UNFAIR FOREIGN COMPETITION ACT OF 1979, S. 938 THURSDAY, DECEMBER 6, 1979 U.S. SENATE, SUBCOMMITTEE ON ANTITRUST, MONOPOLY AND BUSINESS RIGHTS, The subcommittee met, pursuant to notice, at 9:45 a.m., in room 5110, Dirksen Senate Office Building, Senator Charles McC. Mathias, Jr. (acting chairman), presiding. Present: Senators Mathias and Thurmond. Also present: Peter Chumbris, chief minority counsel; J. Michael Cooper, counsel; Marilyn Falksen, chief clerk; Ralph Oman, counsel to Senator Mathias; and Jacqueline Beshar, staff assistant. OPENING STATEMENT OF SENATOR MATHIAS Senator MATHIAS. The hearing will come to order. I want to thank everyone for being here today and for being willing to participate and appear in this hearing on Senate bill 938, the unfair foreign competition bill of 1979. There are a number of distinguished witnesses here today. I would suggest that unless anyone has particular time constraints that we take them in the following order: Mr. Barden, Mr. Patterson, Mr. Beispel, Mr. Fisher, and Mr. Hartquist. In the 96th Congress, a number of Senators, including myself, have focused on ways to increase international trade, thereby improving our balance of trade situation which is one of the underlying causes of our current economic distress. Through negotiating efforts, including the multilateral trade negotiations, the United States has reduced many of the barriers to international trade in return for similar reductions from trading partners. This is a good trend. It promotes production. It creates jobs. It encourages efficient allocation of resources on a worldwide scale. It ought to help to reduce our trade deficit. As long as all of our competitors play by the rules, I think that American workers can more than hold their own to the benefit of the workers and businesses and consumers alike. However, with this relaxation of restrictions on imports, I think we need to insure that no one takes advantage of what may appear to be our vulnerability. I think it is commonly recognized that competition has not always been fair competition, that goods are often sold below fair market value causing massive dislocations in domestic industries. (1) I believe that we need a clear, coherent and enforceable policy toward dumping. Business needs to know what conduct the law forbids and it should be able to collect damages swiftly when the laws are violated. One of the bulwarks against predatory behavior from abroad is the antidumping law. For that reason, I have introduced Senate bill 938 to amend the antitrust laws to include dumping within the definition of behavior prohibited by those laws. Dumping is one of the worst anticompetitive acts and I think we should give both the Antitrust Division and the injured American companies the right to sue for treble damages under the antitrust laws by including it in the company of our antitrust laws which are the basic tenets of our free enter prise economy, we give public notice of the importance that we attach to predatory dumping. In the definition of dumping I would include both selling below marginal costs of production and selling in the U.S. market below the price in the home market. Currently, the antidumping laws are enforced by the Treasury Department and I must state candidly that I have been somewhat concerned by the reports of the rather casual way in which they have been enforced. Soon they will be enforced by the Commerce Department, but under an apparatus that seems to be similar to that which has prevailed in the Treasury. Despite this changing of the guard, it seems to me that the discussion of this bill is entirely relevant. The bill would allow injured U.S. manufacturers and workers to collect treble damages without having to show specific intent by the importer to injure. The question before the subcommittee is whether these proposed changes would improve the regulation and enforcement of the dumping laws and more importantly, if they would provide a more meaningful deterrent to would-be dumpers. Our witnesses have great expertise in the antidumping laws and today we expect to learn about the extent of the problem that we face. If it appears that the problem is serious, and that this bill would help resolve the difficulties, we will then pursue the subject in further hearings. At that time, I would expect to hear from the Commerce Department and from the Antitrust Division. As our first witness we will hear from Mr. Lynn Barden, and we are glad to welcome him this morning. STATEMENT OF LYNN BARDEN, OFFICE OF GENERAL COUNSEL, TREASURY DEPARTMENT Mr. BARDEN. Thank you, Mr. Chairman. On behalf of the Treasury Department, I wish to thank you for the invitation to testify before your subcommittee in connection with your consideration of S. 938, the Unfair Foreign Competition Act of 1979. The bill which would amend the so-called Antidumping Act of 1916, is related to the Antidumping Act of 1921, which has long been administered by the Treasury Department. I should point out the 1916 act, the act which is the subject of the bill, is not and has never been administered by the Treasury Department. It is administered by the Department of Justice. Senator MATHIAS. You are entirely correct. The 1921 act is administered by Treasury. Mr. BARDEN. That is correct. Senator MATHIAS. I might say the 1916 act doesn't seem to really be administered by anybody in particular. That is one of the problems. Mr. BARDEN. In any event, S. 938, because of its logical relationship to the 1921 act, is of interest to Treasury. It would be most appropriate and hopefully useful to the subcommittee if the Treasury official whose primary responsibility is for