3. Eliminate Form 283 when no commissions are applicable. (Form 282 (Sections 28, 29, and 30) provide for commission information.)

Form 285

1. Eliminate Form 285. Only about 285 firms must execute this form. Firms operating under Webb-Pomerene Act could file blanket continuing indemnity.

2. Revamp Form 285 to allow for multiple signatures on shipments involving intervening sellers between producer and supplier. A separate certificate is now required for each party who has held title.

REEVALUATION OF OTHER AID REQUIREMENTS TO STIMULATE SMALL BUSINESS

INTEREST

It is evident that simplification and eventual elimination of other U.S.-A.I.D. impediments would certainly contribute to stimulating and facilitating the entry of small business into the stream of these markets.

Conclusions drawn by the NCITD membership are a re-emphasis of the premise that it would be a major contribution toward the entry of small business in this market if the following A.I.D. requirements were modified or eliminated. Marking requirements

Virtually everything shipped under AID must have attached the "clasped hands" symbol on a metal plate, a decal, or a label of appropriate size and durability. In addition everything shipped to Latin America requires the Alliance for Progress "Flaming Torch" label.

The labeling is expensive, as everyone along the line must be told a specific transaction is to be labeled. The producer must carry sufficient stocks of the piates, decals, or labels. The procedure involved is time-consuming, worrisome, and costly. Violators receive a form letter requiring investigation and response. The elaborate marking regulation stems from a statutory requirement that "procurements under this Act shall be identified appropriately overseas as 'American aid'." A reinterpretation would eliminate the burdensome labeling chore. Periodic publicity, in the way of local advertisements or leaflets, calling the local citizens' attention-not only to imports, but to projects financed by AID-would be far more meaningful and useful than the labels. Recent Cases Cited:

4500 packages shipped to dock before receiving advice that the shipment involved AID financing. This involved the expense of labeling at pier.

A shipment inadvertently moved without labels. A fine will probably be imposed on the shipper (in addition to the cost of sending labels for local application) since the importing country has incorporated AID marking requirements into their import regulations.

It is recommended that a prompt review of the labeling requirement be made with the aim of eliminating the compulsory features of labeling.

Small business advertising requirement

Importers must advertise their requirements with Small Business Office in Washington. This system is wasteful, inefficient, and difficult to keep up-to-date. Advertising should be optional-it should be sufficient for AID to furnish potential bidders with information on importers classified by eligible commodity groups, as has been done in certain cases (Chile and Columbia). Those importers who still wished to advertise could do so.

Such a change in procedures would eliminate such burdensome obstacles as: 1. delays in ordering importers requirements;

2. costly pursuit of procedures from importer to producer;

3. the need to seek and monitor waivers when exclusive contracts or relationships frustrate intent of the requirement.

Charter party review

AID requires a copy of a charter-party on all bulk tanker shipments. This should not be required, since this is a confidential arrangement between shipper and ship owner.

There appears to be nothing in Regulation I which requires AID's prior review and approval of charter parties if the freight is not AID-financed. Yet, when letters of credit are opened, they include such a requirement. Bankers have checked this question with AID's banking branch, and have been assured that AID does require such prior review, whether freight is AID-financed or not. This requirement should be eliminated as being unnecessary and timeconsuming.

The component rule

This is another AID nuisance which is more of a plague than a cure. Unless waivers or exceptions are granted, AID shipments can contain no more than 10 percent of foreign components. Thus, on every order placed with an outsider, certification is required from the producer for self-protection. In the case of many finished products, it is totally unrealistic, if not impossible, to accurately identify the exact component percentage.

If the rule was intended (1) to protect some industries against foreign competition masquerading under a U.S. label, or (2) to ease the U.S. balance of payments burden, it certainly is a highly indirect way of policing either of these objectives.

Using AID as a shield against foreign competition not only is contrary to the concept of free trade, but also, by imposing overpriced products on the aided market, it runs counter to one of AID's objectives, which is to build more permanent foundations for American business abroad. There is serious doubt that the balance of payments saving is worth the difficulties imposed on business. If AID is properly concerned about dollar outflow, periodic estimates of foreign component on AID-financed items should suffice. A wide acceptance of industry waivers, where component identification is impractical, indicates that specific measurement of dollar balance is not at the crux of the component rule. It is recommended that the component rule be cancelled.

Documentary proliferation

Aid should police AID-related documentary requirements of borrowers/grantees to insure that the latter do not call for unnecessary duplication of certification requirements. For example, an Indian letter of credit calls, amongst other things, for the following:

1. Each collection document to indicate, in addition to the Indian Letter of Authority number and buyer's import license number, the AID loan number and letter of commitment number. Such a reference on the invoice should be sufficient. It already appears on the 282 form which India presumably does not see.

2. Beneficiaries to certify in their invoices that they have complied with all requirements according to AID Regulations: 386-H-168 (i.e., loan number governed by Regulation I.) Beneficiary already so certifies on Certificate 282 and cannot collect without it.

