domestic shipments of refined lead by such producers during those same three months, the quarterly quotas established under provisions of this section shall be terminated, effective on the date of such determination by the Secretary of the Interior: Provided, however, That, in making a determination of the relationship of primary producers' metal stocks to domestic shipments, the Secretary of the Interior shall consider the effects of any temporary and significant loss of lead production. SEC. 201. As used in this title TITLE II-ZINC (a) the term "zinc" means zinc metal, as defined in subsection (b), plus zinc ore, as defined in subsection (c). (b) The term "zinc metal" means the dutiable zinc content of all unwrought zinc (except alloys of zinc and zine dust) and zinc waste and scrap which, if imported into the United States, are subject to duty under part 2H of schedule 6, Tariff Schedules of the United States. (c) The term "zinc ore" means the dutiable zinc content of all zinc-bearing ores and other materials which, if imported into the United States, are subject to duty, under part 1 of schedule 6, Tariff Schedules of the United States. (d) The term "imported into the United States" means entered, or withdrawn from warehouse, for consumption within the meaning of the Tariff Classification Act of 1962, as amended. (e) The term "Tariff Schedules of the United States" means the Tariff Schedules of the United States established pursuant to section 201, Tariff Classification Act of 1962. (f) The term "ton" means two thousand pounds. (g) The term "quarter" means a calendar quarter, (h) The term "quarterly quota for zinc" means 80 per centum of the quarterly average of the total general imports are reported by the Bureau of the Census of zinc imported as zinc metal and zinc ore during a quota base period consisting of the ten consecutive quarters prior to the quarter preceding the effective date of such quota as provided in section 203. SEC. 202. No zinc shall be imported into the United States in any quarter after the amount of zinc imported into the United States during such quarter equals the import quota for zinc for such quarter established under section 203. SEC. 203. For purposes of section 202 (a) If, for any period of three consecutive calendar months, the stocks of slab zinc owned by the United States primary producers, at their own plants and elsewhere, at the close of each month exceed 175 per centum of the average monthly domestic shipments of slab zinc by such producers during the same three-month period, a quarterly quota for zinc metal and zinc are shall be applied, effective the first day of the quarter following this determination, as provided in section 201 (h). (b) The import quota for zinc shall in no event be less than one hundred and thirty thousand tons. (c) Eighty per centum of the total quarterly zinc import quota established under the provisions of this section shall be allocated to zinc ore. (d) The quarterly quotas for zinc ore and for zinc metal established under the provisions of this section shall be allocated by the Secretary of the Interior to principal supplying countries in proportion to imports from such countries during the quota base period described in section 201 (h). Specific quotas shall be established for zinc ore or zinc metal, as the case may be, for each country supplying more than 10 per centum of the total such zinc ore or zinc metal imported during such period and the unallocated balance of the zinc ore quota and the zinc metal quota shall be assigned to all other countries. (e) If while the import quota established under section 203 (a) is in effect, stocks of slab zinc owned by the United States primary producers, at their own plants and elsewhere, at the close of any three consecutive months are less than 75 per centum of average monthly domestic shipments of slab zinc by such producers during those same three months, the quarterly quotas established under the provisions of this section shall be terminated, effective on the date of such determination by the Secretary of the Interior: Provided, however, That, in making a determination of the relationship of primary producers slab zinc stocks to domestic shipments, the Secretary of the Interior shall consider the effects of any temporary and significant loss of zinc production. TITLE III-MANUFACTURED LEAD AND MANUFACTURED ZINC SEC. 301. (a) The Secretary of the Interior shall establish quarterly import quotas for any "manufactured lead article" or "manufactured zinc article" not to exceed 100 per centum of average imports for such articles during the quota base period as provided in sections 101 and 201, where (1) more than 50 per centum of the gross weight of the article is attributable to its lead or zinc content, respectively, and (2) the manufactured lead article or manufactured zinc article is imported in any calendar quarter subsequent to the date that a lead or zinc quota, respectively, becomes effective under provisions of section 103 or 203, in quantities equal to 100 per centum or more of the average quarterly imports during the quota base period as provided in section 101 or 201. (b) No manufactured lead article or manufactured zinc article shall be imported into the United States in any quarter after the amount of such manufactured lead article or manufactured zinc article imported into the United States during such quarter equals the quarterly import quotas established under this section. (c) Import