June13, 1978
Page 17472
SENATE RESOLUTION 483 — A RESOLUTION TO DISAPPROVE WAIVER OF THE COUNTERVAILING DUTY ON CERTAIN ITEMS OF GOVERNMENT SUBSIDIZED FISH IMPORTED FROM CANADA
Mr. HATHAWAY (for himself, Mr. MUSKIE, Mr. MCINTYRE, Mr. BROOKE, Mr. DURKIN, Mr. KENNEDY, and Mr. PELL) submitted the following resolution, which was referred to the Committee on Finance:
S. RES. 483
Resolved, that the Senate does not approve the determination of the Secretary the Treasury under Section 303(d) of the Tariff Act of 1930, transmitted to the Congress on June 13, 1978.
Mr. HATHAWAY. Mr. President, I am submitting a resolution to disapprove the decision to waive the imposition of countervailing duties on Canadian fish. A petition for such duties was filed last year by the National Federation of fishermen and the Point Judith, R.I., Fishermen's Cooperative.
I am offering this resolution in part to raise the issue with my colleagues of the need for close scrutiny of our national policies in regard to fisheries. The Canadians have agreed to phase out their direct. landing subsidies and processing subsidies to the ground fishery. Much of this subsidy will be wiped out retroactively, with the remainder due to end October 1. This, according to Treasury, will leave only a small subsidy which will. become countervailable in January unless Canada ends that as well.
I am glad that Canada has agreed to this step. I would hope that this cooperative attitude might also prevail in ongoing United States/Canada boundary negotiations, and in a resolution of the recent fisheries jurisdictional conflict.
Despite these considerations, I cannot simply acquiesce to the Treasury ,Department's grant of this waiver. This situation points up the conflicting national policies which we are now pursuing which threaten the economic death of the New England fishing industry.
First, while Canada is phasing out these more blatant subsidies to its fishermen, there is no doubt that indirect Canadian subsidies will continue, from insurance programs to possible price supports. Canada, in short, has been far better to its fishing industry than the United States has to its own. As a result, we had a $2.1 billion trade deficit in fisheries in 1977. And all indications are that deficit may well grow, rather than diminish.
In terms of subsidizing its industry, there is little doubt that the past years of assistance which Canada has given its fisheries will be felt for years to come. The assistance given the industry in the past decade, both directly and indirectly, has the overall effect of lowering the operating costs of the fishermen, and of enabling them to capture U.S. markets
At present between 80 and 90 percent of the Canadian catch is exported and the Canadian Groundfish exports alone are worth $200 million annually. These fish come into our New England markets at times when our own fishermen may be tied up at port, unable to fish at all as a result of our national policy of "conservation" of the fisheries. In the past Maine fishermen have even been placed in the absurd position of throwing dead cod and haddock overboard because they could not land them, yet they could not prevent them from coming up in their nets. The choice presented was to return to shore and find another way to make a living for 2 weeks or a month, or throw the dead fish back, all in the name of fisheries conservation.
As a result of situations such as this, the Department of Commerce has at last begun to take into account the growing complaints of Maine and New England fishermen. For the record, I would note that they were against the granting of this waiver.
While the direct economic impact of this waiver may not be great, its symbolic impact for our domestic fishermen is, I think, of great importance. We tell our fishermen they cannot fish because we need to conserve the species; we then tell them we will not impose a duty on the Canadian fish which come into our country even though that industry has been Government subsidized for many years. Then we tell them as a matter of trade policy we would prefer not to grant subsidies to our own domestic fishing industry. This is the underlying irony of the situation.
As a matter of policy we stand for free trade, for an end to foreign and domestic governmental subsidies to industry. In the long run, I would agree that this is the ideal. But in the short run we have an industry in this country running up against a conflicting national policy — to "conserve" and manage the resource from which that industry obtains its lifeblood.
We must rationalize these policies. It isthe fishermen who are the victims of this conflict in national policies. I hope that we can open a dialog on how to conserve, not only our natural fishery resource, but also our fishermen. As Chairman of the United States-Canada Interparliamentary Conference, I intend to put fisheries at the top of the agenda for next year's conference.
At this time, I ask unanimous consent that correspondence from the Department of Commerce and to the Treasury Department be printed in the RECORD.
There being no objection, the letters were ordered to be printed in the RECORD, as follows:
U.S. SENATE,
Washington, D.C.,
June 1, 1978.
Hon. MICHAEL BLUMENTHAL,
Secretary of the Treasury,
Washington, D.C.
DEAR MR. SECRETARY: It is our understanding that the Treasury Department is scheduled to make a final determination regarding Canadian subsidies on fish products by June 10, 1978. An affirmative preliminary determination was made last January, and we believe the facts warrant a similar final decision. Your Department must then decide whether or not to grant a waiver of the countervailing duty on. fish imports from Canada.
As you may know, the Canadian government has made substantial direct payments to both fishermen and processors on fish exported to the United States. In April, 1977, your Department determined that these payments were bounties or grants (TD 77-107). This decision, however, was limited to only a few of the tariff items covered by the Canadian assistance program.
Therefore, a new countervailing duty petition covering a number of other tariff items was filed shortly after the Department's 1977 determination. Your Department has taken the full year permitted by statute to make a determination on the additional tariff items covered by this new petition.
Since April of last year, the Canadian government has been well aware that its Groundfish Temporary Assistance Program and vessel construction assistance programs subjected Canadian fish exports to the United States to countervailing duties. No attempt, however, was made to repeal these subsidy programs. In the interim, we have permitted heavily-subsidized Canadian fish to be sold in U.S. markets.
