184 176 Profit-and-Loss Experience of American Motors Corporation American Motors Corporation (U.S.) Total net sales for American Motors Corporation averaged about $1 billion during the period 1960-66 and about $716 million during the period 1967-69 before increasing each year thereafter to $2 billion in 1974. 1/ American Motors Corporation sustained net losses in each of the years 1966 ($12.6 million), 1967 ($75.8 million), and 1970 ($$56.2 million) and its net profit in all other years, as a percent of net sales, was below the industry average--ranging from 0.5 percent in 1965 to 4.9 percent in 1973. American Motors (Canada) Limited Profit-and-loss and financial data for American Motors (Canada) Limited are not publically available. 1/ See table 132 of this report. 185 177 Profit-and-Loss Experience of International Harvester Company International Harvester Company (U.S.) Total net sales for International Harvester increased yearly from $1.7 billion to $5 billion during the period 1960-74. 1/ The company operated profitably in each of the years during the period 1960-74. The net profit after income taxes ranged from a low of $48.4 million in 1961 to a high of $124.1 million in 1974. Profit margins, as a ratio of net sales, ranged from 3 percent to 4.5 percent during the period 1960-68. Profit margins were smaller during the period 1969-74, ranging from 1.5 percent in 1971 to 2.7 percent in 1973. International Harvester Canada Total company net sales for International Harvester ranged from $143.4 million in 1961 to $263.5 million in 1969 during the period 1960-69. 2/ For the period 1970-74, net sales ranged from $252.2 million in 1970 to $550 million in 1974. Net sales of products to the United States ranged from $17.1 million to $25 million during the period 1960-65, from $42.6 million to $74.5 million during the period 1966-69, and from $88.7 million to $145.2 million during the period 1970-74. International Harvester operated profitably in each of the years 1960-74. Profit margins, as a share of net sales, averaged 4.2 percent during the period 1960-67, 2 percent during the period 1968-71, and 4.6 percent during the period 1972-74. Profit returns on shareholders' 1/ See table 133 of this report. / See table 134 of this report. 186 178 equity and total assets were reasonably good in all years except for the period 1968-71. International Harvester's Canadian operations were more profitable than its United States operations in each of the years since 1971, both in terms of the ratio of net profits to net sales and the ratio of net profits to shareholders' equity. 187 179 SNOWMOBILES AND OTHER OFF-HIGHWAY VEHICLES As a result of the wording of annexes A and B which detail Canadian and United States obligations under the United States-Canadian automotive agreement, snowmobiles and several other types of motor vehicles were not given equivalent duty-free treatment in bilateral trade between the United States and Canada. Annex A to the agreement specifically excludes from Canadian obligations the duty-free treatment of specified types of vehicles such as amphibious vehicles, tracked or half-tracked vehicles, golf or invalid carts, straddle carriers, and motor vehicles designed primarily for off-highway use. Annex B to the agreement provides that the United States will grant duty-free entry to a wide range of articles including "Motor vehicles for the transport of persons or articles as provided for under items 692.05 (currently items 692.02 and 692.04) and 692.10 of the Tariff Schedules of the United States, and chassis therefore, but not including electric trolley buses, three-wheeled vehicles, or trailers accompanying truck tractors, or chassis therefor. The Canadian Motor Vehicles Tariff Order 1965, effective January 18, 1965, which implemented the Canadian side of the agreement, excluded from duty-free treatment the same types of articles excluded from Canada's obligations under annex A, including amphibious vehicles, tracked or half-tracked vehicles, golf or invalid carts, straddle carriers, and motor vehicles designed primarily for off-highway use. 188 180 Section 405 of the proposed United States implementing legislation (H.R. 6960 and H.R. 9042) provided for product coverage for duty-free entry into the United States identical to that provided for in annex B of the agreement. In addition to providing duty-free treatment for a wide range of other vehicles, section 405 of the proposed legislation provided, under TSUS item 962.11, for duty-free treatment of all articles covered by TSUS item 692.10 "If Canadian article, but not including any three-wheeled vehicles. . " In its report to the Committee on Ways and Means, which was also transmitted to the Committee on Finance, the United States Tariff Commission pointed out that although the products described in annex B of the agreement were approximately the same as the products described in annex A, "U.S. obligations under annex B are somewhat broader in that, unlike the obligations of the Canadian government, they would include certain amphibious vehicles, half-and full-tracked vehicles and other nonwheeled vehicles such as snowmobiles." These vehicles are, along with a variety of other vehicles and passenger automobiles, covered under TSUS item 962.10. When passed, the Automotive Products Trade Act of 1965, provided that, among other vehicles, snowmobiles, amphibious vehicles, halfand full-tracked vehicles and certain other nonwheeled vehicles covered by TSUS item 692.10 be given duty-free treatment under TSUS item 692.11, if Canadian articles. The duty-free treatment was retroactive to January 18, 1965. Vehicles equipped or designed to perform special |