property) determines that the importation of such property would not have an injurious impact on domestic production or employment *

* *

In our view this has the merit of more specifically identifying the area which might be affected by importations and in establishing a basis against which to measure the degree of impact. We believe that this proposal would be fair to the domestic producing industries, the importers of foreign excess property, and the public, and that it would facilitate administration of our responsibilities under the law. We consider this substitute criterion to be flexible enough to permit us to provide necessary protection to domestic industries which supply their customers from inventories generated by intermittent production

runs.

If this proposal were adopted, we envisage implementing it by regulations. It might be possible to categorize foreign excess property under the provisions of our suggested modification to section 402. In so doing, it would, of course, be necessary to comply with the provisions of the Administrative Procedures Act. Conceivably there could be developed the following categories of foreign excess property:

(a) A "decontrolled list" which would include foreign excess property which might be imported;

(b) A "prohibited list" which would include property which might not be imported; and

(c) An intermediate category which would continue to be subject to individual determinations in response to specific applications.

Additionally, we would be prepared to consider the establishment of "small case procedure" covering instances involving extremely limited quantities of property, and perhaps including property intended for the personal use of the applicant. Some types of property might be susceptible of regulation under a quota system.

This concludes my comments in regard to substantive aspects. There are additionally certain precedural and legal questions arising from consideration of H.R. 9996. I would like to comment on certain provisions of the proposed amendment and to suggest several further amendments which we believe should be included with the other provisions being considered at this time.

We have pointed out on previous occasions that the law was difficult to administer and enforce because of its failure to include provisions making importation in violation of its requirements an offense and making property imported in violation subject to the usual penalties of seizure, forfeiture, and condemnation. H.R. 9996 appears to be thoroughly satisfactory in providing the procedural changes necessary to permit adequate enforcement of the law. It meets our previous comment that an unapproved importation of foreign excess property should be made an offense rather than a breach of contract. It reinforces the position of the Commerce Department, the Treasury Department, and the Justice Department in dealing with unlawful importations. It contains explicit authorization to executive departments to make determinations, rules, regulations, and orders necessary or appropriate to carry out their respective functions. In this connection a suggestion has been made to us informally by the General Accounting Office that the rulemaking authority should be explicitly extended to the Secretary of the Treasury in view of the existence of Treasury functions under the bill. We endorse this suggestion.

The provision relating to forfeiture and seizure commencing on line 8 of page 3 of the bill is modeled on 22 U.S.C. 401 (b) with minor changes. The proviso is designed to prevent admission of forfeited property-in accordance with the legislative purpose-by providing in substance that property sold on seizure or forfeiture must be exported or reduced to scrap. A further purpose of this portion of the bill is to clarify enforcement jurisdiction by placing it where it properly belongs, that is, in the Bureau of Customs within the Treasury Department. We endorse these provisions.

The final paragraph of the bill commencing on page 4, line 4, is designed to eliminate a problem which has persisted for many years. The importation of property in bond, in transit, or for reexport, while having no impact in the United States, is nevertheless in technical terms an importation. Since no impact results from such importation it is considered more appropriate to exclude this specialized type of importation from the general provisions of the law in order that jurisdiction over such specialized imports may be vested where it properly belongs, in the Bureau of Customs, Treasury Department, instead of in the Departments of Commerce and Agriculture, which have no interest in this type of transaction. We endorse this change. However, we are advised informally by the Bureau of Customs that for technical reasons it would prefer to substitute in line 10 on page 4 for the words "prior to such importation" the expression "upon entry for any such purposes." We concur in this suggestion.

In order to eliminate present distinctions in the rules and criteria applicable to importations of surplus property and foreign excess property sold or disposed of abroad by the U.Š. Government before and after July 1, 1949-distinctions which we believe serve no u eful purpose we suggest inclusion of two additional amendments. These would consist of an additional provision in section 402 as follows:

The provisions of this section shall also apply to importations into the United States of property sold or disposed of abroad as surplus property pursuant to the Surplus Property Act of 1944 (58 Stat. 765).

The other change would consist of an amendment to section 601 (b) of the act to the following language:

(b) by any officer of the Government under the authority of the Surplus Property Act of 1944, as amended, or any other authority, with respect to surplus property located in the continental United States including Hawaii and Alaska, and Puerto Rico and the Virgin Islands.

In order to provide for an orderly transition in administration under the present section 402, it is proposed that if section 402 is amended there be included a provision indicating that the law will become effective 90 days after enactment.

Mr. Rintels of the Office of General Counsel is prepared to answer any questions which may arise in connection with legal and procedural

matters.

Chairman DAWSON. Mr. Fascell.

Mr. FASCELL. I don't have any questions, Mr. Chairman, at this time.

Chairman DAWSON. Mr. Brown.

Mr. BROWN. No questions. I simply want the views of other witnesses and of our staff on some of these suggested amendments a little later on.

Chairman DAWSON. Mr. Barry.

Mr. BARRY. No questions at this time.

Chairman DAWSON. Mr. Smith.

Mr. SMITH. I hesitate to ask any. Nobody else did. But on page 4 you change the word "if" to "unless" in this amendment, and this then would mean that the importation would depend upon the speed with which the Secretary could approve these applications.

I take it that you anticipate some rather clear regulations so people will know how to proceed at that point.

Mr. WHITE. Administration of the amendment would require detailed regulations.

Mr. SMITH. That is all I have.

Chairman DAWSON. Mr. Henderson.

Mr. HENDERSON. Mr. White, the changing of the words "unless" to "if" and removing "not" would make it necessary, would it not, for each importer to submit applications for each importation in the way that he has to do now?

Mr. WHITE. Yes, we would have to do that until we developed a revised system.

Mr. HENDERSON. One of the purposes we were trying to achieve was to reduce the paperwork in the Department as well as the burden on the importer. But if we make this change we may not succeed in doing that.

Mr. DRUMM. Mr. Chairman, we feel it would be necessary to modify the regulations that exist at the present time in order to implement the new language in the bill.

We would hope to move to the development of a category treatment, as Mr. White has indicated in his statement. We would hope to develop a decontrolled list, a prohibited list, a small case procedure, and so on.

We think there would be the necessity for an interim sort of a period in which we would have to get this kind of information together, in order to develop the basis for proceeding in an orderly fashion in the future.

We would hope to reduce the workload more and more in this process. We feel that there would be an intermediate range, however, where there would have to be a continuance of a case-by-case treatment. But I think it is something we can move to. I think it is something that in the long run will facilitate the processing of these cases.

Chairman DAWSON. How do you interpret "in the long run"?

Mr. DRUMM. I think it is something that progressively we would have to build up to, Mr. Chairman, on the basis of the experience on cases, on case experience we have had up to now, and what might come in under the new liberalized procedure.

Chairman DAWSON. Covering what space of time to include "in the long run"?

Mr. DRUMM. I would think if the law were enacted and then we had 90 days in order to get our regulations set up, that perhaps 6 months thereafter we would be in a position to set up some kind of list that would be either prohibited or uncontrolled, and we would move progressively to building up each of those lists.

We might also be able to develop a quota system whereby we would rule on certain applications and see that we would have an impact,

say, if 100,000 of a given commodity came in, we would say there might be some impact, but not serious injury to the production or employment.

But if 200,000 or 300,000 or a million came in, then we might have to put on a ceiling. This is our thinking at this point. We have had this bill just a short time.

As Mr. Henderson knows, we are just thinking along these lines and moving toward this sort of position.

Mr. HENDERSON. Mr. Drumm, according to the thinking that you have done, would the change from the general criteria of injury to the economy to the new language "production and employment" make any real difference in the amount of goods that would be imported into the country?

Mr. DRUMM. It might, but we think that injury to the economy is so broad a concept it would be very difficult of administration. We think that we narrow it down to production and employment-if we narrow it down to production and employment, we have a more readily workable basis.

