., EXECUTIVE DIRECTOR, ELECTRONICS REPRESENTATIVES ASSOCIATION, CHICAGO, ILL. Mr. WEBER. I am William C. Weber, Jr., and I am executive director of the Electronics Representatives Association, with offices in Chicago. And I am appearing on behalf of the association and specifically our president, Mr. Wally Shulan of Jersey City, N.J., who wanted to be here but could not. For the clarification of the committee, our members are independent manufacturers' representatives who sell all types of electronics components and equipment. They employ a substantial number of people and are involved in direct day-to-day selling. Competition in the electronics sales today is very, very severe. We are facing not only competition from domestically generated surplus but also from the Japanese manufacturers of the same types of electronic equipment sold here in this country. So far as we are able to determine, there is no shortage of electronic parts and equipment in this country. On the other hand, we are fairly certain that overseas there either are now or will be in the future substantial quantities of electronic goods that will be available for reimportation into the United States. With the steady improvement in military hardware, and particularly in our industry where electronics is changing almost every day, we are pretty certain that this is going to happen. Under the present law we feel that the country and the electronics economy, is protected from the wholesale dumping of foreign excess property. Even if it were small in amount, we see no reason for compounding the difficulties of an electronics market that already has a more than plentiful supply. Under the present law, of course, there has to exist a domestic shortage, and this is a determination now made by the Department of Com merce. If the law were changed as is provided in S. 3154 or H.R. 9996, this means a shifting of the burden of proof over to the injured industry. Our basic position is that, if it is now difficult for the Department of Commerce to determine an import which is beneficial to the economy or, in other words, determine the actual existence of a shortage, that it is far harder for them to determine a potential impact on an economy in advance. We wonder how you determine in advance the impact on the economy as a whole, on a given industry, or on production or on employment. You can prove this, once it has happened, but of course then the damage is done and the market is severely injured. If it were not true that competition is as severe as it is in our electronics industry, perhaps we would feel otherwise. Listening to the witnesses this morning, I gathered their particular complaint is directed at the current policies of the Department of Commerce in administering the present law. If these policies are incorrect, I believe they can be changed by the Department of Commerce just as they apparently were changed in 1958. And we submit that this is the better action. In the meantime, we respectfully ask you not to compound our present difficulties by changing the present law. Perhaps through better procurement on the Government's part or whatever other means are necessary. They can remedy a current domestic situation and, as I say, not add to our difficulties by bringing in goods which, once brought in, are certain to have a depressing effect so long as the goods are already in adequate supply. Senator GRUENING. Well, then, as I understand it, your association is opposed to the enactment of S. 3154? Mr. WEBER. Yes, sir; we are. Senator GRUENING. And you prefer to leave the situation with the current provisions? Mr. WEBER. Yes, Senator, we do. Primarily, as I say, because there are no provable shortages in electronics goods in the country. Our electronics manufacturers, from what we can determine from the electronics industries in the association, are well able to meet the demands; and the demands that they cannot meet, if there are such, are certainly being met by Japanese and German manufacturers. Senator GRUENING. You feel that the importation of surplus commodities in your field would be injurious to your industry? Mr. WEBER. Yes, sir; because the supply is already plentiful, and any goods which are brought back are bound to have a depressing effect on the local market. Senator GRUENING. Do you feel that, despite the provisions of the bill, that the Secretary of Commerce may rule against the importation if he finds it injurious to production here? Mr. WEBER. Senator, under the proposed language how do you determine such a thing as, for example, "injurious to the economy"? This is difficult as we see it, and the Secretary being unable to prove the injury in advance would be required to grant a license. Now, as I say, once it happens, of course, it is a provable situation, and we know that in the case of domestic surplus, where, for example, after World War II, communications gear was dumped on the market, it did have a depressing effect on U.S. manufacturers. But we would prefer to see the determination made now, as to whether a shortage exists. Under this test the Department of Commerce can go to the industry affected and ask them what their current stocks are, both in plant and in their distribution points. This gives a pretty adequate measurement of whether or not there is a shortage existing and whether or not importation of a given quantity of goods would result in a benefit to the economy. But how they would determine undue loss of production or undue loss of employment or impact on either the whole economy or a part of it, we frankly, Senator, do not see how they could establish reasonable criteria. Senator GRUENING. Well, thank you very much, Mr. Weber. We are very happy to have your testimony. Mr. WEBER. Yes, sir. (The full text of the statement by Mr. Weber follows:) STATEMENT ON S. 3154 AND SIMILAR BILLS RELATING TO THE DISPOSAL OF Mr. Chairman, my name is William C. Weber, Jr., and I am executive director of the Electronic Representatives Association, with offices at 600 South Michigan Avenue, Chicago, Ill. I appear on behalf of the association, and specifically its national president, Mr. Wally Shulan, of Jersey City, N.J., who had hoped to be present, but was prevented from doing so by circumstances beyond his control. ERA is composed of some 725 independent manufacturers representatives throughout the country, small business firms which sell electronic components and equipment to commercial, industrial, and military customers. These firms employ well over 3,500 persons, most of whom are involved in direct day-to-day selling in every State of the Union against various forms of competition. Ever since World War II, and the Korean war, our members have faced competition from domestically generated surplus electronic parts and equipment returned to the American marketplace. We are well aware that this situation is caused by inadequate Government procurement policies, in many instances, and we support wholeheartedly the efforts of various Members of Congress who seek to rectify this situation. I am confident that we would lend our complete backing to efforts which would, in the interim, alleviate this condition through better control of the disposal of domestic surplus, even as current law exercises a measure of control over surplus reimported from abroad. The present law, which S. 3154 (and H.R. 9996) seek to amend, provides that such foreign surplus may be reimported only in cases of a shortage here in the United States; we submit, Mr. Chairman, that no domestic shortages exist in the case of electronic parts and equipment. Quite to the contrary, and from what we can determine, electronic manufacturers are well able to supply both military and nonmilitary needs, and the fact that very few applications for the reimport of electronic surplus are now pending before the Department of Commerce would seem to support this thesis. At the same time, we are confident that the rapidly changing technology of our industry means that substantial quantities of obsolete electronic parts and equipment either are now surplus overseas, or will be, as new equipment replaces that in current use. I regret to say that we have been unable to learn from either the Departments of Defense or Commerce exactly the items and quantities which are now (or are in the process of being declared) surplus, but the steady improvement in military electronic hardware is a good indication that large amounts of such material are or will be available for reimportation, particularly if the present law is changed. If such goods are reimported, it can only mean further hardship on those in our industry, like electronic representatives, who must meet the competition of domestically generated surplus, not to mention the increasing competition from Japanese and other foreign manufacturers of the same equipment. Any merchandise dumped into a market of plentiful supply must have a depressant effect, which will translate into a lessening of the need for goods which are manufactured domestically. Obviously, a diminished demand means decreased |