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Hon. JOHN O. PASTORE,

U.S. Senator, Providence, R.I.

UNDERWEAR INSTITUTE,
New York, N.Y., November 28, 1958.

DEAR SENATOR POSTORE: This is supplemental to our previous correspondence regarding injury to the U.S. textile industry from Japanese imports.

It has come to my attention that testimony submitted to your subcommittee by the American Importers of Japanese Textiles, Inc., purports to show that certain U.S.-made garments enjoy a price advantage in the U.S. market over similar Japanese-made garments. The specific examples to which I refer are numbered 1, 4, and 5 in the testimony and are as follows:

EXAMPLE 1.-Underwear (cotton T-shirt, combed yarns, No. 40's)

As regards example 1, Japanese T-shirts as a matter of fact retail at three for $1 in this country which obviously makes their starting figure of $3.50 a dozen in Japan ridiculous, to say nothing of the subsequent figures. Furthermore, according to the BLS Wholesale Price Index, the U.S. manufacturer's price to retailers is $5.733, not the $5.50 cited. The net result of all this, of course, is to point up the fact that if the last line of the examples read "Japanese price advantage" it would be more nearly correct although possibly low. For example, rayon T-shirts were recently offered to wholesalers in New York City at $2.40 a dozen and upon inquiry we were informed by the Bureau of Customs in Washington that these particular shirts were dutiable at 45 percent ad valorem. This case is presently pending with the Federal Trade Commission since the garments were not labeled in accordance with the rayon and acetate rules and it is our feeling that this was done so that they could be brought in as cotton T-shirts at the 25-percent rate.

As regards example 2, like the president of mill No. 1 below, I never heard of a U.S. manufactured knit pajama at 99 cents. However, assuming for the sake of argument that their starting figure of $5 per dozen in Japan is correct, the duty would be $1.25 since the rate is 25 percent ad valorem. Also, since a dozen pajamas cost and weigh more than a dozen T-shirts, it is hard for me to understand how the insurance and freight can be less for pajamas. As a further indication of the ridiculous nature of the figures cited, I would like to point out that U.S.-made men's and women's knit pajamas sell at retail for about $5 to $15 each while boys' and girls' knit pajamas retail from $2.49 to $5.98 each.

While the figures cited would seem to constitute a reductio ad absurdum in themselves, I have considered this important enough not only to prepare these few comments of my own but also to obtain the reaction of five of our members. In the limited time available, it was not possible to canvass our entire membership but those whose opinions are quoted below have been in business from 30 to 60 years and are highly respected manufacturers.

Mill No. 1

"In reference to your letter of the 20th asking for comments on the figures presented by American Importers of Japanese Textiles, I cannot help but feel this is the silliest argument that can be imagined. I never heard of a pair of pajamas that retailed for $1.13 even for the smallest child and if example No. 1 refers to men's goods, I do not know where they are going to find any shirts made of 40CP that sell to the retailer for $5.50.

"But the question of price advantage would be decided by the ability of the importer to sell their product. We feel sure that the stores that buy Japanese goods would not buy them if they could buy equal quality American goods for less, which is what these importers are contending."

Mill No. 2

"We have gone over your letter of November 20, listing various comparative costs of the Japanese product with the U.S. product, and note the statement that the American Importers of Japanese Textiles, Inc., use these figures to show that U.S. products are sold cheaper than the Japanese product delivered in the United States.

"To take your example No. 1-undershirt, combed cotton T-shirts No. 40s combed yarn-we would like to see a sample of such a garment that is sold to the retailers in the United States for $5.50 per dozen. We presume, of course, that you are referring to a men's T-shirt--not a boy's T-shirt.

"Also, our experience in boys' line was brought forward very clearly in a contract that we had with General Motors that was later canceled, because they could buy a Japanese shirt cheaper. You recall, undoubtedly, the correspondence that we had regarding that transaction.

