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hundreds of years the philosophy of a tariff's deterrence to imports has derived from the fact that you have to pay so many dollars for bringing merchandise into the country.
But now we have had the administration witnesses say they don't care very much about the revenues raised, since they are such a small percentage of the value of the boxes. We also have had people who pay the tariffs, the large-fleet owners, say that they don't care very much about the money. But the administration has said that the national policy in this instance is to penalize the buyers with redtape. Redtape will be the primary penalty and not the dollars raised from the tariff itself.
Mr. JENKINS. On the average, what do you pay for an average used container?
Mr. SIKES. We pay $400 or $500. Maybe we pay a little more on some of the larger ones.
Mr. JENKINS. So at the most, if you want to pay the duty, you are talking about what?
Mr. SIKES. About $12 or $15 a container-sometimes slightly higher.
Mr. JENKINS. Then I assume that you have to sign an indemnity agreement when you purchase from these larger companies that in the event one of these containers turns up in the domestic market, that they are liable to in turn vouch you in to pay the bill. Is that basically what happens?
Mr. SIKES. Yes.
Mr. SIKES. A few are used for farm storage to prevent theft of tires or maybe hay, but a very small number. Our greatest dollar is for re-exporting the unit.
Mr. VANIK. They are generally made of aluminium?
Mr. SIKES. Aluminum and steel. And to that $400 or $500 that we pay for these boxes, we must add repair costs and transportation costs. So therefore, our highest and best use is for selling to a company who wishes to export American products. And only those with mangled corner posts and torn up doors, et cetera, are kept in the United States.
Mr. VANIK. Does the unit include the wheels?
Mr. SIKES. No, sir, that is separate. These ocean freight containers are units without wheels. They have doors at one end, and corner castings on the top and bottom. That is all there is to it. They are really not trailers.
Mr. VANIK. They are thick boxes?
Mr. VANIK. So, if you move them around, they have to go on flatbed?
Mr. SIKES. Yes, sir, flatbed or a specially built chassis.
Mr. WOOLLEY. I want to thank the committee and Congressman Jenkins for introducing the bill.
Mr. VANIK. Well, Mr. Jenkins is a very important and dedicated member of the committee. I want you to know we think very highly of your representative.
Mr. JENKINS. Thank you, Mr. Chairman.
Mr. VANIK. Next is H.R. 7709. Our witness is Mr. Evans of the Virgin Islands. If anybody is appearing with you, why don't you have them sit up here as a panel and you will all be here together. Of course, we know General Dawson. Will you identify the other witness?
STATEMENT OF HON. MELVIN H. EVANS, A DELEGATE IN
CONGRESS FROM THE VIRGIN ISLANDS Mr. EVANS. This is the Honorable Amadeo Francis, commissioner of commerce of the Virgin Islands. You know General Dawson.
Mr. VANIK. Your entire statement will be admitted, and you may excerpt from it.
Mr. EVANS. Thank you.
I will therefore not read the entire statement but indicate a portion of it for the record.
Mr. Chairman and members of the subcommittee, I am pleased to take the opportunity to appear before you once again on a matter of great economic importance to the Virgin Islands. I most deeply appreciate the fact you are holding this hearing on H.R. 7709.
Mr. Chairman, this legislation addresses and rectifies the unforeseen adverse impact upon cigarette revenues in the Virgin Islands which occur as a result of passage of the Customs Procedural Reform and Simplification Act of 1978, Public Law 95-410. That law was intended primarily to curb the abuses of Canadian cigarette exports.
However, at the same time it, unfortunately, restricted the unlimited number of cigarettes which could be imported duty free from the Virgin Islands by limiting the number of cigarettes to 200.
H.R. 7709 merely allows for the importation of cigarettes from the Virgin Islands to be increased to not more than 1,000 cigarettes. It does not, however, list the cigarette limitation applicable to foreign countries.
I would like to briefly touch upon the impact that Public Law 95410 has had on the Virgin Islands. A study conducted by the Virgin Islands Department of Commerce, a copy of which you have before you, shows that imports of cigarettes in the Virgin Islands by the three major U.S. distributors dropped 29 percent between 1978 and 1979, despite an unprecedented increase in tourism and tourist expenditures during the same period.
After a steady increase in taxes paid on cigarettes, which reached a peak of $411,544 in fiscal year 1978, it dropped dramatically the next fiscal year by 39 percent to $202,122.
Mr. Chairman, this measure would have no discernible effect upon either the general economy of the United States or the revenues of the United States derived from cigarettes. But as you can see, it has a marked effect on what must be called the very fragile tourist-oriented economy of the Virgin Islands.
This measure, if enacted by Congress will be one more step in the direction of making us more self-sufficient. I urge its favorable