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The President's concern with the inflationary impact of import restrictions is most commendable. Stating however, that adjustment assistance is the only action that would help the adjustment process without being inflationary, he seems to give the anti-inflation standard overriding priority in import-relief cases. Worthy as it is in principle, this priority would summarily rule out the use of import restrictions of any kind in import-relief cases, contrary to Congressional designation of import relief as an appropriate remedy in some instances. Where serious injury (or threat thereof) has properly been found (I do not argue it has been so found in this case), import relief may be necessary to buy adjustment time. The President's decision focused entirely on adjustment assistance as the only acceptable remedy but did not concern itself with the need for adjustment time (or, as noted above, with the full proportions of the adjustment issue).
The Commission, on the other hand, decided on import restriction as the only suitable remedy (for the purpose of buying adjustment time) but neglected the substance of a fully developed adjustment effort. Notwithstanding his sole recourse to adjustment assistance to particular firms and workers, the President stated (as one of his reasons for rejecting import control) that “it is not clear that the industry would be in a position to compete once relief expires.” This supposedly refers to import relief without adjustment help to particular producers. However, these two remedies are not mutually exclusive. The Commission, on the other hand, showed no appreciation of the adverse effect which import restrictions might possibly have on the competitive problems of some U.S. producers within their own industry, devoted no attention to the particular adjustment problems various producers might be having, and no attention to the adjustment help which the whole industry or individual producers or groups of workers might need.
CONCLUSION The protagonists thus far on stage in this trade-policy drama have given faulty performances. For Congress now to enter from the wings to side with the Commission by overturning the President's judgment would be a deus ex machina that could hardly be considered helpful.
If Congre wants to take action in this case, it should limit its action to encouraging the President and the Commission on what both should do to improve their performances in such cases within the letter and the spirit of the current legislation. There is actually need to reform the Trade Act in this and other respects. But that is another matter, outside the practicalities of the case now under review. If there is a genuine interest in developing a soundly based “industrial policy,” reform of government performance in escape-clause cases—first within the parameters of current legislation, then through reforms of the trade statute—would be a good place to start. The Administration had an opportunity to initiate its "industrial policy” reforms in the way it handled the leather apparel case. It still has that opportunity within the framework of the President's decision in this import-relief case. Full attention to all the dimensions of a full-fledged adjustment strategy is a basic necessity. Eliciting commitments from the industry on quid pro quos-concerning productivity, pricing, etc.—for the aid that government provides should be one element of this new policy.
“The Hovercraft Skirt Tariff Act” No reports or communications received.
To extend duty-free treatment to certain freight containers
SEA-LAND INDUSTRIES INVESTMENTS, INC.,
Edison, N.J., August 28, 1980. Hon. ED JENKINS, U.S. House of Representatives.
DEAR MR. JENKINS: I am writing to express our Company's view on H.R. 7660, a bill “to extend duty-free treatment to certain freight containers”, which you introduced on June 25, 1980.
Our Company and its sudsidiaries are engaged in various transportation ventures throughout the world. One of our subsidiaries, Sea-Land Service, Inc., is the world's largest privately owned containership company, operating 37 U.S.-flag ships serving 122 ports in 46 countries.
The extension of duty-free treatment to freight containers is an excellent idea, and we greatly appreciate your having introduced legislation to accomplish this purpose. The containers concerned are instruments of international commerce and as such should be entitled to flow freely and without unnecessary governmental impediment between all countries of the world.
We are concerned with one aspect of H.R. 7660. It would only extend duty-free treatment to those containers which meet the voluntary size and design standards developed by the International Standards Organization, a private entity headquartered in Switzerland. A large percentage of the containers used in foreign commerce by Sea-Land Service, and by many other companies as well, are not "ISO standard,” and thus in a real sense would be discriminated against by the enactment of this bill as presently drafted.
We suggest a far more appropriate standard would be to extend duty-free treatment to all freight containers which have been approved under and are in compliance with the requirements of the International Convention for Safe Containers (CSC), a multilateral treaty administered in the United States by the Department of Transportation in cooperation with the Department of the Treasury's U.S. Custom Service. For many years, our Government and others have recognized that the best standards for containers were those which enhanced their safety and handling, not ones which attempt to mandate conformity with certain arbitrarily selected dimensional criteria. Indeed, the basic Department of Defense procurement statutes specifically prohibits any favoring of such criteria in the use of freight containers (10 U.S.C. 2304).
In this light, we suggest that the language appearing in H.R. 7660, below line six in column 2 (Freight containers . . . IXC) be deleted and replaced with "Freight containers approved under and in compliance with the requirements of the International Convention for Safe Containers (CSC).” We hope you will view this amendment as a reasonable one which more fully reflects the fine intentions of this bill.
