refunds which may have been paid on the export of American goods which are being returned.

The provisions of the present law relating to free entry of certain items by travelers are contained in 10 provisos in paragraph 1798 of the Tariff Act of 1930. This results in difficulties of interpretation and administration, and section 8 re-alines and restates these provisions. The present requirement for customs bonds for traveling nonresidents' baggage, automobiles, and so forth, would be eliminated.

Under present law articles may be entered free of duty under bond for permanent, noncommercial exhibitions, such as

museums.

Since there is no limit on the duration of the bond, many old records must be kept by the Bureau of Customs. Section 9 would limit the duration of these bonds to 5 years, thereby eliminating this recordkeeping and the checking of these articles.

Present law provides for the temporary free entry of samples for use in the taking of orders or for examination with a view to reproduction of articles for experimental purposes, and So on. These articles and items can come in under bond for a period of 6 months, which period can be extended for an additional 6 months by the Secretary of the Treasury. In many instances this time has proved inadequate for the purposes for which the items were temporarily imported, so section 10 would permit the importation under bond for a period of 1 year, with further extensions not to exceed a total of 3 years.

In the case of the temporary free importation of samples under bond so that orders may be taken or the items reproduced, section 10 provides that an exception shall be made in the case of photoengraved printing plates. There have

been complaints received as to the applicability of this provision to such plates, particularly from photoengravers.

The provision permitting the impor

tation of articles for experimental purposes is broadened to include the impor

tation of articles for testing and review purposes. The provision permitting the importation of containers free of duty temporarily under bond is now limited to containers for compressed gases. This provision would be broadened to include containers or other articles for use as a covering or to hold merchandise during transportation and suitable for reuse for the particular purpose. The temporary free-importation-under-bond provision would also be broadened by section 10 to include certain animals and poultry imported for breeding, exhibition, or competition purposes, theatrical scenery, works of art, and

so on.

Section 11 eliminates a discrimination between vessels and aircraft, with respect to the dutiability of equipment and repair parts, by extending to vessels the same privilege already enjoyed by aircraft.

Under present law, in cases where imported goods are used in the manufacture of goods which are later exported, a drawback of duties is permitted if the goods are used in manufacturing items within 1 year and the article is exported

within 3 years. Section 12 would permit the goods to be used in manufacturing the goods to be used in manufacturing within 3 years and to be exported within 5 years. This section also extends from 30 to 90 days the time within which the merchandise which does not conform to sample or specifications may be returned to customs custody for exportation and the duties refunded.

Under present law, the Secretary of the Treasury can disregard the difference between total duties deposited or assessed on an imported article and the total amount of duties accrued on the article if the difference is less than $1. He is also permitted to admit free of duty, articles where the expense and inconvenience of checking the duty is disproportionate to the amount of duty, provided that in the case of any 1 person, for any 1 day, the value of the item exempted is not over $5, where the person brings the item with him upon his return to the United States.

Section 13 would amend the $1 difference allowed in duties deposited and finally determined by increasing the amount to $3, and it would permit the free entry of gifts from persons outside the United States to persons in the United States up to $10, and allow persons returning to the United States to bring in free of duty, articles valued up to $10 instead of the present $5.

The original bill proposed by the Treasury Department would have increased the value of items which can be imported by mail free of duty from $1 to $3. There was considerable opposito $3. There was considerable opposition to this increase, on the part of certain retail organizations, and jewelers in particular, and the committee decided to make no change in this provision.

of certain aircraft, equipment, supplies, The bill also permits the importation and so on, for use in connection with damage to aircraft, for fire fighting, rescue, and relief work in connection with floods and other disasters, without

the payment of duty and without compliance with the customs laws.

Under present law, the pilot of an aircraft is the only person who is permitted to execute and deliver a manifest for an aircraft. Section 16 would amend this by permitting any authorized agent of the aircraft to perform these duties.

Present law permits the Secretary of the Treasury to permit informal entries of merchandise not exceeding $100 in value. Section 17 would raise this ceiling to $250. Informal entries relieve importers from supplying complicated documentation which is required in the case of formal entries. The increase in the of formal entries. dollar amount is proposed in order to conform it with the changes in price levels since the enactment of the $100 provision.

Section 17 would also eliminate, at the discretion of the Secretary of the Treasury, the requirement of invoices certified by United States consulates.

Verification of documents would be permitted by a written declaration in lieu of the presently required oath by section 18. This is similar to authorization already permitted the Secretary of the Treasury in connection with documents required under the internal revenue laws.

Section 19 eliminates unnecessary paper work resulting from amendment of customs entries, thereby facilitating economical administration of the customs laws. It also eliminates the imposition of undervaluation duties on importers who without negligence or intent to deceive customs appraisers have entered merchandise at a value lower than that found to be applicable by customs appraisers.

In the case of commingled merchandise present law provides that where it is impossible to determine the different classes of merchandise all of the commingled merchandise shall be subject to the highest rate of duty applicable to any part of it, or if duty-free merchandise is commingled with dutiable merchandise, the merchandise is subject to duty.

Section 20 would increase from 10 to 30 days the time within which commingled merchandise may be segregated. It would also except from the operation of present law any part of a shipment which the importer can prove is commercially negligible or cannot be segregated without excessive costs and that the commingling was not to avoid payment of lawful duties. Also excepted would be shipments where proof is furnished by the importer that the value of the commingled merchandise is less than the aggregate value would be if the shipment were segregated, that the shipment is not capable of segregation without excessive costs, and that it was not commingled to avoid duties. The duty applicable in the case of commingled merchandise under the exceptions provided in section 20 is that which is applicable to the merchandise which is present in the greatest quantity.

Section 21 would permit greater discretion to the Secretary of the Treasury in correcting errors and mistakes in entries, appraisements, and so on, where the error or mistake is manifest.

Section 22 eliminates the requirement that the Secretary of the Treasury must publish the gold content of foreign coins. As we know, the gold standard has been abandoned in most of the world, and this requirement is obsolete. The secretary would be required to keep a current list of published par values of foreign currencies.

Judicial interpretations of present law have resulted, in cases where warehouse receipts and other evidences of ownership of goods in bonded warehouses have been transferred, in the transferor and each transferee being able to protest assessments and liquidations. This has unnecessarily increased the work of customs employees.

Section 23 provides that a transferee shall not have a right to file a protest or to a separate liquidation unless rates of duties have been changed after he acquires his right to the merchandise.

Section 24 would vest in the Secretary of the Treasury discretion as to the degree of supervision of activities required to be under direct customs supervision. Section 25 is the usual saving clause provision which preserves existing rights and liabilities under present law.

Mr. REED of New York. Mr. Chairman, I yield 1 minute to the gentleman from California [Mr. YOUNGER].

Mr. YOUNGER. Mr. Chairman, I call the attention of the Committee to the fact that the city of Washington is playing host for the next 3 days to the national champion drill team of the United States, the Spanish Dons, of Half Moon Bay, Calif. They will drill tonight at Fort Belvoir and tomorrow night at the Walter Reed Hospital and Sunday night they are going to take part in Ed Sullivan's program, the Toast of the Town, in New York. I call this to the attention of the Committee so that Members may avail themselves of the opportunity to see the champion drill team of the United States.

Mr. REED of New York. Mr. Chairman, I yield 15 minutes to the gentleman from Ohio [Mr. JENKINS).

Mr. JENKINS. Mr. Chairman, as has already been stated several times this afternoon, we are considering a bill that we have been calling the customs simplification bill. Well, if there is anything simple about it, I have not been able to find it yet. But, it is true that the customs business of our country is big business. I am afraid some of you and maybe most of you are a good deal as I have been-you probably have never paid much attention to the importance of the operations of the customs of our country. This is a matter that deserves our best attention because it is a big business. Of course, it does not apply as much to those who live in the interior of our country as it does to those who live on the coast. I wonder if you have ever thought just how big this business really is. The Government employs nearly 9,000 men and women doing this job of operating the customhouses in this country. In addition to that, I would just like to give to you these figures. For instance, in 1952 the Congress appropriated $40,500,000 to operate this big business, and this business has been a very paying business. Because of the spending of this $40,500,000 the Government collected in customs duties $748 million. Last year the ConLast year the Congress appropriated $41 million, the customs department spent $40 million, and the customs authorities took in $843 million. I think you will agreed with me that this is a very important agency of the Government.

