Yet the nations of the free world would be stronger and more cohesive if many of the existing barriers to the exchange of their goods were reduced, if unnecessary uncertainties and delays created by such barriers were eliminated, and if adequate international arrangements for discussing and finding solutions to their common trade problems were developed and maintained. The measures described below are aimed at contributing to these broad objectives.
The Buy American Act and legislative provisions of other acts containing the Buy American principle should be amended to give authority to the President to exempt from the provisions of such legislation the bidders from other nations that treat our bidders on an equal basis with their own nationals. Pending such amendment, the President by Executive Order should direct procurement agencies in the public interest to consider foreign bids which satisfy all other considerations on substantially the same price basis as domestic bids.
The Buy American Act was enacted in 1933 as an antidepression measure. It requires Government procurement agencies in effect to give a preference to domestic suppliers, except where such suppliers are quoting prices substantially higher than those quoted from foreign sources. It embodies a philosophy and a practice which exists in many industrial nations of the free world and which is costly to them all. Today our Government procurement alone is of an order some 40 times its dollar volume in 1933. We are fully aware of sentiment everywhere that governments should buy from those who pay their expenses. While we do not believe that foreign producers have any inherent right to supply our Government, we believe that in the total national interest the United States could well lead the way toward the elimination of such preferences on a reciprocal basin Congress should direct the President to have the Tariff Commission undertake a study of the tariff schedules immediately, with the stated purpose of framing proposals for the simplification of commodity definitions and rate structures; this study should be completed within a definite time period and the Tariff Commission should be provided during this period with an appropriately enlarged staff. Congress should empower the President, on the basis of such recommendations, to proclaim such changes in commodity definitions and changes in rates as he determines to be appropriate, provided that such changes do not materially alter the total of duties collected pursuant to any group of rates affected by such simplifying changes when calculated on imports in a specified base period.
The problem of tariff classification is complicated at best. However, the many distinctions contained in the Tariff Act of 1930 and the additional distinctions introduced as a result of negotiation under the trade agreements program have created a greatly complicated structure of classification. This has led to disputes and delays, the latter being due in substantial part to the extensive appeals system available to importers who wish to protest the findings of customs officials. The complexity itself leads to temptation to evade. The proposals to be developed by the Tariff Commission should be so framed that the proposed new rates, when applied to imports for a stated base period, would yield approximately the same total revenue. Moreover, the proposals should be developed in accordance with specific standards laid down by the Congress defining the objectives of simplification, such as reducing the number of rates applicable to a given industry or schedule; reducing the spread between the highest and lowest rates applicable to the products of an industry or group of industries producing products for the same or similar purposes; and eliminating classifications which have given rise to absurdities, inconsistencies, and needless complications.
The Department of the Treasury should formulate proposals designed to simplify the problem of classifying articles not enumerated in our tariff schedules. To that end, consideration should be given to eliminating the multiple and conflicting standards which now apply in the classification of such articles, such as "similitude" and "component of chief value," and developing a single standard of classifications for the widest practicable application.
Even after customs classifications have been reviewed by the Tariff Commission, many articles of import in our highly diversified trade will not be specifically enumerated. The continuous development of new products necessarily creates new problems of classification. At present various standards are used to determine the classification of unenumerated articles which may produce conflicting results. An unenumerated article may be classified on the basis of its similarity with some other imported article, or on the basis of the component of chief value or again on the basis of chief use. This adds to the difficulties of customs procedures and is a fruitful sorce of litigation.