Thank you for taking the time to consider our views. Please let me know if any additional information would be helpful to you. Sincerely,
CHARLES I. HILTZHEIMER, Chairman, Chief Executive Officer.
THEURER ATLANTIC INC.,
Newark, N.J., August 26,"1980. Mr. CHARLES A. VANIK, Chairman of Subcommittee on Trade, House Ways and Means Committee, Washington, D.C.
DEAR MR. VANIK: By means of this letter, we request to enter as testimony the following, regards the pending bill HR 7660, which would admit certain Intermodal Cargo Containers of foreign manufacture into the United States, without duty.
Frankly, we have for some years been concerned that tariff be collected on containers bought abroad for use by companies based in the United States, entering the country to be owned and operated from here.
As a container manufacturer for the last 13 years, we are very cognizant of the effectiveness of foreign competition, especially since a container built in the United States would be subject to a very substantial import tax when entering West Germany, for example.
Considering the problems that our country already has in the matter of the balance of trade, and the competition to which we are subject to, based on labor costs in Taiwan, Hong Kong and Korea, and the support which Japanese manufacturers receive from their Government, we are deeply concerned at consideration of a measure which would further militate against United States manufacturers and workers.
At the present time, of the approximately 1,000 employees of Theurer in Newark, N.J. and Greenville Ms., 43 of them are engaged in container manufacture.
By means of this letter, we wish to affirm our serious objection to Proposed HR 7660 as described to us. Respectfully submitted.
JOHN THEURER, President.
STATEMENT OF THE TRUCK TRAILER MANUFACTURERS ASSOCIATION
INTRODUCTION The Truck Trailer Manufacturers Association (ITMA) is submitting this statement in opposition to H.R. 7660, a bill to extend duty free treatment to certain international freight containers, to the Subcommittee on Trade of the Committee On Ways and Means. TTMA respectfully requests this statement be included in the record.
TTMA is concerned with the negative effect of unilateral elimination of the tariff barrier on containers built overseas and entering the United States for domestic use and ownership. Domestic container production for 1979 exceeded $75,000,000 in value and over 9,000 units. Although this production was less than 4 percent of the total truck trailer equipment shipments, it represents a stable market segment in tlie volatile freight equipment industry.
TTMA is the only national organization representing the manufacturers of truck trailers, tank trailers and international shipping containers. Membership includes ninety-four vehicle manufacturers and an additional one hundred and thirty associated companies who supply raw materials and components for container manufacture. TTMA member companies are responsible for over ninety percent of the domestic output of all types of truck trailers.
The truck trailer industry, when operating at normal capacity, enjoys annual sales of over two billion dollars per year and employs over thirty thousand people. Today, like the automobile industry, trailer manufacturers are stung by the lash of recession. January 1980 truck trailer production was 31.4 percent below that of 1979. By June 1980 trailer production had plummeted 56.1 percent below 1979. Current estimates of unemployment show 40 percent of the workers idle, while July and August statistics are expected to manifest a further, even more serious decline in vehicle production and employment.
It is against this backdrop that TTMA members face the loss of the already weak tariff barrier.
THE DOMESTIC CONTAINER INDUSTRY Several major domestic trailer manufacturers are actively engaged in building international shipping containers. The authoritative study, Containerisation into the 1980's", states “U.S. builders were very much the pioneers in container manufacture, but they have seen their position as world leaders progressively eroded by the expanding industry they created". While 14 percent of the 1980 TEU production was built in North America, that share had dropped to 3 percent by 1978.2 (Container production is measured by the TEU—representing the twenty foot equivalent.) Although this precipitous drop to Foreign competition focuses on the more easily built dry freight "box”, superior technology has enabled the United States to competitively produce the more sophisticated reefer/insulated and tank/chemical vessel containers.
Significantly, H.R. 7660 removes tariff protection from all types of international freight containers by eliminating the tariff from units which meet size standards,
1 "Containerisation into the 1980's", the Journal of ICHCA, Cargo Systems Research Division, McMillan House, 54 Chean Common Road, Worcester Park, Surrey, KT4 8RJ, England, 1978 (at
2 Ibid, (at p. 76).
rather than type. The bill defines containers to enter duty free as those meeting International Standard 668–1979 (E) for series 1 freight containers designated as classes 1AA, 1A, 1AX, 1C, or 1XC. These definitions are strictly based upon the dimensions and gross weight of the container, e.g. class 1CC units are 20 feet long and 842 feet high, while class 1XC units are less than 842 feet in height.
These dimensional standards apply to all types of containers including the reefer tank units of which the U.S. has considerable market share.
The table below reflects the growth in market share of the reefer and tank type containers. These are considerably more expensive and complex: