(The material referred to follows:)

BEFORE THE UNITED STATES TARIFF COMMISSION

APPLICATION FOR INVESTIGATION AND PUBLIC HEARING AND IMPOSITION OF AN ABSOLUTE IMPORT QUOTA WITH RESPECT TO SAFETY PINS

Under the provisions of section 7 of the Trade Agreements Extension Act of 1951 and article XIX of the General Agreement on Tariffs and Trade

I. STATEMENT OF THE CASE

In accordance with part 207 of the Tariff Commission Rules of Practice and Procedure, this is an application for an investigation and public hearing with respect to the effect of increased imports of safety pins under the provisions of section 7 of the Trade Agreements Extension Act of 1951 (Public Law 50, 82d Cong.) and article XIX (commonly referred to as the escape clause) of the General Agreements on Tariffs and Trade (hereafter referred to as GATT). This application is made on behalf of the American safety pin industry by the following four members of the industry:

DeLong Hook and Eye Co., Philadelphia, Pa.

Oakville Co. Division of the Scoville Manufacturing Co., Oakville, Conn.
William Prym, Inc., Dayville, Conn.

Risdon Manufacturing Co., Naugatuck, Conn.

These 4 companies produce 90 percent or more of the safety pins made in the United States.

TARIFF CONCESSIONS MADE TO CZECHOSLOVAKIA

Paragraph 350 of the Tariff Act of 1930 provided a duty of 35 percent ad valorem on safetypin imports. This duty was reduced to 221⁄2 percent as a concession to Czechoslovakia in the trade-agreement negotiations which took place at Geneva, Switzerland, in 1947. The reduced rate of 221⁄2 percent became effec tive in GATT on April 21, 1948, and is still in effect with respect to imports of safety pins from all countries except Czechoslovakia.

The benefit of this trade-agreement concession was withdrawn from Czechoslovakia, the country with which it was negotiated, by a letter of the President supplementing Presidential Proclamation No. 2935 of August 1, 1951. This withdrawal became effective November 2, 1951, making the rate of duty on imports from Czechoslovakia 35 percent ad valorem.

However the concession has not been withdrawn from other countries and the effective rate of duty on imports of safety pins from all countries except Czechoslovakia continues at the reduced rate of 221⁄2 percent ad valorem.

Of historical interest, it should be noted that the 35-percent duty was reduced to 30 percent in 1938 by an earlier bilateral trade agreement with Czechoslovakia which was canceled after Germany occupied Czechoslovakia and the duty reverted to the statutory rate of 35 percent in 1939.

CONCESSION BENEFIT GOES ENTIRELY TO NON-NEGOTIATING COUNTRIES

Here we have the anomalous situation of the principal suppliers all being countries other than that with which the trade-agreement concession was negotiated-Czechoslovakia. All of the benefit of the concession is going to nonnegotiating third parties since the benefit of the concession has been withdrawn from Czechoslovakia as related above.

INCREASED IMPORTS

As a result of this tariff concession on safetypins, imports of 4,460 gross in 1946 and 101,835 gross in 1947 have increased constantly until imports reached 3,193,856 gross during 1951 which equaled 25.61 percent of domestic sales in 1951. The 1951 rate of imports averaged in excess of 25 percent of domestic sales compared with annual average imports of approximately 1 million gross during the prewar period of 1935 through 1939 which amounted to only about 10 percent of domestic sales at that time. (See table No. 1.)

Imports have temporarily declined in the first 3 quarters of 1952 to a rate equal to 13.3 percent of domestic sales. However this still represents an increase over preconcession imports both actual and relative to domestic sales. In the case of steel safety pins (as distinguished from brass) where import competi

tion is most injurious, 1952 imports to date equal 21.93 percent of American sales. (See table 5.)

With excessive inventories (as a result of Korean war) now worked off it is anticipated that imports will again increase in relation to domestic sales which have declined from over 15.4 million gross in 1950 to 12.5 million gross in 1951 and further to an anticipated 10 million gross in 1952.

Ten to eleven million gross is the anticipated normal volume of American sales which is approximately equivalent to the prewar volume. For reasons pointed out later, safetypin consumption has been relatively constant-consumption has not kept pace with increasing national income or the increasing population. (See table 1.)

INJURY CAUSED AND THREATENED

This increase in imports, both actual and relative to American sales, has displaced the sale of a like quantity of American safety pins, the demand for which is inelastic and relatively static.

These increased imports have substantially contributed to a decline in annual domestic sales of approximately 3 million gross from 1950 to 1951, and a decline of 5 million gross from 1950 to 1952.

Imported safety pins are exactly like American and are used by identically the same users for identically the same purposes. They are directly competitive and directly displace the consumption of American safety pins. They are sold at prices substantially lower than American prices. In addition to declining sales, imports have caused a decline in prices and substantial decline in profits for American producers.