"In this particular case, the U.S. distributor sold these goods to General Motors at $3.60 a dozen. He would have to make at least 10 percent or 36 cents, bringing his cost to $3.24 per dozen. From this he would have to deduct the cost of screening on two sides of a shirt, which could not be done for less than $1, which would bring the actual cost of this shirt to $2.24 per dozen, delivered in Chicago.

"We have figured this out using approximations for the insurance, duty, etc., as we do not have identical figures, but on a basis of delivered price in Chicago of $2.24, this shirt would have to be sold for approximately $1 per dozen f.o.b. Japan.

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"Another instance, that we ran into was a large chainstore that was selling a boy's T-shirt with a cowboy motif screen printed on the front. These were sold at 29 cents each, and a concern would have to buy these at $2.62 c.i.f. New York, which, using approximate figures for insurance, freight, duty, etc., would make the price f.o.b. Japan around $1.40.

"In both of these instances, a shirt manufacturer in the United States would have to be sold for considerably more than the price quoted for these Japanese products.

"We believe that figures submitted by the American Importers of Japanese Textiles, Inc., should be very carefully checked."

Mill No. S

Recently we had one of these Japanese pairs of shorts sent in to us by one of our salesmen but unfortunately I am not able to locate this garment at this time. I remember it was around $1.50 per dozen cheaper than a similar garment that we have in our line. *** I personally don't think, Mr. McCabe, we would have any problem if we had a U.S. price advantage of $1.47 or even the 47 cents, on men's undershorts over the Japanese. We would find immediately that our business on the woven shorts had improved."

Mill No. 4

This is in response to your general letter to members dated November 20, 1958, wherein you give an extract from the testimony by the American Importers of Japanese Textiles, Inc., before the Senate subcommittee."

"I don't see that the supposed comparisons cited proved a thing. For example, they should compare 'wholesaler's price' with 'U.S. manufacturers' price' which would eliminate the favorable buildup which they are able to show by including 'wholesaler's markup' to the price of Jap goods. I believe it is a matter of common knowledge that the cheap Jap goods which are found on the retail and particularly the chainstore counters very seldom if ever go through wholesale channels but instead are marketed by the brokers of Jap imports direct to U.S. retail merchants.

"Another point that doesn't make sense to us is that a combed cotton T-shirt made from 40/1 and priced at $3.50 f.o.b. Japan carries a charge for insurance and freight of 50 cents per dozen whereas a knitted pajama from 30/1 yarn and therefore considerably heavier than the above cotton T-shirt, also priced at $5 per dozen or $1.50 higher than the T-shirt, carries a charge for insurance and freight of only 40 cents per dozen. It would seem that the insurance and freight charge on one or the other items is badly off. Further, they apparently have compared the retail selling price per unit of the Jap pajama versus the manufacturers' price of the U.S. pajama.

"In the men's undershorts, are they knitted or woven? In that example, they again attempt to take advantage of 'wholesalers' markup' on Jap goods and compare that with the U.S. manufacturers' price. Hardly comparable comparisons.

"In short, Bob, we think the testimony represented by the three comparisons is absurd and absolutely meaningless."

Mill No. 5

"I would not think that in the case of Japanese goods sold through chainstores, that the broker's commission and importer's margin, plus the wholesaler's markup would be just about completely eliminated. I would think that there would be, and are, shipments direct to large chainstores. The only costs for importing, other than duty, and the charges in the first section of the cost sheet, would be a flat fee of $75 or thereabouts for a custom's broker to clear the items through customs. This at least is my experience in importing on rare occasions here."

As regards "example 3" I believe that the duty on these shorts should be 93 cents if knit and $1.395 if woven. However, apart from the apparently minor question of accuracy the more important point here is the fact that their 62 cents duty figure indicates that these are knit shorts. According to the BLS Wholesale Price Index, the U.S. manufacturer's price is $6.242 rather than $4.25 so that once again it appears that the final line should read “Japanese price advantage."