Before we adopted the income-tax law, the Government sustained itself very largely from about four sources-the first and most important, I think, was the duty on imports. Another was the excise tax on tobacco and liquor. Another was the tax on the western lands, and that was not very much, and then the other source was the tolls we got from vessels passing through the Panama Canal. Of course, in those times the Government was operated on about $2 billion or $3 billion a year-which is quite a contrast to the astronomical figures to which our national expenses have

come.

The consideration of this bill should be a little easier for the Members when I remind you that just 2 years ago the House went through this same procedure

and passed a bill simplifying the customs practices-that bill was quite similar in some respects to this bill. It took us a long time to work out that bill. The Committee on Ways and Means worked at it for days. We had the experts be fore us. That bill passed the House without much objection.

The bill then went over to the other body, but they did not consider it and of course it did not become a law. Now we have the same task before us again and I am sure that this House will pass this bill that we have before us today because it has been much improved over the other bill.

I daresay to those of you who are lawyers who practiced in inland States that you do not know much about the laws controlling imports and exports. I judge that most of you are just like I am. I am a lawyer from an inland town; I did not know a thing about the law controlling imports and exports, and the code of procedure that applies to the administration of the customs laws and, in working on the preparation of this measure that we are considering here today, I have developed a great respect for this splendid branch of our Government and the fine, capable men who operate it.

There are only a comparatively few lawyers in the country who make their living in practicing before the customs agencies and the customs courts. I do not know how many there are, but I dare say there are probably no more than 3,000 or 4,000 in all the country who make their living in that business. Still it is a big business, and a complicated business. The men and women who form the staff for the operation of this big department are not much in the public eye, but they must be smart and alert to carry on this work, much of which is very confidential and involves foreign people and foreign governments.

This year it was decided that we would again try to bring to this Department and to the Government the relief to which they were entitled. Therefore, our good chairman put that duty and responsibility upon me. We proceeded to prepare a bill. We consulted those who were most vitally interested. I mean the importers and exporters of the country. We consulted the Treasury Department, porters and exporters of the country. We consulted the Treasury Department, under which the collection of the customs duties is done. And, incidentally, I want to say that if the Treasury Department is as well-manned and wellequipped in every one of its branches as it is in the customs branch, it is better equipped than it ever has been before. I do not think that the customs branch has ever been as well equipped as it is now. I am glad to pay this compliment to the ladies and gentlemen whom I and the Ways and Means Committee have contacted in the preparation of this legislation. I want to pay a special compliment to Mr. Chapman Rose, the Under Secretary of the Treasury, and to Mr. Johnson, who is one of the chief administrators in the Customs Bureau. Their knowledge of the rights and responsibilities of the customs department

proves them to be brilliant and competent officials.

We also had before us-and when I say "we" I mean the committee; and it was not a subcommittee, either-many. very smart and capable businessmen who were vitally interested in the matter of the collection of custom duties.

It has been brought out here that there were no hearings on these matters, but we did have very extensive and exhaustive hearings. tive hearings. We had 3 or 4 days of hearings. We invited everybody. Of course, those people who were interested in customs simplification naturally came before the committee, because it is their business. Any of the Members of the House who have had experience know that if they were considering an important matter, say, in the Committee on Interstate and Foreign Commerce, the people interested in the particular proposed legislation would be present before the committee. That is the way we found it.

We found that the best lawyers in the country who make their living practicing this particular branch of the law before the customs courts and before the Commissions, in Washington, in San Francisco, in Savannah, in all the ports of the country, were present.

They brought in their suggestions as to how this procedure could be improved by law and as to what ought to be done.

When the hearings were completed, we called before us the experts of the Government, who went over all the testimony given in the hearings, and gave us a complete summary of all the testimony. Those recommendations that had been made by many different persons we naturally were inclined to follow. Those recommendations were controversial we gave serious consideration, with the purpose of trying to put into law what was best.

that

Mr. REED of New York. Mr. Chairman, will the gentleman yield?

Mr. JENKINS. Mr. JENKINS. I yield to the distinguished chairman of our committee.