quotas for a manufactured lead article or manufactured zinc article established under provisions of this section shall terminate effective the date of termination of quotas for lead metal and lead ore or zinc metal and zinc ore as provided in section 103 (e), 203 (e), or 405 of this Act. (d) Any quota established in accordance with this section shall become effective the first day of the quarter following the quarter in which the Secretary determines that the conditions set forth in this section are met. TITLE IV-GENERAL PROVISIONS SEC. 401. The import quotas provided for in titles I, II, and III of this Act shall be determined and published by the Secretary of the Interior. The determination of quarterly import quotas provided for in sections 103 and 203 of this Act shall be made as promptly as possible after the close of the period of three consecutive months as provided in sections 103 (a) and 203(a) that precede the quarter for which such quotas are determined. SEC. 402. Whenever merchandise containing lead or zinc is exported and duties are refunded as drawback with respect to such lead and zinc under the provisions of section 1313 of title 19, United States Code, the exporter of the merchandise containing the material on which duty had been paid shall be permitted to enter or withdraw from warehouse for consumption within a period of one year from the date of such exportation, a quantity of lead or zinc equivalent to the quantity as to which duties are refunded and such quantity shall not be subject to the quotas established under titles I and II of this Act. SEC. 403. The quotas provided in this Act, as determined by the Secretary of the Interior, shall be administered by the Secretary of the Treasury. SEC. 404. The Secretary of the Interior and the Secretary of the Treasury are authorized to make such rules and regulations as may be necessary to carry out the provisions of this Act. SEC. 405. Quotas for lead metal and lead ore, or zinc metal and zinc ore, that may be established as provided by the provisions of sections 103 and 203 of this Act shall be in effect for a term of three years unless sooner terminated by the provisions of sections 193 (e) and 203 (e). Such quotas can only be established during the five-year period which begins on the date of enactment of this Act. Hon. HENRY M. JACKSON, EXECUTIVE OFFICE OF THE PRESIDENT, BUREAU OF THE BUDGET, Washington, D.C., April 3, 1967. Chairman, Committee on Interior and Insular Affairs, DEAR MR. CHAIRMAN: This is in reply to your letters of February 17 and March 6, 1967, inviting the Bureau of the Budget to comment on S. 289, a bill "To protect the domestic economy, to promote the general welfare, and to assist in the national defense by providing for an adequate supply of lead and zinc for consumption in the United States from domestic and foreign sources, and for other purposes." Contingent on the relationship between stocks owned by primary producers and domestic shipments, S. 289 provides for the imposition and termination of import quotas on lead and zinc for a limited period of time. Other provisions of the bill relate to the level of the import quotas, the allocation of the import quotas between ores and metal, and the distribution of the import quotas among supplying countries. In addition, imports of manufactures of lead and zinc would be subject to quotas. The Departments of the Interior, Commerce, State, and Treasury in separate reports to your Committee, set forth their reasons for opposing the enactment of S. 289. The Bureau of the Budget concurs with these agencies and recommends against enactment of S. 289. Sincerely yours, WILFRED H. ROMMEL, Assistant Director for Legislative Reference. U.S. DEPARTMENT OF THE INTERIOR, OFFICE OF THE SECRETARY, Washington, D.C., April 3, 1967. Hon. HENRY M. JACKSON, Chairman, Committee on Interior and Insular Affairs, DEAR SENATOR JACKSON: Your Committee has requested a report on S. 289, a bill "To protect the domestic economy, to promote the general welfare, and to assist in the national defense by providing for an adequate supply of lead and zinc for consumption in the United States from domestic and foreign sources, and for other purposes." We recommend against enactment of the bill. S. 289 proposes a system for the import control of lead and zinc ore and metal based on the relationship between primary producers stocks and shipments of refined metal. The bill further restricts the importation of manufactured lead and manufactured zinc when import quotas on metal and ore are applicable. Pursuant to an escape-clause action under the Trade Agreements Extension Act of 1951, import quotas on unmanufactured lead and zinc were imposed effective October 1, 1958. These quotas restricted imports of lead and zinc ores and metal to 80 percent of the average commercial imports during 1953-57. They were terminated by Presidential Proclamation of October 22, 1965, upon advice by the Tariff Commission that such termination would not likely have a detrimental effect on domestic producers unless world demand for these metals should subside substantially in relation to world supplies. In its advice to the President, the Tariff Commission noted that conditions of trade in lead and zinc had materially changed since import quotas were imposed. The excess of production over consumption that was characteristic of the early quota years was reversed in 1964, and prices increased sharply. Demand for both metals had drawn