The Invisible Tariff - International Economic Relations

When all this has been admitted, it is nevertheless true that American customs procedure is not nearly so burdensome from the point of view of importers as the corresponding procedure in many foreign countries. Nowhere is more prompt notice given than in the United States of impending changes in tariff duties or in customs regulations; nowhere are more liberal facilities afforded to importers to appeal to the courts against abuse of authority by customs officers and against misinterpretation of customs laws. Importers complain of the occasional delays of months, sometimes of years, that ensue in the final liquidation of their entries, but they freely admit that such delays are not owing to inefficiency or an obstructive attitude on the part of customs officials. On the contrary, the desire of these officials to conduct their affairs with maximum efficiency coincides with the importer's desire to get his goods through the custom house as soon as possible. The greatest cause for delay is in appraisement, in determining the value of dutiable goods. American statutory definitions of value are extraordinarily detailed and the results of appraisement are often unsatisfactory to importers. But they would probably be unanimous in preferring the American system, with all its defects, to the system of arbitrary official valuations used in certain other countries.

Defenses against Unfair Competition

Statutes and regulations designed to protect American business against unfair competition from abroad are essential components of our protective system. An important sector of our invisible tariff is made up of (1) laws requiring the identification of foreign goods by "marks of origin," (2) antidumping legislation, (3) laws applying countervailing duties to bounty-fed imports, (4) prohibitions on imports of the products of convict labor and forced labor, ( 5 ) laws penalizing imports from countries that discriminate against American commerce, and (6) prohibitions and penalties on unfair competition in general. In this formidable array of weapons of commercial warfare, all were designed for purposes of defense only. They were intended, not to introduce new obstacles to "legitimate" importing, but to prevent or to neutralize unfair tactics on the part of foreign producers and exporters, or unfair advantages accruing to them through subsidies or bounties. . . . the history of the use of these weapons shows that, except for marks of origin, they have been applied infrequently. Some have proved too clumsy for effective use, and all are doubleedged, dangerous to the defender as well as the offender. Nevertheless, the presence of these laws on our statute books and their occasional use act as deterrents to the acts and policies against which they are aimed. Also, they furnish a further opportunity for domestic interests to harass importers.

Hundreds of complaints are lodged in Washington alleging dumping, infringement of patents, payment of bounties, and other types of unfair competition. Upon investigation, the bulk of the charges prove unfounded. But meanwhile the rumors that action has been initiated and the chance that penalties may be applied add to the hazards of the importing business.

The requirement that imported goods should bear marks indicating the country of origin aims to safeguard domestic producers against the danger that foreign goods may be palmed off as domestic. Just now, the label "Made in England" or "Made in France" may help to sell imported goods, while "Made in Germany" or "Made in Japan" has quite the opposite effect. In general, marks-of-origin laws, even when not designed for the purpose, usually act as a handicap to imports. Marking adds a bit to costs. Our laws, which are unusually detailed, may not be understood abroad; hence, our importers find their goods held up on what appear absurd technicalities. By the 1938 revision of customs law, some objectionable features of American marking provisions were eliminated. Also, the discretionary powers of the Secretary of the Treasury have been enlarged. Whether the new powers will be used to facilitate or to handicap importing will depend upon the attitude of this administration and of succeeding administrations and upon the interpretation given to the statute by the courts.

The Defense of Patents and Copyrights

American protectionism is not restricted to helping domestic industrialists and farmers in their competition with foreigners; it extends its aid, in varying degree, to inventors, designers, authors, playwrights, scenario writers, musicians and artists of all kinds, and to the printers and publishers of their works. In other words, the invisible tariff applies to intangible property rights as well as to material wealth.

A general prohibition against unfair competition in import trade has, on several occasions, been invoked to exclude foreign articles that infringe American patents. American law, however, is unusually liberal in the facilities it accords to owners of foreign patents. They are subjected to no especial taxes and are not required to "work their patents" in order to sustain their validity. Furthermore, foreign manufacturers licensed to use American patents may export the patented articles to the United States. In some respects, it seems that American inventors, and the firms manufacturing their products, are afforded less protection against unfair foreign competition than against competition at home. Recent court decisions seem to imply that the American owner of a process patent has no adequate remedies against its unlicensed use abroad, nor even against the importation into the United States of goods produced by his process.