Mr. REED of New York. I want to say that many who did not appear personally had the opportunity, and took advantage of it, to file briefs expressing their views.

Mr. JENKINS. Yes. And in addition to those who came before the committee, quite a number filed briefs. I have in my hand a copy of the hearings. There are about 225 pages of the hearings.

When we came to consider the hear

ings in the committee, again we called these experts in to find out what were the faults, what were the criticisms that could be made to the testimony that had been presented to us, and what were the provisions that they would recommend to be inserted in the proposed bill.

We found that there were some complaints against the original bill. Those who had complaints came in and aired them. Members of the committee did the same thing. Finally we thought we had a pretty good bill covering the whole situation. After doing everything that is reasonably possible in such situations we decided to rewrite the original bill. Then we introduced a new bill, which is H. R. 5877. This is the bill that we are considering today.

After H. R. 5877 came back to us from the printer, we had another meeting of the full committee and we proceeded to consider it. In the meantime, two or three interested groups had indicated that they had some items or amendments in mind. We, the members of the committee in regular session, had exhaustive hearings with respect to these proposed amendments. Mr. EBERHARTER, member of the committee, had some people who were interested in certain proposed amendments and some other members had people who were interested in some other proposed amendments. The gentleman from Michigan [Mr. KNOX] had a problem that we had had up 2 years ago. He brought that problem back before the committee in a modified form.

The committee accepted the Eberharter amendment and the amendment offered by Mr. KNOX. Later on in this Later on in this general debate I am sure that these gentlemen will appear before you and give their reasons for offering and passing their respective amendments. As far as I am concerned, they have considerable merit. Of course, these amendments may not have as much merit as their proponents think they have, but that is not an uncommon situation in this House. That is nothing uncommon from the floor of the House. That is why the House of Representatives is the greatest legislative body in the world.

I just want to say one word about the Eberharter amendment, if you please, and that is this: The basis of the Eberharter amendment is that we try to protect our country against surplus imports, we try to protect our factory workers and our businessmen against those countries that pay a bonus to their manufacturers. We call it a bounty. Take for instance some country such as Japan: It pays its manufacturers an extra amount of money more than the cost of labor so they can go into the markets of the world. They pay the duty that we assess and still sell below producers in our country. The law now provides that when our experts and those who administer the law find that out, find that a country is paying its manufacturers a bounty to permit them to sell in our markets, then we get ready to raise the barrier against them, we get ready to raise the import duty against them. That is the law now.

The Eberharter amendment would provide that in addition to that Amer. icans complaining against foreign imports would also have to show injury. That is a pretty hard thing to do, of

course, as any of us know who have ever had to meet a proposition of that kind advanced in the enforcement of law. What is an injury to an industry or to the farmers? An injury to the steel people might not be an injury that the cotple might not be an injury that the cotton people would suffer, and an injury that the cotton people would suffer would not be one that the pottery people would suffer; so it is a very difficult thing to prove injury. Consequently you can naturally expect that there will be differences of opinion with reference to a matter of that kind.

XCIX- -545

The same applies to the amendment offered by the gentleman from Michigan [Mr. Knox]. I am not going into that amendment in detail for I am sure the gentleman from Michigan will explain it more fully and more completely than I can. But I want to say that this bill represents the very best that our committee can do-I do not mean the subcommittee now, I mean the whole committee-can give to the Congress; and I hope this bill will be passed by a larger vote today and will get over to the Senate in time so that that body can take it up and pass it in a few days, I am sure the same experts from the different departments that came before us will appear before the Senate committee, and other people interested will be there also. No doubt the Senate will have open hearings so that anyone who wants to come may do so just as we did in the Ways and Means Committee. hearings were open to anybody who wanted to come. So as we finish the work on this bill we think it is about the best we can do. I make that statement because lawyers working with us said so, because the different departments of the Government had said so. ments of the Government had said so. Experts from New York and other ports came to Washington and said so. Here we have a bill that will take care of all these interests. Then we have the Customs Bureau here in Washington presided over by men of great ability who have been coming before us for years; and I want to say in their behalf I think there is no part of the Government any better taken care of than the Customs section of the Government.

The

Mr. JONAS of North Carolina. Mr. Chairman, will the gentleman yield? Mr. JENKINS. I yield.

