Mr. BARNES. I don't think that it is. I haven't had any personal experience. I have got a list of some of the companies that have formed pools and, of course, it isn't limited to small business alone. In many cases it is more likely to be a trade association, or concerns in a particular industry that form a pool under that law. When we prepared this pamphlet, "Pointers in Foreign Trade," there were at that time 41 pools under the Webb-Pomerene law that had some 470-odd companies, I think, involved in them. We took a reading before this hearing to see what the situation was now, There are now, I think, 35 or 37. In any event, there are four or five fewer now than there were in 1946 and a corresponding lesser number of companies involved. I have hesitated to recommend-to make any recommendation myself in this particular field. I could leave with you a list of the associations that have filed, which is dated September 30, 1955, if it would interest you. Mr. YATES. It would be of interest to us and it may be received for the committee files. (The document referred to will be found in the files of the committee.) Mr. MULTER. So far as I know there is no Government agency charged with the duty of encouraging the establishment of associations or corporations under the Webb-Pomerene Act. FTC performs a policing function under the act to make sure there is no violation of that act or, more important, of the Antitrust Act. Do you believe your agency should encourage more activity in that line? Mr. BARNES. I am reluctant to make that a recommendation. I merely suggest this is an area in which your subcommittee might take a look to see what is needed. I don't know that that would do it. We have formed the other type pools and attempt to do so and even promote them. Mr. YATES. That is domestically. Mr. BARNES. Yes, and yet there are not very many that are formed. It seems to me there is a much better, more realistic reason to form a pool perhaps under this law than there is even for these domestic purposes. At least as good a reason. Mr. MULTER. My own observation is that the reason there is not more activity in that field is the same reason that there is less activity abroad. I think if we get something like H.R. 5 enacted, which is the Boggs bill, there may be more activity. But when the tax range is as high as it is, there is nothing to encourage foreign investments. If anything it discourages any further investments abroad. Plus the fact that if there are any tax gimmicks available, the individual company or the small businessman will probably follow the big business company if it can do it. The tendency is to up a company abroad and ship from here, or even manufacture abroad, so that the Webb-Pomerene Act corporations are continuing to lose their usefulness rather than gain any usefulness. Mr. BARNES. That is why I was reluctant to make any particular recommendations in the field. It is a study in itself. Mr. MULTER. I think it is deserving of more attention. Are there any further questions? Mr. MULTER. Along that same line the Western Hemisphere Corp. is something, too, that many of our small businessmen might be able to avail themselves of but no one has ever called it to their attention, they do not know how it operates and they just do not get into that operation. Of course, it has very severe restrictions. The Western Hemisphere Corp. must be almost solely in the business of operating outside the United States but within the Western Hemisphere. Mr. BARNES. At the time of the preparation of the pamphlet referred to, the Office of the Economic Adviser of the Small Business Administration obtained from the Internal Revenue Service the latest information that was then available on the corporate income tax returns for 1957 with credit claimed for Western Hemisphere Trade Corp., and classified them by total assets and by net income and income classes. This information has not, as far as I know, been made available before and it seems pertinent to your inquiry. Mr. YATES. We would like to get a copy of that information for the files. Mr. BARNES. I will introduce it into the record. You realize, of course, that it is not on current years but it does give you a typical year. (The document referred to will be found in the files of the committee.) Mr. YATES. If there are no further questions, Mr. Barnes, we are very grateful for your help on this matter. The subcommittee stands adjourned. (Whereupon, at 4:30 p.m., the subcommittee adjourned to reconvene at the call of the chairman.) APPENDIX APPENDIX A Selected press releases announcing bids published by Department of Commerce A review has been made of all BFC press releases on foreign government tenders, covering the period January 1 through July 17, 1959. This study covers a total of 112 press releases. Two separate tabulations have been made, one for NATO bids and the other for the balance of tenders. In the case of NATO announcements, all that is required is that interested firms express by cable, or otherwise, any interest in participating in the particular project, and the bid may be submitted at a later date. The bid deadline, therefore, allows much more time than the date for filing an interest or intention to bid. The details respecting each project-how to bid, specifications, etc.—are sent by mail directly from NATO's contracting office to each interested firm having established, as a result of the earlier announcement, its competence to participate in the bidding. The study covered 26 releases, and the date of the BFC press release to the closing date for filing with the NATO office averaged 132 days. Exhibit A contains the tabulation. In the case of non-NATO tenders, the bid must be reasonably complete at the time of filing, unless the announcement specifies other conditions. The tabulation for the period January 1 to July 17, 1959, showed a total of 86 releases. 139 The average time allowed for submission of the bid from the date of the BFC press release to the colsing date was 321⁄2 days. Exhibit B contains the results of the tabulation. There is also attached a more detailed statement (exhibit C) stating the facts respecting each of the cases called to the Department's attention by the committee. The above facts may be summarized as follows: Average number of days between date of BFC press release and closing Average number of days between date of BFC press release and date on which interest must be expressed to NATO contract office____ 322 115 132 1 This figure reflects the extension of the bid deadline on the project in Brazil, announced in press release FC 59-16, Feb. 2, 1959, from Feb. 12 to Apr. 29. Without considering this extension, the average time between issuance of press release and closing date would have been a little less than 10 days. The Bureau of Foreign Commerce has long been aware of this problem. Instructions under which the Foreign Service operates emphasize the importance of bidding periods adequate to permit American firms to compete. Representations have been made repeatedly to foreign government departments pointing out that competitive activity by American firms will be beneficial to procurement organizations by providing a broader range of products and prices. That the average time between the announcement in Washington and the closing date exceeds 30 days is an indication that these efforts have not been without result. It should be recognized, however, that many foreign governments are concerned essentially with dealing with local suppliers wherever and whenever possible, and for this reason bid-closing dates often tend to be rather short. It should also be recognized that certain categories of products do not require long bidding periods. For example, the invitation of Burma for bids on condensed milk (which was announced by Commerce in a press release of February 20) had a closing date of February 24. The information was received in the Department of Commerce on February 18 in a communication from the American Embassy at Rangoon, dated February 13. A press release was prepared on February 19, and-at the same time-the information was telephoned to the Dairy Industry Supply Association, which is a broadly representative association insofar as U.S. industry is concerned. On February 20 the press release was issued, and on that same date the membership of the trade association was made aware of the opportunity. There was sufficient time for a cabled bid and there was no indication from U.S. industry that the time was too short. The Embassy at Rangoon has been reminded to cable this type of information in the future so that it can be released to the trade as early as possible. Foreign government tenders are also useful to business as a means of identifying procurement organizations abroad, and frequently-where bidding periods are short-American suppliers make use of the information to establish their identity with the purchasing office in the expectation that future bids will be possible. They also use the information to explore trade opportunities for accessory or related products. We would be remiss if we did not publicize business opportunities solely because of limited bidding time. |