We must avoid the danger of swinging from nonenforcement of the law to overenforcement. I believe there is a middle ground that is based in law and due process for all concerned. I hope that these hearings will find that middle ground. I would like to submit at this point a copy of the press release announcing the hearing and background information prepared by the staff.

[The material referred to follows:]

[Press Release of October 31, 1977]

CHAIRMAN CHARLES A. VANIK (D., OHIO), SUBCOMMITTEE ON TRADE, COMMITTEE ON WAYS AND MEANS, U.S. HOUSE OF REPRESENTATIVES

The Honorable Charles A. Vanik (D., Ohio), Chairman of the Subcommittee on Trade of the Committee on Ways and Means, U.S. House of Representatives, today announced that the Subcommittee on Trade will conduct two days of hearings on Tuesday and Wednesday, November 8 and 9, 1977 in connection with the Subcommittee's oversight responsibilities regarding the administration of the Antidumping Act of 1921, as amended. The hearings will be held in the Main Committee Room of the Ways and Means Committee in the Longworth Building beginning at 10:00 A.M. on Tuesday, November 8, and at 10:45 A.M. on Wednesday, November 9.

During the oversight hearings on the administration of the Antidumping Act of 1921, the Subcommittee will be particularly concerned with the issues of the adequacy of the existing statute to deal with the problems of unfair import pricing practices and the timely assessment of dumping duties following a finding of dumping by the Secretary of the Treasury.

Officials from interested Executive Branch agencies will be the first witnesses, with representatives from the Treasury Department and the U.S. Customs Service leading off, followed by a spokesman from the U.S. International Trade Commission. Testimony will be received by the Subcommittee from the interested public following the appearances of the Executive Branch 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 the 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 Friday, November 4th. 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 statement to the Committee office, Room 1102 Longworth House Office Building, by the close of business Monday, November 7th. 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 Monday, November 21, 1977. 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 organization, their address or addresses, their total membership and where possible, a membership list; and

3. A topical outline or summary of the comments and recommendations in the full statement.

Mr. VANIK. Before I proceed to the hearing, I would like to ask first that we hear from our colleagues in the Congress.

3

Mr. Buchanan, I understand you have a brief statement that you would like to make. The committee will be very happy to hear from you. We know of your deep interest in the steel problem.

STATEMENT OF HON. JOHN BUCHANAN, A REPRESENTATIVE IN CONGRESS FROM THE STATE OF ALABAMA

Mr. BUCHANAN. In light of the time constraints and the fact that the administration witnesses are waiting, I will ask unanimous consent to address the committee for 1 minute.

Mr. VANIK. Without objection, so ordered, with pleasure.

Mr. FRENZEL. You will be invited back regularly.

Mr. BUCHANAN. I want to thank, on behalf of the 170 other members of the Steel Caucus, you, Mr. Chairman, and members of the subcommittee, for your attention to the very serious situation threatening an industry vital to the economy and the security of the United States. I want to thank you for the proposal you have already suggested as a possible means to meet both the present crisis and the long-term problems of the steel industry.

I think everyone in the country, with the possible exception of the ITC and until recently the Treasury Department, has felt a good deal of dumping has taken place. I am glad for the first time that there is effort being made at vigorous enforcement of the law. I am sure it will be fair. The time has come for action.

Mr. Chairman and members of the subcommittee, I would like to thank you for holding these hearings and for all you have done to help alleviate the problem of foreign steel imports. It is obvious to all of us here today that the U.S. steel industry is in grave trouble. Since the mid-1950's, the role of the U.S. steel industry in world markets has declined dramatically. In 1955, the United States was the world's largest producer of steel with 39 percent of the total world output. Today, its share has declined to less than 20 percent, barely matching that of the European Common Market and Japan.

In 1955, the United States was a net importer of steel. By 1971, imports had grown to 18 percent of domestic consumption. Imports have been rising again in recent months and average 15 percent of consumption in the first half of 1977.

Steel imports for the month of September amounted to over 2 million tons, bringing the total for the year to date to just below 14 million tons. On this basis, it now appears that 1977 steel imports will exceed 19 million tons and, most importantly, account for better than 1 out of every 5 tons of steel consumed by American fabricators.