Mr. HENDERSON. But in general, you wouldn't see too much difference in the quantity of goods that might come in?

Mr. DRUMM. Yes; I am afraid we would. I have been using a case in discussions for illustrative purposes.

We have on the domestic side the case of about 166,000 tire chains that were sold in the domestic economy, or offered for sale in the domestic economy. Now the 166,000 tire chains represent an acquisition cost of about $2 million. If you measure the potential impact of $2 million against a gross national product of $483 billions, I don't think anybody can seriously argue that there is much impact on the national

economy.

But if you look at what 166,000 tire chains mean in terms of production within the United States, it represents an average of between 9 and 12 years of production in the given sizes of the total of U.S. tire-chain industry.

So if you apply the criterion of production and employment, I think you have something that is more readily measurable. Do I make

this point clear to you?

Mr. HENDERSON. I think I understand what you have said, but even then you would certainly agree that the new language proposed, or even the suggestion that you make about production and employment, is more readily determinable than the present language in the bill about benefit to the economy.

Mr. DRUMM. I agree, and I think both of them are a liberalization of the old criteria.

Mr. HENDERSON. And both are substantial liberalizations of the old criteria.

Mr. DRUMM. I have some figures on these tire chains, if you would care to hear them.

In one given size, the 53,000 lot represents 18 years of normal production of all U.S. industry. In another size, it represents 10 years. In another size, 9 years, and in another size, 15 years. So I say here we have, I think, a measurable criterion.

What is the effect of the importation of a given commodity on production and employment?

As I said before, I don't think anybody would seriously argue that an additional $2 million of acquisition cost entered into our economy would have any measurable impact on a gross national product of $483 billions.

Mr. BROWN. Will the gentleman yield?

Mr. HENDERSON. Yes, sir.

Mr. BROWN. Of course, if your one size of these tire chains represents 18 years' production, there must not have been much demand for tire chains of that size in this country. Either that or somebody sold a devil of a lot of tire chains to the Government that the Government shouldn't have bought.

Now which is it?

Mr. DRUMM. You have said it; the last one.

Mr. BROWN. It gets back to this thing I said in the beginning, terribly poor procurement practices that some of us on the Hill can't get anything done about downtown, and we are getting a little disgusted.

Mr. DRUMM. There was the comment I heard the other day about the salesman who could sell salt.

Mr. BROWN. I heard that story too. And so have the taxpayers, and they are pretty sick about it.

Mr. FASCELL. We moved off of tire chains to $50 million fertilizer plants.

Mr. BROWN. Oh, yes. Now, what was the production of tire chains in the United States of that size? Not very much, was it?

Mr. DRUMM. According to these figures, I think that is a reasonable conclusion, Mr. Brown.

Mr. BROWN. What percentage-do you have any figures there that show what percentage of these tire chains of that particular size that we purchased that we have left in surplus?

Mr. DRUMM. That I don't know, sir.

Mr. BROWN. Don't you think it might be interesting to know? You are from the Department of Commerce, aren't you?

Mr. DRUMM. Yes, sir.

Mr. BROWN. I get requests from the Bureau of the Census to fill out all the nonsensical questions in the world on every little business. that I am engaged in.

Mr. DRUMM. Yes.

Mr. BROWN. And perhaps it might be good to have the census boys take a little of their time away from plaguing ordinary businessmen in the United States and have them find out some of these things so that the Congress can act.

Mr. DRUMM. I am sure we have these data back in our files, Mr. Congressman. I just don't happen to have it here in connection with this hearing.

Mr. BROWN. They want to know how much cardboard, grade 3 or size 3, that some little printer out in Ohio used-you can find that down at the Bureau of the Census-but we can't find out how many chains you have bought and how many were used and how many are surplus.

Mr. DRUMM. We must have these data. These data were worked up by one of our division directors, and he made these computations, and he has the basic information in his files.