of the United States Customs Court, before the Subcommittee on Appropriations of the House of Representatives on the judiciary appropriation bill for 1948, which is very applicable to this case and would be, I am sure, good testimony and of help to the committee. Mr. O'HARA. Is that a true copy of the testimony? Mr. FRANCIS. That is a true copy of the testimony. I could only copy it, because they have only one record in there, in their Appropriation Committee. The judge has had years of experience. I think his statement will be very beneficial. Mr. EDELMAN. What does it say? So that we can answer it. Mr. EDELMAN. Could you summarize it? You can get it from the com mittee and copy it, as I did, if you care to. It says here: Mr. STEFAN. I hope that the fur farmers of America will come to Congress for some relief. Now, you told us something last year about truth in fabrics and truth in furs. There is no law covering truth in furs, is there? Judge OLIVER. You are probably referring to dogskins; you are right, to a certain degree on that. Mr. STEFAN. Tell us how a purchaser of furs can be assured that the fur is fox, dog, skunk, or whatever it is. Is there any way he can tell today? Judge OLIVER. Only by going to a reputable dealer. That is the only way. What I have told you before, and what I tell you again, is that most of the women in this country who wear a moderately priced wool coat with collar and cuffs of cheap, unnamed fur are probably wearing dogskin; and if they knew it, they might possibly throw the coat away. But that is the truth. (The document above referred to is as follows:) STATEMENT OF HON. WEBSTER J. OLIVER, PRESIDING JUDGE OF THE UNITED STATES CUSTOMS COURT, BEFORE THE SUBCOMMITTEE ON APPROPRIATIONS OF THE HOUSE OF REPRESENTATIVES ON THE JUDICIARY APPROPRIATION BILL FOR 1948 Mr. STEFAN. Will you give the committee some information about some of your larger cases, some of your more important cases? Judge OLIVER. The largest case we recently decided is this one that I am going to tell you about, the Silver Fox case. Forty witnesses were examined, nearly 1,500 pages of testimony were taken, and hearings were held both in New York and in the Middle West. This case will illustrate the oddity of the work in our court. Mr. STEFAN. You have laid out on the table certain skins. That is a silver fox that you are showing there? Judge OLIVER. Yes. Mr. STEFAN. And are all these silver foxes? There is a question of foreign competition? Judge OLIVER. No. Mr. STEFAN. If it does not destroy the market for the American fur farmer. Judge OLIVER. Well, the gentleman will pay duty if he ships in silver-fox pelts. I brought down these foxskins to show you. All these pelts are of different types, but all are foxes. Here is the red, the blue, the silver; that would be called by a furrier a three-quarter silver. If it had silver-tipped guard hairs all the way up to the head, it would be a full silver. This is the platina, or platinum fox. The whole case centers around this skin [indicating]. The red fox pelt is free of duty, as is the blue fox, the white fox, and the gray fox, only the silver or black foxskins are subject to duty; they are also subject to quota restrictions. You not only pay a duty of 371⁄2 percent, but you can bring in only a limited number of the silver-fox pelts. The reason is obvious, to protect the American rancher. 74903-48-14 In 1939, in a litter of silver foxes in Norway, there appeared an odd-looking light-furred pup which they call platina, which is the Norwegian name for platinum. The American name given was platinum. The animal was a male, and the name was Mons. Sometime before Mons, the platinum-colored fox, made his appearance into the world, there had been repeated appearances in litters of silver foxes of what are called sports or bastards, meaning freaks like this. They were called sports or bastards, because they did not answer to the test of a mutation, which is a fortuitous change, capable of reproducing itself. But they mated Mons with a vixen, which is the name of a mama fox, while the youngsters are called pups. Out of the resulting litter of seven pups they got four platinums and three silvers. Then they kept on interbreeding and finally bred platinum to platinum, but still from a pair of platinums they would get a mixed litter of platinums and silver foxes averaging about 50 percent of each type. Therefore, you have what the genetecists and the biologists call a herterozygous type of mutation, meaning that it answers to the test of mutation, the ability to reproduce its kind but not in the entire resulting progeny. Nevertheless, it is a mutation. When these came in, the importer entered them free of duty as for furs or skins, other than silver, undressed. Mr. STEFAN. Entered the platina? Judge OLIVER. Entered the platina as all other foxes. Mr. STEFAN. And that came in competition with the silver-fox farmers in the United States? Judge OLIVER. That is the question. Let us assume that it did. Mr. STEFAN. He came into court? Judge OLIVER. The Government comes into court and alleges that this is a silver fox. The importer claims the platinum fox is not a silver fox, it is a mutation or color phase of the silver fox, and therefore it is not a silver fox. It is not disputed that the silver fox is a color phase of the red fox. In other words, generations back in the wilds there was a throw-off of the red fox, which resulted in the silver fox and in the intervening period you got the silver-fox breeding true in its entire offspring. So actually the silver fox is just as much a color phase or mutation of the red fox as the platinum is now a mutation of the silver fox, or, indeed, the platinum could be said to be a color phase or mutation of the red fox, going way back. The original progenitor, the red fox, is admitted free of duty. The differences between the silver and the platinum are obvious. To point out a few of these—the silver has slate-colored underfur, black paws, black guard hairs, some of which are silver-ringed near the tip, the general appearance being dark. The platinum, on the other hand, has white underfur, white paws, white