In the Birmingham area which I am privileged to represent, this situation has manifested itself in the closing of a number of plants and facilities. As of November 1, the Southern Electric Steel Corp. permanently shut down its Birmingham operation with a loss of over 220 jobs. At United States Steel's Fairfield Works, the most advanced, diversified plant in the Southeastern United States, literally hundreds of jobs and job opportunities have been lost. As recently as last Thursday, United States Steel was forced to close one if its Fairfield blast furnaces with the loss of over 180 jobs. Additionally, United States Steel has closed its cotton bale tie plant with the permanent loss of 150

to 160 job opportunities. United States Steel currently estimates that foreign imports have captured 26 to 28 percent of the Southeastern steel market. In the last 9 months, over 4 million tons of steel have been imported into the South-over one-quarter of total steel demand. The industry estimates that of every million tons of steel imported, 6,000 job opportunities are lost. Therefore, in the past 9 months, 24,000 opportunities for employment have been lost as a direct result of imports into the Southeast alone. It is the contention of many industry officials that these imports are coming into the country at less than their fair market value. I support this contention.

On August 5, 1977, the President asked the Council on Wage and Price Stability to prepare a report on economic conditions within the American steel industry, with emphasis on the reasons for cost and price escalation. Although the report has been portrayed in the news media as being damaging to the position of the steel industry, the report is actually quite supportive of the industry's position on the issue of foreign imports. The report states that steel production costs in Europe are at least as high as those of the United States, and that importation costs raise full costs substantially above those of domestic producers.

The report also points out that the Japanese steel production cost advantage is completely or nearly negated by importation costs. On the average, total Japanese costs would enable them to sell only 5 percent below U.S. prices, whereas they are currently discounting their products at 10 to 20 percent of U.S. prices. On page 63 of the report, the Council states that "the $248 net realized export price of Japanese steel appears to be substantially below our calculated Japanese production costs for 1976." Continuing on page 69, the Council concludes that "in 1976 and 1977 the Europeans must have been selling steel to the United States at prices less than the cost of production." Therefore, Mr. Chairman, both Japanese and European steel producers are discounting their products and dumping them on the U.S. market.

This is a situation where U.S. law is being violated and no action is being initiated by appropriate departments of the executive branch. Instead, private industry is beng forced to take on the very expensive burden of proving a situation which is becoming clearly demonstrable to all concerned.

For example, on Oct. 3, 1977, the Department of the Treasury issued its first affirmative dumping ruling in recent history, finding that five Japanese exporters of carbon steelplate are selling in the American market at prices substantially below their costs. In its finding, the Treasury Department assessed a dumping duty of 32 percent. The Treasury Department's ruling, however, is only a preliminary one-and is subject to further hearings before it becomes final. In addition, if the final determination confirms sales at less than fair market value, the matter is then referred to the International Trade Commission for its ruling on whether these imports have injured or threaten to injure the domestic industry. The ITC is allotted another 3-month period to make its determination.

In my estimation, a period of one-half a year is much too long to wait for a final decision. In half a year, many thousands more Americans will be without jobs and additional steel companies will have to curtail, if not totally cease, operations.

If the administration plans to rely on the antidumping provisions to combat the massive influx of foreign imports and I believe they do—then it is incumbent upon the Congress to revise the laws in two ways:

Öne: Place a greater part of the burden for identifying dumping practices on the Department of the Treasury rather than private industry. Currently, district customs officers are allowed to institute antidumping suits, but I know of no specific instance in which they have done so successfully.

Two: Streamline the time frame under which these investigations are carried out so that relief can be more quickly channeled to beseiged industries.

Regardless of what the administration and the Congress may do with regard to the antidumping laws, I do not believe that they will be sufficient to alleviate either the short- or long-term problem of foreign steel imports. While all of us prefer free and open trade, and expanding rather than contracting markets for the benefit of both domestic industry and our allies, free trade must be a two-way street. Until our friends in Europe and Japan realize this, additional measures will have to be taken.

The distinguished chairman of this subcommittee has proposed a number of intelligent, workable solutions to this problem. I wish to commend him for his timely, sensitive appraisal of this very difficult situation. Whichever route the chairman and other members of this committee may choose to take on this problem, I want to thank you for your attention to and concern for a problem which is threatening the very lifeblood of America."

