1-10-39 Page 1 2 CONTENTS Special provisions of the tariff act of 1930 calling for investigation__. 1. Provisions of section 340 of the tariff act of 1930_. Determination of converted rates versus application of them 2. Methods and purposes of field work. Representative importers. Representative samples. Representative periods. Methods of tabulating the field data_ Personnel.. 3. Form of the published information Quotation of tariff paragraphs.. Import statistics_ Form of the summary table.... Plans versus accomplishment_ 4. Special problems Different channels of trade_ Treasury and court decisions_ Variations in converted rates because of— Changes in duties_ Different kinds or grades of products.. Time_ Problems illustrated_ Methods of weighting. Changes in duties-chinaware and cotton gloves... Landed costs versus sales in the principal market at whole- Conversion of value brackets. Basis of valuation for the assessment of ad valorem duties in Illustration of variations in converted rates because of- III SPECIAL PROVISIONS OF THE TARIFF ACT OF 1930 CALLING SEC. 340. DOMESTIC VALUE-CONVERSION OF RATES (a) Conversion of Rates by Commission.-The commission shall ascertain, with respect to each of the ad valorem rates of duty, and each of the rates of duty regulated by the value of the article, specified in this Act, an ad valorem rate (or a rate regulated by the value of the article, as the case may be) which if applied upon the basis of domestic value would have resulted as nearly as possible in the imposition, during the period from July 1, 1927, to June 30, 1929, both dates inclusive, of amounts of duty neither greater nor less than would have been collectible at the rate specified in this Act applied upon the basis of value defined in section 402 of the Tariff Act of 1922. (b) Report to Congress by Commission.-The commission shall, as soon as practicable, but in no event later than July 1, 1932, submit a report to the Congress setting forth the classes of articles with respect to which the conversion of rates has been made, together with the converted rates applicable thereto. (c) Data to be Furnished by Secretary of Treasury and Secretary of Commerce.-To assist the commission in carrying out the provisions of this section, the Secretary of the Treasury and the Secretary of Commerce are authorized and directed to furnish to the commission, upon request, any data or information in the possession or control of their respective departments relating to the importation, entry, appraisement, and classification of merchandise and the collection of duties thereon. (d) Definitions.-When used in this section (1) The term "domestic value," applied with respect to imported merchandise, means (A) the price at which such or similar imported merchandise is freely offered for sale, at the time of exportation of the imported merchandise, packed ready for delivery, in the principal market of the United States to all purchasers, in the usual wholesale quantities and in the ordinary course of trade, or (B) if such or similar imported merchandise is not so offered for sale in the United States, then an estimated value, based on the price at which merchandise, whether imported or domestic, comparable in construction or use with the imported merchandise, is so offered for sale, with such adjustments as may be necessary owing to differences in size, material, construction, texture, and other differences. (2) The term "rate of duty regulated by the value of the article" means a rate of duty regulated in any manner by the value of the article, and includes the value classification by which such rate is regulated. 1 REPORT ON THE INVESTIGATION MADE BY THE TARIFF COMMISSION IN COMPLIANCE WITH SECTION 340 OF THE TARIFF ACT OF 1331 INTRODUCTION Section 340 of the tarif act of 1980 amrides than the Tarif Com mission ahan gapemain with reapers to ad valorem duties the raZES which, if applied upon the basis of domestic valve in the United States, #ond have resulted in the imposition, during the two years ended June 30, 182a, of amounts of dust equal to what would have been colectiole at the rates specified in the tariff act of 1980. In addition to the conversion of ad valorem rates of duty the law also provides for convegáona respecting "the rates of duty regulated by the valne of the article." After approximately 16 months of field work the commission submite the result of the valuation investigation in this report. The first part of the report is a discussion of the problems encountered in the Investigation and the methods of treating them. Many of these problems are illustrated by the use of summary tables compiled from the basic information. The second part of the report consists largely of tabular material arranged by paragraphs of the tariff act which are affected by the valuation study, namely, those containing ad valorem rates and value brackets. The first part of the report is divided into four sections. Section 1 is a discussion of the law and its implications from the point of view of the valuation study; section 2 deals with the methods and purposes of the commission's field work, including the office tabulations in New York; section 3 explains the form of the published information illustrated by a number of sample tables; and section 4 is a discussion of special problems. At the end of the first part is a brief summary of the methods of valuation in other countries. 1. PROVISIONS OF SECTION 340 OF THE TARIFF ACT OF 1930 There are a number of important points to be taken into consideration in connection with the provisions of section 340, of which the following are of special significance. All ad valorem duties and value brackets are to be converted. Duties upon the domestic basis are to be equivalent to the present rates upon the foreign basis. Domestic value is carefully defined. Prices in the principal markets are to be used. Domestic value must be based upon the sale of merchandise in wholesale quantities in the ordinary course of trade. Although the basis of dutiable values as specified in section 402 of the tariff act of 1922 gives several alternates, most of the imports DOMESTIC VALUE -CONVERSION OF RATES er that act were in fact dutiable upon the basis of the foreign e. (The same is true at the present time.) For brevity, therefore, term "foreign value" will be used as equivalent to the basis of e as specified in the law. "he ad valorem duties, whether in the simple form or as a part of pound duties, or as maximum or minimum rates, must be conted from the basis of foreign value to the basis of domestic value in United States as defined in this section. "Rates of duty regulated the value of the article," i. e., value brackets, must also be conted, whether the duties under such bracket are ad valorem or specific. the case of specific duties in value brackets, it will be observed that is not literally the rate which is to be converted, but rather the reign dutiable value marking the limits of each bracket which must converted to the basis of domestic value; that is to say, if an ticle valued at more than $1 and less than $2 per pound is dutiable 25 cents per pound, and from $2 to $3 is dutiable at 50 cents per ound, the foreign value limits under the present law are to be conerted to the domestic values of such or similar products when sold n the United States. The period covered by the valuation study was the two fiscal years peginning July 1, 1927, and ending June 30, 1929. This period, cherefore, covers imports entirely dutiable under the tariff act of 1922. The ad valorem rates of duty in the tariff act of 1930 are to be converted upon the basis of foreign and domestic prices of the products imported immediately preceding the period of the last tariff revision, and at the domestic prices prevailing at the time the bill was under consideration by the Congress. The fact that the duties or value brackets under the tariff act of 1930 are to be applied to imports which were made prior to the enactment of the law of 1930 creates some awkwardness of expression in the report when reference is made to imports under a particular paragraph of the act of 1930. For example, many sentences in the body of the report speak of imports under various duty brackets during the valuation period. Of course no imports were made under these brackets of the tariff act of 1930 because that act had not been passed. These statements should be understood to mean "imports of goods which would now be classified under this duty bracket" or "under this ad valorem rate," as the case may be. When reference is made to the dutiable value of goods subject to specific duty during the valuation period it should be understood that in fact these goods had no dutiable value, being on a specific basis, but that reference is made to what would have been the dutiable value had the goods been subject to ad valorem rates. Special emphasis is placed in the law upon the question of equivalent duties. The first paragraph of the section provides for converted rates "which if applied upon the basis of domestic value would have resulted as nearly as possible in the imposition [during the valuation period] of amounts of duty neither greater nor less than would have been collectible at the rates specified in this Act [act of 1930] applied the basis of value defined in section 402 of the Tariff Act of 1922." Essentially this means that the commission is to determine dutiable value under the act of 1922 of articles imported during the valuation period, apply the ad valorem rates of duty in the tariff act of 1930 to these values, and then, by dividing the calculated amount of duty upon |