guard hairs, some of which are black-ringed near the tip, and the general effect is light. I wrote this opinion, so you can blame me if you don't agree with the result. Mr. STEFAN. What was the decision? Judge OLIVER. That it is not a silver fox; it is a mutation. Mr. STEFAN. And dutiable? Judge OLIVER. And not dutiable. The platinum is free of duty. Mr. STEFAN. So the platina is free of duty now? Judge OLIVER. At the present moment. If they appeal it to the Court of Customs and Patent Appeals, that court may reverse the decision. If not, the domestic ranches do not have to be unduly concerned? Mr. STEFAN. Why? Judge OLIVER. Because all they have to do is to go to you folks and have you enact legislation making platinum fox furs dutiable. You did that in the wool hat case. That case involved the refund of about 21⁄2 million dollars. We do not legislate. We simply apply the law as enacted by Congress in the tariff act. I have gone into this case at your suggestion just to give you an idea of one type of case that we have. Mr. STEFAN. I hope that the fur farmers of America will come to Congress for some relief. Now, you told us something last year about truth in fabrics and truth in furs. There is no law covering truth in furs, is there? Judge OLIVER. You are probably referrring to dog skins; you are right to a certain degree on that. Mr. STEFAN. Tell us how a purchaser of furs can be assured that the fur is fox, dog, skunk, or whatever it is. Is there any way he can tell today? Judge OLIVER. Only by going to a reputable dealer. That is the only way. What I have told you before and what I tell you again, is that most of the women in this country who wear a moderately priced wool coat with collar and cuffs of cheap, unnamed fur, are probably wearing dog skin, and if they knew it, they might possibly throw the coat away. But that is the truth. Mr. O'HARA. The hearings are concluded. The committee will adjourn. (The following was presented for the record:) The Honorable CHARLES A. WOLVERTON, DEPARTMENT OF STATE, House of Representatives. MY DEAR MR. WOLVERTON: Reference is made to your letter of April 6, 1948, transmitting for the comment of the Department of State copies of H. R. 3734, a bill "to protect consumers, retailers, distributors, manufacturers, dealers, and producers from misnaming, misbranding, improper identification, and deceptive or misleading advertising of fur products and articles made in part or in whole from fur, and for other purposes.' The bill proposes that any fur article or any imported fur be stamped, tagged, labeled, or otherwise identified to protect consumers and others against misrepresentation regarding the fur. In the case of a fur article the means of identification would be required to show plainly the true English name of the animal that produced the fur, or if more than one type of fur was used the true English names of the animals that produced the fur; the fact that reused fur was employed if such were the case; the name of the manufacturer of the fur article; and in the case of an article made of imported fur the name of the country appearing on the fur when it was released from custody of the Bureau of Customs. Imported fur skins or pieces would also be required to show plainly by some means of identification the true English names of the animals that produced the fur and the name of the country from which the fur originated. There are no similar mandatory requirements applicable to fur articles and imported furs at present, Consumer protection against deception through improper identification of furs is commendable and it may be necessary. Other agencies of the Government are better qualified to comment on the matter of necessity than is the Department of State. The Department believes, however, it highly undesirable that H. R. 3734 be enacted. The Department's opposition is based primarily on three considerations regarding imported undressed fur skins as covered by section 7 and related provisions of the bill. (1) The requirements regarding the identification of imported fur skins appear to be unnecessary to accomplish the specified purposes of the bill. (2) The requirements are unduly burdensome in the case of imported furs and would, in the case of low priced furs in particular, unreasonably increase their cost. (3) Requirements regarding imported fur skins appear to be contrary to certain of our international commitments. The Department has no comment regarding the provisions of the bill in respect to fur articles. With regard to the first point it should be noted that by far the largest proportion of imported furs and fur articles consists of undressed furs. The initial consumers of such furs are the importers, brokers, fur manufacturers, and similar experts in the fur trade. Whatever may be their practices regarding the identification of processed furs when sold to small manufacturers, incidental users of fur, and retailers, it is inconceivable that they themselves need labels on raw furs for purposes of identification either as to kind or quality. Their expert knowledge insures that they will not accept inferior skins of one species in the name of high quality goods of a different type. That same knowledge would permit, if it should be required, accurate identification of any fur sold by the expert initial consumers of imported furs to the subsequent consumers who may be less expert. It appears therefore unnecessary for the protection of the subsequent and the final consumer of processed furs to require the name of the fur in English, to be attached at the time of importation to each imported fur skin. In the case of most of the fur skins imported the question of country of origin also has little meaning in terms of consumer protection. Only in the case of a few of the higher priced furs would the misrepresentation of the fur as the product of a particular country imply that the fur so misrepresented was of higher quality than it might be. It would seem unnecessary to require that country of origin be indicated on millions of fur skins where it is of no significance in order to insure accurate identification in the very limited