3. Supplier to certify that the commodity procured under the credit is not included in list of ineligible items set forth in Indian Schedule "A". This, despite the fact an approved AID 11 product eligibility form is required.

4. A lengthy certification on source and component rule to be attached to or endorsed on each invoice presented for payment and signed by the supplier. It runs into 25 lines of type. This despite supplier's certification (paragraph #5) on AID 282 that he has complied.

The nature of the AID program should enable AID to insist that these practices of duplicating the information be stopped.

AID minima

AID is in process of limiting individual shipments to certain minimum values in order to lessen the burden of processing small value orders. This move is welcome, provided AID arranges with the borrower/grantee for the latter's financing of such small value shipments. Because this is often left undecided, a supplier suddenly faced with an undervalued shipment finds himself unable to collect without entering into negotiations, either with the local government or AID Washington.

AID should reach an accommodation with each borrower/grantee whereby the Latter instructs the paying bank to draw automatically upon his national exchange for undervalued transactions. If this cannot be done in all cases, AID should provide some simple waiver procedure which would enable the banks to pay out of AID funds.

Waivers must be authorized by the AID mission in the importing country whenever the value of the shipment is less than the minimum allowed. The standard minimum according to AID Small Business memo dated January 17, 1966 is normally not less than $1,000.00.

CONCLUSION

The overcomplicated procedures and costly documentation inherent in the normal intercourse of foreign trade plus the burdensome U.S.-A.I.D. complexities

are compelling reasons to discourage small business entry into A.I.D. financed commodity export markets.

The need for simplification of procedures is urgent and the documentation demands of U.S.-A.I.D. must be put into clear perspective with the overall welfare of small business.

The cost savings which can be accomplished from simplification and standardization of AID procedures and requirements are significant to industry as well as to governments and should strongly motivate small business participation in AID markets.

In the final analysis, AID procedural requirements and document simplification are the responsibility of government, and their cooperation is essential to the outcome-increased interest in A.I.D. financed transactions under the commodity export program.

RECOMMENDATIONS

The recommendations that follow represent a composite of NCITD member's views and are re-pectfully offered as suggestions for reform in U.S.-A.I.D. procedures and requirements. Such reforms will benefit government and industry and afford incentive for small business participation in A.I.D. financed transactions under the commodity export program.

1. AID requires certification from steamship lines for:

1. If a non USA flag vessel is used, the bill of lading must state that the vessel named has not called on Cuba since January 1, 1963, etc.

2. Shipment must not be effected on a vessel under the control of any country not included within AID Geographic Code 935.

3. That related freight tariffs have been filed with the FMC when shipment effected on USA flag vessels.

Suggest that AID permit all these clauses be shown on the ocean bill of lading, so that no separate steamship certification need be made.

2. To save documentation detail, why not permit a sworn affidavit by the shipper that he has complied with all AID regulations in all respects, and has fulfilled all obligations and arrangements as they relate to the shipment involved, together with his acknowledgment of criminal liability in case of a fraudulent statement or failure to comply?

This could appear on a single AID document designed to follow the standard export format. This single document being both invoice and AID document would be presented to AID with the copy of the shipping document for reimbursement. A further improvement over this would be a requirement that the steamship company place an "on board" stamp thereon and thereby eliminate the necessity of the copy of the shipping document.

3. Under AID regulations, the current system necessitates exporters maintaining voluminous files of Federal Register and Small Business memos, making it extremely difficult to comply with current AID regulations on any specific topic.

It is suggested that AID should issue a current manual of regulations. Up-todate publication would clarify numerous announcements made periodically in the Federal Register and Small Business memos. Future revisions should be made on replacement pages.

The single compilation should include: (1) regulations pertaining to Program Assistance under AID Regulation I, (2) regulations applicable to Project Assistance transactions now defined by U.S. bank administering the AID loan, and specified in the letter of credit.

4. Why are AID forms required in triplicate?

5. Why could there not be one supplier's certificate designed so that FOB, Insurance, and Freight information could be stated, and have a place for the supplier, insurance company or agent, and carrier as agent to sign, each being responsible for his own section?

6. Shipper is now required to file AID 11 for audit and approval. At the time, AID should apply case number and approval number to each shipment, and require shipper to forward AID documents direct to AID Washington. At time of shipment, shipper could indicate AID case and approval numbers on invoice, evidencing to bank compliance with AID regulations. When bank applies to AID for reimbursement, case and approval numbers indicated on voucher would indicate bona fide shipment made, and also indicate that banks had documentary evidence. This would eliminate handling voluminous AID documents examined by paying bank under Letter of Credit.

This procedure is suggested for application only as long as AID-11 is used.

7. To hasten the demise of Form #11 it is suggested that optional submission of Form 282 be allowed instead of AID-11 for prior approval. AID need not make complete audit at time of prevalidation, but merely approve transaction for commodity eligibility.

