Dear Mr. Chairman:1 I agree with the majority of the United States Tariff Commission that the American bicycle industry has, within the meaning of the law, suffered serious injury or the threat of serious injury from increased imports resulting in part from tariff concessions.2
As to the remedy that should be applied, however, I differ with the majority of the Commission. The purpose of this letter is to inform you of my reasons for this difference.
In "escape clause" cases such as this, several issues of a fundamental kind are involved.3
There is the question of injury and relief to a domestic industry within the meaning of the law.
There is the question of our national security interest in the economic strength of valued allies in the free world.
There is the question of building export markets for the products of our farms, factories and mines.
There is the question of compensation under our trade agreement commitments to nations affected by the withdrawal of certain tariff concessions previously granted by us.
There is the question of protecting the American consumer against unnecessary and unjustified price increases.
The Tariff Commission has the responsibility with respect to the first of these questions: to investigate and report to the President any finding of serious injury or threat of serious injury within the meaning of the law.
The President has the responsibility of considering, not only the question of injury to a domestic industry and measures recommended for its relief, but also the other fundamental questions bearing on the security and well-being of 165,000,000 Americans. The President's final judgment in each case must represent the best composite evaluation he can make of these questions.
In analyzing this case I have considered not only the Tariff Commission's two reports, but also the opinions of interested Departments and Agencies of the Executive Branch and other relevant and available information.4 Although the facts in this case do not all point in the same direction, as is evidenced by the lack of unanimity among the Tariff Commissioners who participated, the conclusion seems to me clear that, under the law which I am charged to uphold--in this instance Section 7 of the Trade Agreements Extension Act--the conditions for relief there established have been met.
The Tariff Commission majority recommended that the minimum ad valorem duty be increased to 22 1/2% on all imported bicycles. This would mean an increase from 15% to 22 1/2% on all types except the large wheel lightweight (wheel diameter over 25 inches, net weight less than 36 pounds) where the minimum duty would triple--from the present 7 1/2% to the proposed 22 1/2% rate.
I concur with the Commission majority's recommendation of a 22 1/2% minimum rate on all types of bicycles other than the large wheel lightweights. It is my conclusion that the minimum rate for the latter category should be increased proportionately from 7 1/2% to 11 1/4%, instead of to 22 1/2%.
The recent expansion of the United States market for large wheel lightweight bicycles has resulted in the main from the efforts of foreign producers and American importers. The domestic industry manufactures almost no bicycles of this type. The American product, which has typically been of the balloon tire variety, is thus not directly competitive with the imported large wheel lightweight. In view of these circumstances, raising the minimum duty by 50% on imported large wheel lightweights from 7 1/2% to 11 1/4% recognizes in a measure the indirect competition which the American product may be experiencing from the imported large wheel lightweight. This increase will also, of course, be of tangible benefit to the producers of this country's relatively few lightweight bicycles of the large wheel variety. Moreover, this action preserves the existing relationship in tariff treatment for imported large wheel lightweights and thus recognizes that the development of the present American market for this particular bicycle is attributable almost entirely to the ingenuity and resourceful efforts of foreign producers and American importers.
As for the other varieties of imports--the balloon tire, middleweight and junior size types, for example--I have not disturbed the Tariff Commission majority's recommendation for an increase in the minimum duty to 22 1/2%. It is in these areas that the American industry has specialized and developed the market. Here the competition from imports is direct and thus most prone to cause serious injury. Recently increasing imports of these kinds of bicycles bear witness to this fact.
The American industry is showing encouraging signs of stirring to meet the challenge of competition from abroad. It is improving its technology and appeal to consumer tastes. The newly developed middleweight bicycle, now being produced in increasing quantities, is an example. In my judgment, these developments, rather than intervention by government, are the domestic industry's real hope for the future. They deepen my conviction that the action I have taken pursuant to the law will be sufficient to enable the American industry to strengthen its position, that it accords reasonable recognition to the interests of American consumers, that it assures to producers in friendly foreign lands an excellent competitive chance to share handsomely in our large and growing market for bicycles and thereby helps strengthen the economies of our allies and their ability to buy our products.
Finally, I would like to emphasize that this nation's firmly rooted policy of seeking ever expanding levels of international trade and investment is in no respect altered by this decision. I am able to take satisfaction in this regard from the realization that our progress in pursuing this objective has been considerable. I need not add that this Administration will continue to press forward earnestly and diligently in furtherance of this basic national policy. Sincerely