number of cases where it might possibly be. Furthermore, the marking provisions of the Tariff Act of 1930, as amended (19 U. S. C., sec. 304), which are applied under detailed regulations of the Secretary of the Treasury cover furs as well as all other imported articles. For many years the impracticability of marking the country of origin upon each undressed fur skin has been recognized in the administration of these regulations (T. D. 48447 (11); C. D. 31; Abs. 41595). The burdensome nature of the requirement for the marking of imported fur skins by the person first introducing such fur into commerce in the United States might perhaps be better realized by reference to the difficulties which would be encountered if a similar requirement applied to domestic furs. Trappers in the United States and Alaska are estimated to number about 2,750,000. Their annual fur catch is valued at $100,000,000 or more. It includes 16 to 18 million muskrat, about 3 million opossum, nearly 2 million skunk and 4 or 5 million other skins. If the trappers who first introduce the skins into commerce were to be educated as to marking requirements the task would be a formidable one. Even if the lesser number of dealers did the marking it would still be a large job. The cost of labeling and relabeling at various stages of processing where labels would be destroyed or would have to be removed, and the record-keeping attendant on handling the large volume of low-value skins such as muskrat would be unreasonable. In terms of imports the problem is far greater. Instead of 28 million skins as in the domestic case imports in excess of 100 million skins are usual. In 1946 imports were nearly 200 million skins. In number of units coney or rabbit skins account for a large proportion of the total imports of fur. The cost of opening 500-pound bales each containing some 2,500 coney or rabbit skins, labeling, and repacking the skins, would be out of all proportion to the value of a skin which in 1947 was about 26 cents each. In the case of higher valued furs such as Persian lamb which are imported in quantities of 3 to 8 million skins a year the cost of opening bales and labeling furs in this country would be substantially increased by deterioration in the quality of the skin resulting from this action. If it should be desired to pass the labeling requirement back to the foreign shipper the problem is made difficult by the very large number of dealers in many different countries who have to be educated to do the marking which has not hitherto been required and which as previously indicated appears unnecessary to accomplish the stated purpose of protecting consumers of fur. The record-keeping, extra handling and the increased cost incidental to maintaining the identification of furs would be especially burdensome on small manufacturers and processors of furs and might well result in restricting the market for furs because of the necessary increase in the cost of final products. The bill, in that it imposes an additional unnecessary barrier to imports, is contrary to the policy of the Government which is directed toward the reduction of world trade restrictions. It is contrary also to the policy of encouraging imports which are currently far below the level of exports. The provisions of H. R. 3734 appear to be contrary to commitments of this Government under the general agreement on tariffs and trade signed at Geneva, Switzerland, October 30, 1947, and effective January 1, 1948. Article III, paragraph 2, of that agreement states: 2. The products of the territory of any contracting party imported into the territory of any other contracting party shall be accorded treatment no less favorable than that accorded to like products of national origin in respect of all laws, regulations and requirements affecting their internal sale, offering for sale, purchase, transportation, distribution, or use. Since H. R. 3734 would require labeling, relabeling, and burdensome recordkeeping at each stage in the processing of imported raw fur skins and would not require the same treatment for domestic fur skins, the imported product would be receiving less favorable treatment than the domestic product contrary to the requirement cited above. Article IX, paragraph 3, of the general agreement states: "3. The laws and regulations of contracting parties relating to the marking of imported products shall be such as to permit compliance without seriously damaging the products, or materially reducing their value, or unreasonably increasing their cost." It appears, as previously noted, that the cost of the marking as contemplated in H. R. 3734 of such low-priced furs as coney or rabbit would be unreasonable relative to the unit value of the furs and that the marking of Persian lamb by the person first introducing the fur into the commerce of the United States would result in quality deterioration which would materially reduce the value of the fur. Article VIII, paragraph 1, notes: 1. "* * * The contracting parties also recognize the need for reducing the number and diversity of such fees or charges, for minimizing the incidence and complexity of import and export formalities, and for decreasing and simplifying import and export documentation requirements." H. R. 3734 would greatly magnify rather than minimize the present import formalities in respect to raw furs. Australia and Canada are contracting parties to the general agreement and both are important suppliers of fur. While there is an exception in article XX, I (d), to the provisions of the general agreement, if the measures which conflict are necessary to prevent deceptive practices, that exception would not apply in this case if as previously contended the requirements are not necessary to prevent deception. For the reasons stated above the Department of State believes strongly that H. R. 3734 should not be enacted. Because of the urgency of the matter this letter has not been cleared with the Bureau of the Budget, to which copies are being sent. Sincerely yours, CHARLES E. BOHLEN, Counselor. (Whereupon, at 5:45 p. m., the committee adjourned and the hearings were concluded.) |