Mr. JONAS of North Carolina. I wish to say to the gentleman from Ohio that as far as I am concerned at least, and I believe I can speak for those who discussed the matter when the rule was under consideration, that no criticism of the Ways and Means Committee was inthe Ways and Means Committee was intended when reference was made to lack of hearings; we were discussing the Ebof hearings; we were discussing the Eberharter and Knox amendments, not the bill itself. I intend to vote for the bill. I am going to vote against the EberI am going to vote against the Eberharter amendment because no hearings harter amendment because no hearings were held and I believe those interested were held and I believe those interested should have a right to be heard before a controversial bill of this importance should be passed. I am not sure whether I will vote for the Knox amendment or not. I am going to support the bill and

I would not want the committee to think that those of us who raised the question of lack of hearings had any reference whatever to the bill itself; the reference was to the two amendments.

Mr. JENKINS. With reference to the matter of lack of hearings in the committee, of course, after the bill was introduced and a new bill voted out we had hearings on the matter in executive session, and practically every member of the committee was present. Experts came up 2 or 3 different times from the executive departments; so we did have rather good hearings in that respect. Of course, you cannot blame your constituents or my constituents for

not having been alert to all the activities of the committee there because they did not know about them. not know about them. That is why we

are here. If everything were perfect they would not need to send the various Congressmen here to represent the different districts. You have a right to present your matter; you have a right to debate it, but because this rule will not permit the offering of amendments the time for you to ask questions and speak out is right now during general debate. Mr. McCORMACK. Mr. Chairman, will the gentleman yield?

Mr. JENKINS. I yield.

Mr. McCORMACK. We heard quite a lot said some minutes ago about trade, not aid. It was a nice sounding slogan. I think my friend will agree with me it was nothing but a slogan. I can remember some weeks ago I told certain people I had met for the first time that, in my opinion, the most that could be expected would be an extension of the reciprocal trade agreement law for 1 year and the possible passage of the Customs Simplification Act which I think is important in connection with business. It is fair to say that no more legislation will come out of the committee this session other than the two bills I just referred to?

Mr. JENKINS. The reciprocal trade agreements bill will come out; that is, the last half of that bill. The original bill was cut in two. Half of it has been passed by the House and the other half that the gentleman is interested in is to come yet and I feel sure it will be considered by this House.

Mr. McCORMACK. You would not call it a bill to carry out the slogan of trade, not aid?

Mr. JENKINS. No; it is just the reverse. As far as I am concerned, this trade and aid proposition is all right in its place and some times but at the same time I have not forgotten who made this great country of ours. I have not forgotten who is making it now. I have not forgotten who lives here and who pays the taxes in this great country of ours. My theory is that we have to take care of them first before we take care of everybody else all over the world. I believe that we must keep our country strong. Our mission in the world is to guarantee to our people life, liberty, and the pursuit of happiness, and the better and the longer we can do that is the best guaranty for peace among nations. We must be strong. Should we be so foolish as to spend ourselves into bankruptcy then God pity the world.

Mr. REED of New York. Mr. Chair

man, I yield 10 minutes to the gentleman

from Michigan [Mr. KNOX].

Mr. KNOX. Mr. Chairman, the amendment that is known as the Knox amendment, and which the gentleman from North Carolina [Mr. JONAS] has spoken about, is one that would permit manufacturers to send into Canada principally for processing where they are unable to process that particular metal product within their own plants. There have been periods of time when the industry has had breakdowns in the manufacturing plant and did not have the facilities to continue on with the work;

so, therefore, they have exported the metal product over into Canada for processing, then imported it back to the United States.

Under the present law it is necessary for the manufacturers to pay a duty on the full amount of the cost of that particular commodity that is imported back into the United States after having been exported.

There has been some opposition, I know, to this amendment, and justly so; however, the amendment as it is now before you provides in section (A):

Any article of metal (except precious metal) —

"metal" in your amendment, you shut the door on about everything except the people who would more or less be in the heavy metals industry.

Mrs. CHURCH. The gentleman from The gentleman from Michigan has certainly aroused my curiosity about this. I am wondering whether or not the plant to which the American company ships the product is owned by the American company.

manufactured in the United States or subjected to a process of manufacture in the United States is exported for further processing.

