CUSTOMS PROCEDURAL REFORM ACT OF 1977 TUESDAY, JULY 19, 1977 HOUSE OF REPRESENTATIVES, SUBCOMMITTEE ON TRADE, Washington, D.C. The subcommittee met at 10:10 a.m., pursuant to notice in room 2318, Rayburn House Office Building, Hon. Charles A. Vanik (chairman of the subcommittee) presiding. Mr. VANIK. The subcommittee will please be in order. Without objection, copies of the press release announcing this hearing and the texts of H.R. 8149 and H.R. 8222 will be placed in the record following this statement. This morning I want to welcome representatives of the administration and the public who have come here to present their views on H.R. 8149, the proposed Customs Procedural Reform Act. In addition to the subject matter of H.R. 8149, which includes a provision to amend section 592 of the Tariff Act of 1930, the so-called fraud and penalty provision, the subcommittee will take testimony on H.R. 7856, a bill to amend general headnote 3(a) of the Tariff Schedules of the United States, to apply duty-free treatment under certain circumstances to articles produced in the insular possessions of the United States. We will also receive testimony on H.R. 421 and 6922, regarding duty-free privileges and other proposals of the Commission on Federal Paperwork. These proposals have been incorporated into H.R. 8149. Earlier this year, I formed a special task force on customs administration under the chairmanship of Congressman James R. Jones and including Congress Bill Frenzel, both members of the subcommittee. As part of its activity, the task force has inspected numerous customs port facilities around the country and has met with representatives of the importing community at all of these locations. Many of the views and suggestions expressed by the private sector and also the Customs Service have been incorporated into H.R. 8149 and H.R. 7856. I want to give special recognition to the U.S. Custom Service, the Department of the Treasury, and the many representatives of the business community who have worked long and hard to develop legislation to modernize and simplify customs procedures, beginning with H.R. 9220, on which this subcommittee held a hearing in August of last year. (1) The primary purpose of H.R. 8149 is to build flexibility and reaSon into the customs law to permit the use of more modern procedures nd thereby increase the productivity and efficiency of these statutes. I am sure this subcommittee fully supports these objectives, and we applaud the executive branch and the private sector for the hard work and careful thought that has been devoted to trying to attain this. It is in recognition of this effort and of the need to bring reform to the many outdated and archaic laws and practices that the Subcommittee on Trade is beginning its consideration of these bills today. We must work towards meeting the objectives sought by the proposed legislation. However, meaningful customs reform requires that we attain and not lose sight of additional objectives under any set of customs procedures. For example, in order to be able to make reasoned and well-informed policy judgments in the area of international trade, the Congress, the executive branch and the public have a great need for reporting and verification of detailed import statistics to be maintained under any modernized customs system. In addition, whatever we do in the area of customs procedural reform must not undermine policies or agreements established for the purpose of preserving American industries and jobs. For example, interested parties, particularly from the textile and apparel industries, are concerned that provisions that would increase the limit for informal entries would permit too many imports to enter uncounted and encourage. subversion of agreements placing quotas on such imports. Such results must be guarded against. Finally, the customs brokers and smaller importers have expressed concern that authority delegated to the Treasury to prescribe where and when entries may be filed could reduce their business in a discriminatory fashion. In its further consideration of customs modernization, the subcommittee must deal with these and possibly other concerns. With regard to our procedure during this hearing, we will begin with administration witnesses this morning, followed by representatives from the interested public. Due to the limited time available and the number of witnesses scheduled to appear, witnesses should summarize their presentations and comply with our three-minute rule for oral testimony, with the understanding that their full statements will be included in the printed record. Our lead-off witness will be Under Secretary of the Treasury Bette Anderson, followed by the new Commissioner of Customs Robert E. Chasen, who was sworn in just last Friday. We congratulate you on your appointment, Mr. Commissioner, and we look forward to a very close and profitable relationship with you and your organization. The final administration witness will be Shirley Kallek, Associate Director of the Census Bureau for Economic Fields, who we understand will concentrate on the effect of H.R. 8149 on the Department's statistical programs. Ms. Kallek is accompanied by Emanuel Lipscomb, Chief of Foreign Trade Division, Bureau of the Census. It is our pleasure to welcome Under Secretary Anderson as our first witness. [The press release and bills follow:] [Press release of Thursday, June 30, 1977] CHAIRMAN CHARLES A. VANIK (D., OHIO) SUBCOMMITTEE ON TRADE, COMMITTEE