down stocks to minimum working levels by the end of the first quarter of 1964, and in July of that year the Congress authorized releases from the national stockpile. Demand for lead and zinc has remained strong, although there was a decline in zinc shipments in December, January, and February which resulted in a build-up of producers stocks of slab zinc. At the same time there is now taking place a very substantial growth in productive capacity, both of mines and of smelters, in the United States and abroad. As these new mines and smelters come into production free world supplies threaten again to exceed demand. The bill would anticipate this excess and establish controls on a standby basis to be promptly applied when producers stocks build up to a given point in relation to shipments. The Trade Expansion Act of 1962 provides that upon the request of the President, upon resolution of either the Committee on Finance of the Senate or the Committee on Ways and Means of the House of Representatives, upon its own motion or upon the filing of a petition by a representative of the industry, the Tariff Commission shall promptly make an investigation to determine whether, as a result in major part of concessions granted under trade agreements, an article is being imported in the United States in such increased quantities as to cause or threaten to cause serious injury to the domestic industry. In the past, representatives of the domestic lead and zinc producing industries have complained that the time required for the Commission to investigate and advise the President permits injury from increased imports to widen and deepen. Recognizing the need for prompt action the President, in ending the previous quotas, urged the members of the Tariff Commission to streamline procedures and to redouble efforts to expedite proceedings in any case where it is indicated that delay might bar effective action. S. 289 would ignore the existing procedure, would depart from the principle of a finding of injury or threat of injury, and would impose restrictions whenever producers' metal stocks reach a given level. There need be no determination that such inventory build-up is attributable to increased imports. There need be no determination that any segment of the industry is experiencing injury or threat of injury. Rising stocks do not necessarily reflect increases in imports. Increased productive capacity in the United States could lead to excess supplies without any increase in imports. In such circumstances imports become a residual supply and the minimum quotas tend to become the maximum. Thus, the control of imports would be determined by the industry rather than by market conditions. This Department fully understands the desire of domestic lead and zinc producers to have some assurance that uncontrolled imports will not again threaten serious injury to domestic mines and smelters as has happened in the past. We believe, however, that existing administrative remedies are adequate and that special legislation is not called for. The Bureau of the Budget has advised that there is no objection to the presentation of this report from the standpoint of the Administration's program. Sincerely yours, Hon. HENRY M. JACKSON, J. CORDELL MOORE, Assistant Secretary of the Interior. DEPARTMENT OF STATE, Chairman, Committee on Interior and Insular Affairs, DEAR MR. CHAIRMAN: Your letter of February 17, 1967, requested the Department's views on S. 289, a bill "to protect the domestic economy, to promote the general welfare, and to assist in the national defense by providing for an ade quate supply of lead and zinc for consumption in the United States from domestic and foreign sources, and for other purposes." This bill is an amended and simplified version of similar bills introduced in the 89th Congress. As background to S. 289, it may be recalled that in 1958, after an investigation by the Tariff Commission and report to the President under Section 7 of the Trade Agreements Extension Act of 1951, a Presidential Proclamation modified the concessions on lead and zinc which had been granted under the General Agreement on Tariffs and Trade. Under the terms of the Proclamation dated September 22, 1958, the quantity of imports was limited to 80% of the average annual imports during the five-year period 1953-1957. These import quotas were continuously operative until October 22, 1965. During the intervening period, there was a marked improvement in the condition of the lead and zinc industry. The years 1963, 1964, and 1965 were years of substantial recovery, and prices rose by approximately 65% in the case of lead and nearly 30% in the case of zinc. The higher prices stimulated production which in the United States regained the levels of the early 1950's. Significantly, we understand a large proportion of the new mine capacity initiated in the United States recently is low-cost production capable of profitably competing with imported lead and zinc. In the light of the new situation, the Tariff Commission, upon the request of the President on March 1, 1964, instituted an investigation pursuant to Section 351(d)(2) of the Trade Expansion Act of 1962 with a view to advising the President of its judgment as to the probable economic effect on the domestic industry of the reduction or termination of the increased import restrictions which had been imposed under the Escape Clause procedure. In its report dated June 8, 1965, the Tariff Commission concluded that