the Department's administration of the 1921 act, Robert H. Mundheim, who is our General Counsel, were to be able to testify today. Unfortunately, he is out of the country this week on rather urgent matters relating to the freezing of Iranian assets and therefore is unable to be here. I am confident that he will be able to testify at any subsequent hearings that the subcommittee may schedule. Further, it has not yet been possible, unfortunately, to formulate a departmental position on the bill which has cleared through the required interagency process. Therefore, I must restrict my statements to a few general observations. We will submit a formal position on the bill as soon as we are able to. Returning to the bill, I believe it can be said fairly that the present Antidumping Act of 1916 has proven to be ineffective because of its requirement of proof that an exporter intends to dump and to injure a U.S. industry. Such a burden of proof is at best a very difficult thing to sustain. Since the determination of whether foreign merchandise is being sold at dumping prices normally is very complex, it is questionable whether the requirement in section 3(a) of your bill that an importer knowingly and purposely be importing at dumping prices imposes a significantly lower burden of proof. This is especially important since usually only exporters, not importers have sufficient information available to them to form any judgments as to whether dumping may be occurring. Even exporters may find it very difficult to know whether their home market prices are above or below their prices to the United States. This is because of the frequently numerous and complex adjustments to the prices involved which must be made for such factors as differences in conditions in terms of sale and for physical differences in the merchandise sold in each market which must be made before reasonable and fair price comparisons can be accomplished. The Department's experience in administering the 1921 act, under which most investigations require extensive analysis of facts and complex price adjustments, causes us to question the efficacy of any test based upon a showing of intent. Further, that experience in an ever-growing number of cases has shown that the 1920 act is utilized frequently by domestic industries and, in our judgment, has proven effective in bringing to a halt injurious dumping practices. Nonetheless, in response to the growing concerns of some domestic industries and many Members of Congress that the 1921 act was not as effective as it should be, that act was substantially amended in July, of this year, as part of title 7, of the Trade Agreements Act of 1979. The new law which will become effective on January 1, will be administered as you said, by the Department of Commerce. It substantially reduces the time limits for determinations. It provides significantly greater opportunities for representatives of domestic industries to acquire information which is relied upon in making determinations and to participate in antidumping proceedings and it establishes more opportunities for judicial review of agency determinations made under the law. With these changes the effectiveness of the law in dealing with problems of U.S. industries caused by dumping practices should be greatly enhanced. The subcommittee may wish to delay action on the bill until enough time has elapsed to make some judgments about the efficacy of the new law. Further, careful consideration should be given to questions concerning the logic and consistency of the bill with other provisions of U.S. law in addition to the antidumping provisions that I just mentioned. These include the counterveiling duty law, the escape clause and market disruption provisions of the Trade Act of 1974, section 337 of the Tariff Act of 1930, and as well, the international obligations of the United States, especially the International Antidumping Code. This concludes my statement. While, as I indicated at the beginning, I am not in a position to offer any definitive comments or take any position on the bill, I will be pleased to try to answer any questions you may have concerning our experience under the 1921 act. Thank you, Mr. Chairman. Senator MATHIAS. Thank you, Mr. Barden. The 1916 act refers to any person importing or assisting in imports any articles from any foreign country. The bill before us, Senate bill 938, retains essentially that same language. Now, under the current view of the law, would it be your understanding that this language would be sufficient to allow the injured party or the Government to sue the foreign manufacturer who may have assisted in importing? Mr. BARDEN. Well, it is my understanding that some foreign manufacturers are indeed involved in some presently pending private litigation under the 1916 act. Senator MATHIAS. As defendants? Mr. BARDEN. As defendants, yes. I don't think there is any other way they could be involved. But, personally, I am not conversant enough with that case or with this law to be confident that that language clearly establishes jurisdiction over foreign exporters, and in any event, even if it does, unless they have a domestic presence of some magnitude. I am not at all confident that it would be meaningful. Senator MATHIAS. A great many of them have some sort of domestic presence though. Mr. BARDEN. That is true. Senator MATHIAS. In those cases it would be meaningful. Mr. BARDEN. You are right. Senator MATHIAS. And, of course, it would also be-even if they didn't have a domestic presence-a powerful inhibition to further activity in the United States if they were involved in such litigation. Mr. BARDEN. That's correct. |