ON WAYS AND MEANS, U.S. HOUSE OF REPRESENTATIVES, ANNOUNCES FOUR DAYS OF HEARINGS BEGINNING ON TUESDAY, JULY 19, 1977, ON CUSTOMS ADMINISTRA TION, SECTION 592 OF THE TARIFF ACT OF 1930, AND ON GENERAL HEADNOTE 3 (A) OF THE TARIFF SCHEDULES OF THE UNITED STATES The Honorable Charles A. Vanik, (D-OHIO), Chairman of the Subcommittee on Trade of the Committee on Ways and Means, today announced that the Subcommittee on Trade will hold four days of hearings beginning July 19, 1977, and continuing July 20, 21, and 22 on H.R. 8149, a bill to provide for reform of and improvements in customs procedures, including section 592. the fraud and penalty provision of the Tariff Act of 1930, and on H.R. 7856, a bill to amend general headnote 3 (a) of the Tariff Schedules of the United States, to apply duty-free treatment under certain circumstances to articles produced in the insular possessions of the United States. Testimony will also be received on H.R. 421 and 6922, regarding duty free privileges for returning residents and other proposals of the Commission on Federal Paperwork. These proposals have been incorporated in H.R. 8149. At this time, the Subcommittee will not consider matters concerning changes in the customs valuation provisions under sections 402 and 402 (a) of the Tariff Act of 1930, or the antidumping and countervailing duty statutes. The hearing on July 19 will be held in the hearing room of the Committee on Science and Technology, Room 2318 Rayburn House Office Building, beginning at 10:00 A.M. The hearing on July 20, 21, and 22 will be held in the Main Committee Room of the Ways and Means Committee in the Longworth House Office Building, beginning at 10:00 A.M. Earlier this year, Chairman Vanik formed a special task force on customs administration under the chairmanship of Congressman James R. Jones (D., OKLA.) and including Congressman Bill Frenzel (R., MINN.). As part of its activity, the task force has inspected numerous customs port facilities around the country and has met with representatives of the importing community at all of these locations. Many of the views and suggestions expressed by the private sector and also the Customs Service have been incorporated into H.R. 8149 and H.R. 7856, the legislative proposals presently under the Subcommittee's consideration. Officials from interested Executive Branch agencies will be the first witnesses. Testimony will be received by the Subcommittee from the interested public following the appearances of the Executive Branch agencies' witnesses. Witnesses are on notice that in order to provide more time for questioning and discussion, the oral presentation of written statements will be limited to three (3) minutes strictly, to be followed immediately by questioning. The full statement will be included in the record. Also, in lieu of personal appearance, any interested persons or organizations may file a written statement for inclusion in the printed record. Requests to be heard must be received by the Committee by the close of business Thursday, July 14. The request should be addressed to John M. Martin, Jr., Chief Counsel, Committee on Ways and Means, U.S. House of Representatives, Room 1102 Longworth House Office Building, Washington, D.C. 20515; telephone (202) 225-3625. Notification to those scheduled to appear and testify will be made by telephone as soon as possible after the filing deadline. In this instance, it is requested that persons scheduled to appear and testify submit 30 copies of their prepared statements to the Committee office, Room 1102 Longworth House Office Building, by the close of business Monday, July 18th. Persons submitting a written statement in lieu of a personal appearance should submit at least three (3) copies of their statement by the close of business Friday, July 22. If those filing written statements for the record of the printed hearing wish to have their statements distributed to the press and the interested public, they may submit 30 additional copies for this purpose if provided to the Committee during the course of the public hearing. Each statement to be presented to the Subcommittee or any written statement submitted for the record must contain the following information. 1. The name, full address and capacity in which the witness will appear; 2. The list of persons or organizations the witness represents and in the case of associations and organizations, their address or addresses, their total membership and where possible, a membership list; 3. A topical outline or summary of the comments and recommendations in the full statement. 95TH CONGRESS 1ST SESSION H. R. 8149 IN THE HOUSE OF REPRESENTATIVES JUNE 30, 1977 Mr. JONES of Oklahoma (for himself, Mr. VANIK, Mr. HOLLAND, Mr. JENKINS, and Mr. FRENZEL) introduced the following bill; which was referred to the Committee on Ways and Means A BILL To provide customs procedural reform, and for other purposes. 1 Be it enacted by the Senate and House of Representa2 tives of the United States of America in Congress assembled, TITLE I-CUSTOMS PROCEDURAL REFORM 3 4 SEC. 101. This title may be cited as the "Customs Pro 5 cedural Reform Act of 1977". 6 SEC. 102. Subsection (a) of section 315, Tariff Act of 7 1930, as amended (19 U.S.C. 1315(a)), is amended by 8 striking out the period at the end of paragraph (2) and 9 inserting in lieu thereof "; and" by adding the following new 10 paragraph at the end of such subsection: 11 "(3) any article for which duties may be paid at a |