The only product that is involved in this amendment is metal products. I know that the textile industry was quite concerned. I read several telegrams that Members showed me this morning about the provisions of this amendment. The first amendment we had before the committee, and we discussed it thoroughly with the full committee, would have left everything wide open, so that any manufactured product could have been exported and imported. But this amendment does not allow anything else but metal products.

Mr. JONAS of North Carolina. Mr. Chairman, will the gentleman yield?

Mr. KNOX. I yield to the gentleman from North Carolina.

Mr. JONAS of North Carolina. I would like to ask the gentleman to turn to the amendment. Does that part which precedes A now appear in existing law?

Mr. KNOX. Yes. That is true. Mr. JONAS of North Carolina. The new language which begins with the section labeled "A"?

Mr. KNOX. That is correct. Mr. JONAS of North Carolina. So the reference in the paragraph above to "any article" is now in the law?

Mr. KNOX. That is in the law. Mr. JONAS of North Carolina. And the new amendment does not affect that? Mr. KNOX. That is correct.

It has been necessary for industry-I speak of the Detroit area-to ship to Algoma, at Sault Ste. Marie, Canada, which is across the river from Sault Ste. Marie, Mich., metal products in order to have them processed, because there was no other plant accessible to the manufacturer to have this particular work done upon that particular product. Now, you all know, I believe, what the cost of transportation in your own hometowns amounts to when you have to transport metal products, getting it out of the plant, getting it on the truck, then trucking it to its destination to have the processing done and the same thing happening on the return journey, removing from the Canadian plant, coming back on the truck to the United States again and back into the home plant for further processing. This applies only in emergency situations. This will provide that a manufacturer would pay just the

goma Steel Co. is not an American-owned plant.

Mrs. CHURCH. Can the gentleman tell me how much benefit would result from this process; in other words, how many industries would be affected in various localities other than the Detroit area?

Mr. KNOX. I believe it would be very minor because of the great cost of transportation of these articles into Canada. This is just in case of an emergency. It is not a case that would be practical continuously because of the fact that your Canadian wage scales today are comparable to our American wage scales, so there would be no advantage as far as industry is concerned. But it is a matter of expediting the manufacture of that particular product.

Mr. RABAUT. Mr. Chairman, will the gentleman yield?

Mr. RHODES of Arizona. Mr. Chairman, will the gentleman yield?

Mr. KNOX. I yield.

Mr. RHODES of Arizona. Does the gentleman's amendment define the word "processing"? In other words, what sort of processing would be necessary to comply with the terms of that amendment?

Mr. KNOX. The word "processing" in this particular case would refer to the portion of the work that had to be done on the particular product.

Mr. RHODES of Arizona. The way I understood the gentlemen, I thought it might be possible for the same thing to happen as the gentleman from Ohio mentioned, that perhaps a piece of steel could be shipped across to Canada and come back as an automobile.

Mr. KNOX. No, it cannot do that, because of the fact that this amendment provides just for that portion of the processing of it.

Mr. JONAS of North Carolina. Mr. Chairman, will the gentleman yield? Mr. KNOX. I yield.

Mr. JONAS of North Carolina. What

Mr. RABAUT. The gentleman might explain that the peak load in the automotive industry will make this necessary at times.

Mr. KNOX. That is very true. It very often hits the automotive industry. Of course, this also has reference to the defense industries. We all know that Detroit is known as the arsenal of democracy. It has produced a terrific amount of materiel for the war effort. I do not know, as I am not too familiar with the provision as far as it relates to the automotive industry, but if you have a shutdown in one portion of your plant in the automotive industry it affects the entire line, whereas if they could send the product to Canada and have the processing done there until the proper repairs could be made, then they could proceed in a normal manner.

Mr. JENKINS. Mr. Chairman, will the gentleman yield?

Mr. KNOX. I yield to the gentleman from Ohio.