Although production declined with sales volume, inventories increased alarmingly above normal inventories and it has been necessary to lay off or reduce the Workweek of a considerable number of employees. This reduction in employment would not have been necessary if imports had been limited as requested herein. The threat of serious injury in the future is even more serious than the injury already caused. Both pricewise and volumewise the industry is more susceptible to import injury on a buyer's market such as exists and is anticipated today than on a seller's market, such as existed for some time following the start of the Korean war. The fact that American safety pin consumption has been relatively constant over the years makes the industry unusually susceptible to injury from imports. This is particularly true because American production capacity and actual production in recent years exceeds total American requirements.

The cost advantages of foreign producers in Europe and elsewhere are so great that they can continue to profitably take an increasing percentage of the American market at prices below those required to produce a profit for American producers or even below American production costs.

RELIEF SOUGHT

In order to prevent or mitigate this very serious threat of injury from increased imports, it is requested that an absolute quota be imposed limiting safety pin imports to 1 million gross annually, which is approximately the prewar annual average of imports.

An import quota of 1 million gross annually would permit a continuance of the normal prewar volume of imports at the reduced rate of duty. This Would continue a very substantial benefit to the various foreign countries exporting safety pins to the United States. It would also permit imports to retain approximately their prewar percentage of the anticipated normal American market.

A quota is requested because the industry is confident that a withdrawal of the concession and a reversion of the duty to 35 percent ad valorem would not remedy or prevent the injury being caused and threatened by the increased imports.

Mr. DAILEY. This arbitrary action of the Tariff Commission in refusing even to make an investigation indicates that a majority of the Tariff Commission has not been in sympathy with the escapeclause provisions written into the act by Congress and that they have ignored the intent of Congress.

Where the Commission has made investigations, section 7 has been so interpreted or administered by the Commission or the administration as to be practically meaningless.

Of the 26 investigations ordered by the Tariff Commission under section 7 it has denied relief in 12 cases and 9 cases are still pending before the Commission.

Even in the 5 cases where the Tariff Commission did find injury to an American industry and recommended relief, the President (on advice of the State Department) has denied such relief in 3 cases (garlic, watches, and briar pipes). Such relief found necessary by the Tariff Commission was denied to the briar-pipe industry by the current administration. Only in the cases of dried figs and hatters' furs has any relief been granted under section 7. In one case where relief was granted, President Eisenhower has ordered the Tariff Commission to reinvestigate with a view to restoring the reduced duty on dried figs for the benefit of Turkey.

Certainly there has been no indication that American industries could expect any better treatment from the present State Department than from past administrations if the law should be extended as it is with an implied congressional approval of the manner in which the law has been administered in the past. It is abundantly clear that our only hope for relief lies in Congress.

For these reasons we are specifically opposed to any extension of the Trade Agreements Act in its present form.

In addition to our belief that the existing safeguards in the Trade Agreements Act and other laws need clarification and strengthening if the congressional intent is to be carried out; we feel that an extension of the act, as is, would be interpreted by the many free traders and advocates of "trade-not aid" in the present administration as a blanket endorsement and approval, by this Congress, of the manner in which the Trade Agreements Act has been administered in the past. In our opinion this would be a most dangerous thing for us and for many other American industries.

We feel that our industry is in no different position than thousands of other small industries which have a relatively high labor cost in the production of their product and in which they enjoy no mechanization or technological advantage over foreign producers through which they can overcome their labor and material cost disadvantages. We feel that the existing law and the manner in which it has been administered has worked to the very great disadvantage of the relatively small businesses throughout the United States.

In our opinion the clarifications and modifications in the Simpson bill before this committee (H. R. 4294) will substantially correct this situation and provide an effective and timely means by which American industries such as ours can obtain relief when they are threatened with injury from imports.

The CHAIRMAN. Does that complete your statement?

Mr. DAILEY. That completes my statement.

The CHAIRMAN. Are there any questions?

Mr. Simpson will inquire.

Mr. SIMPSON. Either for you or your attorney, when on occasion you have gone before the Tariff Commission in the past, have you found

them cooperative and eager to help the American businessman and give him the benefit of the doubt or not?

Mr. DAILEY. Mr. Simpson, I am not an attorney. I should like our attorney here to answer that. I have some opinions of my own. Mr. SIMPSON. He is familiar with it, I know, and I suggest that he

answer.

Mr. BRECKENRIDGE. I am attorney for the association.

Congressman Simpson, I had intended supplementing Mr. Dailey's statement on that specific point. In the safety-pin case, as Mr. Dailey said, an application for investigation was filed on December 17. The Tariff Commission refused even to make an investigation in that case on the ground that the application was not properly filed. I have, which I would like to submit

Mr. SIMPSON. Was that a technical point, was it a delaying action, or did you feel that you were getting justice?

Mr. BRECKENRIDGE. We did not feel we were getting justice. I want to introduce in the record a copy of the letter the Commission wrote us, and I would like to intro e in the record a copy statement which we wrote to the Tariff Commission in response to it. The CHAIRMAN. Without objection that may be inserted in the record.