the termination of the import quotas would not be likely to have a detrimental effect on domestic lead and zinc producers unless the world demand for these metals should subside substantially in relation to world supply. Subsequently, on the basis of the Tariff Commission's report, the President proclaimed the termination of the import quotas on lead and zinc on October 22, 1965. In response to expressed concern over the impact on the domestic industry of future imports, the President recognized the need for a strong and vigorous domestic lead and zinc mining industry and the possibility of future difficulties. Accordingly, he urged the Tariff Commission to strengthen its procedures and to redouble its efforts to expedite proceedings in any case where it is indicated that delay might bar future relief. During the approximately fifteen months since the termination of import quotas, there have been continuing shortages of lead and zinc, and commercial supplies have been supplemented by sales from government stocks. Prices have been firm. Only recently have supplies and demand been in approximate balance. Under these circumstances, there is obviously no need for import quotas at this time. The proposed legislation recognizes this fact but seeks to establish a quota plan which would only become effective when producers' stocks in the United States exceeded certain levels. However, we have discerned no relationship between stock levels and domestic shipments, on one hand, and imports on the other. Stock levels change for many reasons unrelated to imports. Moreover, we believe it is undesirable to commit ourselves to a specific course of action with respect to lead and zinc at this time. Despite the fact that import quotas might not be established immediately under the provisions of this bill, the enactment of this particular legislation would have far-reaching and severe repercussions on our relations with the lead and zinc exporting countries. It would be inconsistent with the objectives of the Trade Expansion Act and with our announced intention to impose only temporary import quotas when necessary to deal with proven hardship situations. Our efforts to seek broad reductions in trade barriers in an effort to stimulate world trade would also be cast in doubt. The General Agreement on Tariffs and Trade (GATT) provides that the parties thereto shall not impose quantitative restrictions, such as quotas, on the imports of products of other contracting parties, except under specified circumstances which do not appear to exist with respect to lead and zinc. Consequently, the imposition of quotas under the bill could result in a finding that our action was unjustified under the GATT and an authorization for the injured contracting parties to take retaliatory action against United States exports. In addition to these objections to the proposed legislation, we note that some of its specific provisions do not seem consistent with its stated purposes-for example: a. Individual country quotas are based on the record of imports from individual countries over the past ten consecutive quarters. This represents a period of 21⁄2 years, and in the event quotas became effective during this period, they would in part be based on the time when lead and zinc imports were subject to the previous Escape Clause action. Therefore, if enacted, the proposed legislation could impose a continuing hardship on a number of countries with unrealistic low quotas and for others changes in the pattern of distribution, which have occurred since the termination of quotas in 1965, would not be taken into account fully. b. In the case of lead, 50% of the quotas established under the proposed legislation would be allocated to ore and in the case of zinc, 80%. Such a mandatory distribution would, in our opinion, prove unworkable and contrary to United States supply interests, apart from its obvious impact on a number of countries who have established new smelting capacity. In addition, the mandatory distribution is probably inconsistent with the determination of quotas as provided for in Section 101h and 103d for lead and in Section 201h and 203d for zinc, since under these provisions individual quotas are based on the quarterly average of general imports of combined ore and metal. c. The quotas regulating imports became effective when stocks of primary procedures reach levels considered excessive relative to smelter shipments, and the quotas are cancelled when shortages occur as determined by the relative level of producers' stocks. Only four firms control all the primary lead smelting and refining facilities in the United States, and nine firms control all the primary zinc smelting facilities. The policies of these companies with respect to their inventory holdings can, therefore, under this legislation, effectively determine the timing as to when quotas become effective and when they are terminated. Thus, vital decisions affecting supplies, prices, and the consumption of these metals would be effectively placed in the hands of a relatively few companies. d. Extending the quotas to manufactured lead and zinc is probably unnecessary and is unduly restrictive. Since 1958, the only marked increase in the import of manufactured lead and zinc occurred in the case of litharge imports from Mexico. In 1963, Mexico placed litharge under export license and has volutarily restricted its exports to the United States. To subject a very large number of manufactured |