Mr. JENKINS. The gentleman used the words "metal products." There has been apprehension that it might affect other lines. Take Mexico, for instance. Somebody could send leather or cotton goods of some kind down into Mexico, and they could decorate them, and add the labor to it, and bring it back to be sold in competition with American goods, and that is what a lot of people are afraid of. They were afraid it would affect watches and many other commodities. But, when you insert the word modities. But, when you insert the word

Mr. KNOX. I am happy the gentleman brought up that question, because this morning through a telephone conversation with the Canadian consul they advise that if the Congress should pass this bill they will initiate the same type of bill in Canada, to reciprocate.

Mr. JONAS of North Carolina. I understand that today there is no such reciprocal agreement.

Mr. KNOX. Yes, today it is identical in Canada as in the United States.

Mr. JONAS of North Carolina. Canada has the same situation you are trying to change in so far as the United States in concerned?

Mr. KNOX. The present situation is identical.

Mr. JONAS of North Carolina. Then would such an arrangement as the gentleman contemplates not more properly be the subject of a reciprocal trade agreement between the two countries? Should not both countries do this at the same time, instead of Congress making this provision with respect to our side and then expecting Canada to reciprocate?

Mr. REED of New York. Mr. Chairman, will the gentleman yield?

Mr. KNOX. I yield.

Mr. REED of New York. Would not this really be the case, that in time of war there were certain industries on the Michigan side of the Soo River and the Detroit River that were to make a certain line of defense products, but they did not have the facilities for doing

certain kinds or putting on the finishing touches but Canada did have factories so equipped that they could do that? Mr. KNOX. That is correct.

Mr. KNOX. That is right.

Mr. REED of New York. So that any time there was an emergency they would have had to build factories and spend millions of dollars, and the delay would not have warranted it, to do that little bit of processing, when factories equipped to do it existed just across the line?

Mr. KNOX. That is right, and the amount of time that would be consumed in building a plant in that particular area would not warrant it.

Mr. CAMP. Mr. Chairman, will the gentleman yield?

Mr. KNOX. I yield to the gentleman from Georgia.

Mr. CAMP. Does the gentleman's amendment apply to sending any kind of textiles into a foreign country for work to be done on them?

Mr. KNOX. It does not. It applies to metal products only.

Mr. CAMP. I knew it did not, but I Just wanted to get that in the RECORD. As I understand, the gentleman's amendment applies only to metal products?

Mr. KNOX. That is correct.

Mr. CAMP. It does not apply to precious metal products?

Mr. KNOX. The gentleman is correct.

Mr. JONAS of North Carolina. I would like the gentleman to speak to the point I made a few moments ago. The gentleman started to answer but was interrupted.

Mr. KNOX. What was the gentleman's question?

Mr. JONAS of North Carolina. It was whether this arrangement the gentleman contemplates would not more properly be the subject of an agreement between the two countries, in which both countries would do this simultaneously.

Mr. KNOX. I feel every confidence, and I believe the committee does, that after careful consideration the amendment I am offering will be found germane to the bill. It deals directly with the question of customs regulations.

Mr. BYRNES of Wisconsin. Mr. Chairman will the gentleman yield? Mr. KNOX. I yield.

Mr. BYRNES of Wisconsin. I think, in answer to the statement of the gentleman from North Carolina, it must be stated, even though our executive branch could enter into an agreement probably with Canada to make a change and have a reciprocal arrangement, it would still be necessary that the Congress act and write the change into law, making it permissive that this be done. The same thing is possibly true, as far as the Canadian situation is concerned. So, sooner or later, one legislative branch is going to have to take the initiative, and, as I understand it, in this case we are going to take the initiative, and the gentleman has an understanding from the Canadian Embassy that if we do accept this amendment and write it into

our law, Canada will take the necessary steps to grant a similar privilege, as far as goods going from Canada into the United States and back to Canada so as to make the treatment fully reciprocal. Mr. KNOX. I thank the gentleman for his statement. That is absolutely correct. I have been so informed this morning by telephone that that will be the next act of the Canadian Government, to initiate necessary legislation so that we will have reciprocal trade in that form.

Mr. REED of New York. Mr. Chairman, I yield 1 minute to the gentleman from Massachusetts [Mr. GOODWIN].