8. Many importers are using Letters of Credit to accumulate data which is often restrictive, redundant, or unnecessary, such as:

(a) Insisting all documents show both the AID loan number and the letter of commitment number when the latter is the same as the former plus two digits.

(b) Requiring a certification on commercial invoices that AID regulations have been complied with when compliance is covered within AID Form 282. (c) Requiring certificates on flag requirements that minimum quantities have been complied with.

(d) Minimum value of individual shipments at different values (e.g., $5500, 5000, and 1000). This creates problems for many shipments as often a single letter of credit will comprise many individual shipments causing unnecessary and inefficient consolidation to avoid the minimum.

9. Since DLF (The Development Loan Fund) was placed under AID in 1961, why cannot the same rules, regulations and forms be applicable for both agencies?

NCITD COOPERATION WITH THE SELECT COMMITTEE ON SMALL BUSINESS

The opportunity to present this statement to the Select Committee on Small Business, House of Representatives of the United States, is greatly appreciated. NCITD fully supports the U.S.-A.I.D. program and will be pleased to meet with members of the Committee and/or their personal staff or the staff of the Committee to discuss these matters further.

Mr. ADDABBO. Mr. Baylis, do you wish to give the supplemental statement? We have the complete statement. You can give this state

ment now.

Mr. BAYLIS. Before counsel? All right.

Mr. ADDABBO. The Chair calls the meeting adjourned upon completion of submission of the testimony by Mr. Baylis and questions by counsel subject to the call of the Chair.

Mr. BAYLIS. Thank you, Mr. Counsel and Mr. Congressman.

I am appearing before you today representing the National Committee on International Trade Documentation.

This appearance in this hearing is a little different than those you have been hearing today because we are not a company, big or little. We are a group just under 300 companies, many of whom are small, many are large. The organization that I represent did submit a 12page memorandum, and I understand that it will be made part of this record. I will not therefore bother to read it into the record at this time.

The organization that I represent is made up of a large number of companies of all types and sizes. These companies have joined together to try to get rid of paperwork involved in international trade, a burden on all U.S. exporting and importing estimated to cost American businesses around $6 billion per year, just to fill out and to process the paperwork.

Since every party to an international transaction looks at it from a slightly different angle, it is natural that the paperwork problems are somewhat different as between exporters, importers, carriers, banks, insurance companies, and so forth.

In this organization we have between 100 and 150 importing and exporting companies, about 30 railroads, a great number of Americanflag and foreign-flag steamship lines, airlines, over 40 banks, marine underwriters, and just about every possible type of business that is

involved in international trade. About the only thing they have in common, and the reason they banded together in this nonprofit organization, was to see if they could solve the problem of getting rid of the paperwork that is costly and unproductive, duplicative, and is a real restraint on foreign trade.

In our appearance before you, the NCITD in no way is critical of the principles underlying the establishment of the Agency for International Development, nor do we have any intention of becoming involved with the total amount of money that AID administers, or the manner in which it is divided among the various recipients. Instead, our purpose is a very simple one, namely to insist that in its administration, AID officials, on their own volition or, if necessary, on specific instructions from Congress, take every possible precaution to see that AID shipments in the future are not strangled by paperwork as they have been in the past. This strangulation by paperwork has placed a terrific burden on American businessmen participating in AID programs, particularly on small businesses whose zeal to participate is great, but whose abilities to withstand the expenses and burdens of paperwork is not so great.

For more than a year, we have been working with the AID officials at the request of our membership, pointing out to them how the paperwork and documents that they have created have been self-defeating, have forced many companies, particularly the small ones, to give up AID shipping participation; and in addition we have suggested many specific ways of doing the job more effectively without this paperwork proliferation. With due respect to the AID administrators, I acknowledge that while our progress with them at first was very slow and almost negligible, there has recently been noticeable improvement, and currently we are getting fairly good cooperation from them on specific issues.

As has been noticed in other agencies of Government also, the AID officials, in administering the responsibilities delegated to them by the Congress, have a tendency to overorganize and to overpolice everything on the theory that in order to identify the occasional violator. the entire community must be screened and subjected to burdensome qualifying requirements. Since these administrative methods stem largely from a desire to overprotect and to avoid criticism from Congress, it logically follows that Congress might well admonish agencies against such practices.

In this specific proceeding, where there is recognition that overdocumentation places an untenable burden on all businesses, and particularly on small businesses, AID should be instructed by your subcommittee to institute programs that will eliminate this documentary burden. That is what NCITD has been trying to help AID officials accomplish ever since NCITD was formed, and we will continue to do that.

Dealing with our previously submitted testimony, we analyzed the four key AID forms identified as form 11, 282, 283, and 285. In every case, we made specific recommendations as to how these forms can be simplified, eliminated, or consolidated. Form 11: The Certificate of Commodity Eligibility, crept into the lineup of AID forms a little over a year ago, almost without due process or advance notification in the Federal Register. As a matter of fact, the timing of it was less