This situation has created severe economic hardship for New England fishermen. The Department of Labor recently documented the impact of these subsidized imports when it certified employees of several U.S. vessels for Trade Adjustment Assistance.
We recognize that the Multilateral Trade Negotiations (MTN) have entered a sensitive stage in Geneva, and understand that the progress of these discussions will be taken into consideration by your Department when making a final determination on countervailing duties. It is our firm belief, however, that the immediate economic pressures on U.S. fishermen must be given priority consideration. We therefore strongly oppose any waiver of countervailing duties on Canadian fish.
Sincerely,
EDMUND S. MUSKIE, EDWARD M. KENNEDY, WILLIAM D. HATHAWAY, EDWARD W. BROOKE, CLAIBORNE PELL, JOHN H. CHAFEE, THOMAS J. MCINTYRE, and JOHN A. DURKIN.
U.S. DEPARTMENT OF COMMERCE,
Rockville, Md.,
June 5, 1978.
Mr. RICHARD SELF,
Director, Office of Tariff Affairs,
Office of the Secretary,
U.S. Treasury Department,
Washington, D.C.
DEAR MR. SELF: The Treasury Department is currently studying the advisability of imposing countervailing duties on imports of certain fish products from Canada pursuant to the petitions of the Point Judith Fisheries Cooperative and the Fisheries Marketing Association of Seattle, Washington. The purpose of this letter is to indicate the Department of Commerce's strong support for the imposition of countervailing duties on such products.
U.S. trade law clearly requires the imposition of countervailing duties on imported. fishery products when the evidence indicates that artificially low prices for imports are made possible by foreign government subsidies. The evidence is overwhelming that the Canadian fish imports in question are so subsidized. The Canadian government has instituted an extensive network of programs that assist the Canadian fishing industry in catching, processing, and freezing fish, and in transporting it to theUnited States, at prices that are more than low enough to compete effectively in the U.S. market.
Under special circumstances, these countervailing duties may be waived. However, we believe strongly that a waiver cannot be justified for these fishery products, for the following reasons:.
(1) Canada has not indicated that it will terminate all of its subsidy programs for the fishery products in question.
(2) Canada has apparently indicated a willingness to terminate some of its subsidies. Our experience in connection with Canadian commitments to reduce subsidies in 1977 casts significant doubt on Canada's willingness or ability to comply with such commitments. This suggests that a far better course of action would be to delay any waivers until commitments made by the Canadian government for the removal of subsidies have in fact been carried out.
(3) The adverse impacts of allowing subsidized products to be imported into US. markets will persist long after the subsidies are terminated. Subsidized vessels constructed prior to termination of subsidies will continue to compete with non-subsidized U.S. vessels long after such termination. Markets such as the mid-western market captured by Canadian industry through anticompetitive subsidies cannot easily be recaptured by U.S. industry at a later date.
(4) The purposes of the Fishery Conservation and Management Act of 1976 are significantly undermined by such subsidies. The Act was aimed at both conserving U.S. fishery resources and developing a strong U.S. fishing fleet. In order to protect fishery resources, the U.S. fleet is required to adhere to rigorous quotas to restrict the amount of fish that can be caught. Without heavy competing supplies of low-priced Canadian imports, the price for fish harvested by the U.S.fishing industry would tend to rise during the period that U.S. fishermen are forced to restrict their catches. Such a price rise would assist the harvesting sector of the U.S. groundfish industry to survive the period of quotas needed to restore our groundfish stocks. And because the price of raw material is only a part of the price of fish products, the impact of countervailing duties on U.S. consumers will be minimal.
The question of whether special circumstances exist that justify a countervailing duties waiver must be considered in light ofthe significant United States balance of trade problem. The United States balance of trade deficit in fishery products was 82.1 billion in 1977. The waiver of duties on these Canadian imports will further exacerbate this problem.
Even when and if Canada meets the requirements for a waiver of these duties, we believe that a waiver should be withdrawn should it become evident that a subsidy code cannot be achieved in the Multilateral Trade Negotiations.
We would be pleased to provide you with any additional information you may need in connection with this matter.
Sincerely yours,
RICHARD A. FRANK.
Mr. MUSKIE. Mr. President, I join my colleague Senator HATHAWAY in offering a resolution to disapprove the Treasury Secretary's decision to waive countervailing duties on imports of fish from Canada.
Mr. Blumenthal's decision was disappointing to our fishermen and has no sound basis in fact.
The countervailing duty system was designed to guarantee the right of Americans to compete on an equal basis with other nations in the American marketplace. The Canadians provide subsidies to their fishermen. As a result, Canadians can catch fish in American waters, and undersell our own fishermen in our own markets. The countervailing duty system was put in place to stop these kinds of practices.
The harm to our fishermen has been documented. The Canadian Government has been on notice for more than a year that action might be taken to protect our own industry.
Yet at the 11th hour, the Canadian Government petitioned for relief from countervailing duties in America. Apparently the importance of Canadian support for other American trade interests prompted the Treasury Secretary to grant their request.
And the interests of our domestic industry were once again brushed aside.
American fishermen are faced not only with financial hardship as a result of competition from Canada. In many cases they are denied markets outright; in other cases they are prevented from developing market strategies to avoid the boom-bust cycle of fish prices; in still other cases unfair Canadian competition blocks Americans from developing onshore processing facilities to take advantage of available markets.
The Trade Act was designed to correct just such problems. And the Trade Act was designed to allow Congress to be the final arbiter in extreme cases through resolutions like the one we introduced today. The case of Canadian fish imports is just such an extreme and obvious case of unfairness. I urge the Congress to act quickly to impose countervailing duties and give the beleaguered American industry the support it merits.