Mr. GOODWIN. Mr. Chairman, I Mr. Chairman, I favor this bill but am opposed to the favor this bill but am opposed to the Eberharter amendment. This amendment may have far-reaching effects and may easily prove disastrous to industry and agriculture. The amendment received scant consideration in the Ways and Means Committee and if it had been well understood, I am sure it would not well understood, I am sure it would not have been placed in the category of permissible amendments.

To provide that proof of injury shall be required before countervailing duties may be applied, appears to me to be dangerous. Nobody knows what the injury would have to be, nor how it would be applied. We do know that any injury test proceedings means that much time is consumed in the inquiry and in the meantime great damage could be done to American industry and American agriculture.

Our American wool industry is certainly justified in expressing grave concern over the situation. Including the Eberharter amendment in this bill might mean the rescinding of the countervailing duty recently imposed on wool top imports from Uruguay.

Notably to be adversely affected would be the candy industry which is so important in the business life of New England. There has been a tremendous increase in the volume of candy imported into this country from abroad.

Among those from Massachusetts who have communicated to me, as a member of the Committee on Ways and Means, their alarm at the Eberharter proposal are the following: Ernest Bentley, president, Boston Wool Trade Association; Walter R. Guild, managing director, New England Manufacturing Confectioners Association, Boston; Walker Top Associates, Boston; William F. Sullivan, president, Northern Textile Association, Boston; Rufus F. Hale, assistant treasurer, Pacific Mills, Boston; Kenneth Marriner, Marriner & Co., Inc., Boston; Thurmond & Co., Boston; Draper Top Co., Boston; Gilet Carbonizing Co., Lowell; Southwell Combing Co., North Chelmsford; Merrimack Manufacturing Co., Lowell; A. C. Brett, Hood Rubber Co., Watertown; Henry C. Berlin, president, Converse Rubber Corp., Malden; Joseph McGarry, president, Rubber Workers Federal Labor Union Local, Malden; Thomas Moriarty, business agent, Malden; and Arthur O. Wellman, Boston.

I doubt if this amendment has any place anyway in a customs simplification bill and I hope it will be defeated

here and let any further consideration of it be deferred pending the contemplated study of our reciprocal trade laws.

Mr. REED of New York. Mr. Chairman, I yield 7 minutes to the gentleman from Michigan [Mr. OAKMAN].

Mr. OAKMAN. Mr. Chairman, I wish to speak in favor of the proposed amendment as it offers a commonsense approach to an economic problem and would be in the best interest of industry and the general public-the taxpaying public who also foots the final bill for the cost of manufacturing the articles which he consumes. There are times along the Canadian border when certain manufacturing facilities are inadequate or lacking in some respect, making it necessary to farm out goods to Canadian plants for further processing. This is an expensive inconvenience because of high costs of handling and of transportation involved, but obviously there are times when it does become absolutely necessary in order to maintain production and employment at continuing high levels. For American manufacturing plants located near the Canadian border who farm out goods for further processing, just like plants in other parts of the country, present law imposes a penalty on the consumer if the commodities are further processed in Canadian plants. The duty on the reimported, further processed commodities should rightfully be on only the value added. But it is not. It is totally unfair-and unrealistic-to place the duty on the total value of the reimported product because thereby duty is assessed on American manufacture, and on American labor, and it is the consumer-who also pays taxes-who foots the final bill.

Consumers all over the country use the products of our plants located near the Canadian border. These consumers have had to pay the extra bounty on such things as, first, idler wheel rims which were exported for having a flange turned on the edge; second, lever arms for adding machines which were sent over to have angles bent in the arms; third, piston rings which were exported for a rough-grinding operation; and fourth, castings and forgings sent over for grinding and drilling operations.

These aforementioned products, like many other products manufactured in the United States near the Canadian border, are used all over our Nation, and I submit it is unfair and unrealistic to assess a duty on a reimported, furtherprocessed commodity on the basis of the present law. Adequate precedent has been established with respect to books and sound recordings as follows:

Paragraph 1410 of the Tariff Act of 1930 provides:

That exported books of domestic manufacture, when returned to the United States after having been advanced in value or improved in condition by any process of manufacture or other means shall be dutiable only on the cost of materials added and labor performed in the foreign country.

Paragraph 1726 of the act provides for free entry of:

Sound recordings transcribed or recorded abroad for radio or television news broadcasts in the United States, or suitable for