Mr. VANIK. Thank you very much. Without objection, your entire statement will be admitted in the record as submitted.

I want to point out that I know you have taken a role in the Steel Caucus. What we want to explore today is what the circumstances of antidumping are, and we want to look at what has happened in the past.

Of course, in the hands of new administrators it may function; but we are always concerned about the way the process can fall apart and stop working. That is the real subject of today's hearing. I hope we come up with viable solutions.

Mr. BUCHANAN. Thank you for your leadership.

Mr. VANIK. I would ask at this time that the Government witnesses come forward: Mr. Mundheim, General Counsel of the Treasury, Mr. Robert Chasen, Commissioner of Customs, Robert Cornell, the Acting Director of Operations at the Trade Commission, and Bruce Hatton, the Director of the Office Congressional Liaison.

The ITC does not usually sit with Treasury. I do not think there is any great danger if they are at the same table, but it is up to you. I noticed that there are very lengthy statements that Mr. Mundheim and Mr. Chasen have prepared. and I would appreciate it if we could maximize the time for questioning, in light of the newspaper accounts and investigations that are underway that are of great interest and concern to us. I would suggest that you try in your statements to make a summation of the propositions that are set forth in them written statements.

PANEL CONSISTING OF ROBERT H. MUNDHEIM, GENERAL COUNSEL, DEPARTMENT OF THE TREASURY; ROBERT E. CHASEN, COMMISSIONER OF CUSTOMS; PETER EHRENHAFT, DEPUTY ASSISTANT SECRETARY FOR TARIFF AFFAIRS, DEPARTMENT OF THE TREASURY; GLENN ROBERT DICKERSON, DEPUTY COMMISSIONER OF CUSTOMS; AND JOHN O'LOUGHLIN, DUTY ASSESSMENT DIVISION Mr. MUNDHEIM. Thank you. I would just like to introduce the people here with me. On my left is Peter Ehrenhaft, Deputy Assistant Secretary for Tariff Affairs. On my right is Robert Chasen, Commissioner of Customs. Then we have Bob Dickerson, Deputy Commissioner of Customs and on the end we have Jack O'Loughlin of the Duty Assessment Division.

I will try to compress what is already a compressed statement. I thought it might be useful to begin in this oversight hearing to briefly tell you what we have done since the 1974 amendment was enacted. We have initiated 58 antidumping investigations involving $9.4 billion in trade. In 26 of those investigations, we have made determinations of sales at less than fair value. The ITC has found injury in 11 of those cases. Sixteen of the cases are still pending.

I would also like to review for you quickly our activities with respect to steel imports. As you know, on March 8, 1977, the Gilmore Steel Corp. filed a petition alleging the dumping of carbon plate steel from Japan. We made a tentative determination of sales at less than fair value with dumping margins of 32 percent on September 30.

On September 20, United States Steel filed what is in effect four petitions alleging dumping of a broad variety of Japanese steel products. Since that time we have had numerous other petitions relating to steel, and we are now dealing with 16 petitions involving steeel imports of $1.6 billion from nine countries.

The handling of those petitions within the time constraints imposed by the statute, will test the administrative feasibility of a full-scale implementation of the act.

I think this committee has expressed concern and interest in how Treasury staffs itself to handle this volume of cases. The Antidumping Act is administered through the Office of Tariff Affairs in the Office of the General Counsel and through Customs. Customs' role in that process will be explained by Mr. Chasen later.

The Office of Tariff Affairs is responsible for reviewing Customs' recommendations and for considering with Customs changes in established procedures which would facilitate the administration of the Antidumping Act. This staff in this part of Treasury is relatively small; and in the supervisory echelons, relatively new. As General Counsel, I have the overall responsibility, and, as you know, have been in office since August 4. Mr. Ehrenhaft is the senior official in the Office of Tariff Affairs. He has been in his post only since September 12. Mr. Ehrenhaft is assisted by four professional staff members. Two lawyers in the General Counsel's office are also assigned to serve Tariff Affairs. Mr. Ehrenhaft and I are agreed that some staff must be added if the responsibilities for administering the Antidumping Act are to be successfully discharged. Active recruiting is taking place; in the