(The material referred to follows:)

POPE, BALLARD & Loos,

UNITED STATES TARIFF COMMISSION,

OFFICE OF THE SECRETARY, Washington 25, D. C., December 31, 1952.

Munsey Building, Washington, D. C. DEAR SIRS: Reference is made to an application which you submitted to the Tariff Commission on December 17, 1952, in behalf of the D Long Hook & Eve Co., Philadelphia, Pa.; the Oakville Co. Division of the Scoville Manufacturing Co., Oakville, Conn.; William Prym, Inc., Dayville, Conn.; and the Risdon Manufacturing Co., Naugatuck, Conn., for an investigation under section 7 of the Trade Agreements Extension Act of 1951 with respect to safety pins.

The Commission, after considering the application, found that it fails substantially to furnish information called for by the provisions of part 207 of the Commission's Rules of Practice and Procedure, and ordered that the applicants be given until the close of business February 1, 1953, to complete the application by furnishing the necessary additional information. Until the additional information is furnished, the Commission will treat the application as not properly filed.

The essental deficiency in the application lies in the failure to supply certain information called for by section 207.3 (e) of the rules, particularly paragraphs (1) (ii), (2), (3), and (5). It is noted that the 4 applicant companies are stated to be the producers of 90 percent or more of the safety pins produced in the United States, and that all of them combine their safety-pin production with other lines of manufacture. Accordingly, there would appear to be no reason why each of the companies could not supply the information called for in the provisions of the rules referred to.

Also noted is the statement in the application that much of the pertinent information called for in the rules, such as prices and profits, is a closely guarded secret of the various members of the industry and would have to be obtained by the Commission in confidence. In this connection, your attention is called to sections 207.3 (e) and 207.4 of the Commission's rules, which provide for the submission of confidential information in connection with the application. As is clearly evident from these rules, the confidential nature of information called for does not justify failure to furnish such information with the application. In order to assist the applicant companies in supplying the necessary information we have prepared a form, copies of which are attached, which they may wish to use. Any information called for on the form which the applicants consider confidential may, if desired, be submitted in confidence by each of the

applicants separately. It should be noted that section 207.4 of the rules provides that information submitted in confidence should be submitted on separate pages clearly marked "Confidential."

Sincerely yours,

DONN N. BENT, Secretary.

POPE, BALLARD & LOOS, Washington 4, D. C., January 15, 1953.

Re withdrawal of application for investigation under section 7 with respect to safety pins.

Mr. DONN N. BENT,

Secretary, United States Tariff Commission,

Washington 25, D. C.

DEAR MR. BENT: We have your letter of December 31, 1952, concerning the above-named application and we regret very much that the Commission has decided to ignore the application on the ground that it "fails substantially to furnish information called for" and is "not properly filed" under the Commission's Rules of Practice and Procedure.

After a careful review of sections 6 and 7 of the Trade Agreements Extension Act of 1951 (under which this investigation was requested) and after a careful review of the Commission's rules, the applicants are confident that their application, as filed, did include all of the information properly required by the Commission's rules. More specifically, the applicants strongly feel that their application was "properly filed" within the meaning of procedural section 7 (a) of the Trade Agreements Extension Act of 1951, the pertinent part of which commands that: "** upon application of any interested party, the United States Tariff Commission shall promptly make an investigation and make a report thereon [Emphasis supplied.]

*

The applicants feel that their application was properly filed within the meaning of this mandate of Congress and that the action of the Commission in deciding to ignore the application as not properly filed was improper and not authorized by the statute.

Even though section 7 was designed and intended by Congress to set up the Commission's procedure under escape-clause investigations and even though the applicants are convinced that the Commission's rules cannot modify this congressional mandate that the Commission "shall promptly make an investigation," they wish to state that in their considered opinion their application was "properly filed" even within the would-be terms and provisions of the Commission's rules.

The application did submit all of the information required by such rules. Subparagraphs (a), (b), (c), and (d) of section 207.3 attempt to indicate the type of information which "shall" or "must" be included in an application and a review of the application will show that all such information was included therein. Your letter does not question this fact.

You cite subparagraph (e) of section 207.3 of the rules as indicating the type of information called for but which was not included in the application and you enclose a table indicating the desired additional information. A review of this subparagraph (e) will show that it only states that the additional information indicated therein and the information indicated on the table enclosed with your letter "should also be furnished with an application, to the extent that it is readily available to the applicant." [Emphasis supplied.] Thus, it is apparent that even the Commission's rules do not require that this information must be submitted with the application. Some of such additional information was included in the application and the balance of it was not and is not readily available to the applicants. Also such information could not possibly be put together in comparable and understandable form by the individual applicants prior to February 2 as required by the Commission's action. The application clearly indicated that such additional information was not readily available to the applicants but that it would be made available to Commission representatives by each individual applicant during the course of the investigation.

Furthermore, the applicants do not consider the information requested with respect to their production of other commodities as proper to be submitted to or even considered by the Commission within the terms or intent of sections 6 and 7. The applicants have not requested an investigation concerning any of the products they produce other than safety pins. Consequently, they do not