Mr. KEOGH. Mr. Chairman, I appreciate the opportunity of commending to the committee the next witness, Mr. Donald Dunn, who is a resident of New York City and a member of one of the outstanding and most reputable law firms in the city. I am sure that the testimony he will bring to us will be helpful in our consideration.

It is a pleasure for me to greet you, Mr. Dunn.

STATEMENT OF DONALD M. DUNN, DIRECTOR, E. LEITZ, INC., NEW YORK; ACCOMPANIED BY JAMES G SCARFF, EXECUTIVE VICE PRESIDENT, AND EMIL KELLER, VICE PRESIDENT, E. LEITZ, INC.

Mr. DUNN. Thank you, Mr. Keogh, and Mr. Chairman.

Mr. Chairman and members of the committee, my name is Donald M. Dunn. I reside in New York City and am an officer and director of, and attorney for a corporation by the name of E. Leitz, Inc., a New York corporation. E. Leitz, Inc., (hereinafter referred to as "Leitz"), is wholly owned by American citizens and has about 230 employees. The organization has been in business in this country more than 70 years.

Leitz is engaged principally in the purchase and distribution of scientific instruments (and photographic materials) manufactured in Western Germany. Most of the microscopes and other imported scientific instruments are sold to institutions established for educational or scientific purposes, including agencies of the U.S. Government.

In our relatively small field of highly specialized scientific instruments, Leitz is fairly considered to be one of the foremost suppliers of such instruments to our educational and research institutions. It is most significant that, in the face of duty rates running as high as 45 to 50 percent and resultant premium prices, it has nevertheless found a substantial market among educators and scientists who require the advantages offered by these instruments.

Leitz would welcome legislation which would truly, in the words of the Florence agreement, "promote*** the free circulation of *** scientific *** materials" and "simplify the administrative procedure governing the importation of *** scientific *** materials." H.R. 8664, and the identical bill introduced by Mr. Curtis, H.R. 15271, as applied to scientific instruments do not accomplish these purposes. On the contrary, in its present form it will impede free circulation of scientific instruments by introducing a complicated administrative procedure.

On the assumption that the Leitz instruments have a unique scientific value and are a necessity for the most effective research procedures, there should be and must be a simple and expeditious procedure for making them available to the educator and scientist. This is the purpose of the Florence agreement.

SUMMARY OF COMMENTS

Of course, we do not oppose the general purposes of the Florence agreement and the bill. We confine our specific criticism to those provisions of the bill relating to Annex D-Scientific Instruments and Apparatus.

(1) The inordinate amount of time-consuming redtape in which the tariff-free importation of scientific instruments is to be enmeshed

would necessarily entail literally months of delay under the most favorable circumstances.

(2) The requirement that orders must be placed with a "foreign supplier" would deprive the educational and research institutions of the services of an organization such as ours and would compel them to deal directly with foreign suppliers. These institutions are not equipped to deal with foreign suppliers. Such requirement would also threaten the survival of our firm and many dealers in scientific instruments.

(3) We have great respect and confidence in our Nation's educators and scientists and in the heads of the nonprofit institutions with which they are associated. We refer to our great universities and to such institutions as Sloan-Kettering Institute for Cancer Research and the Rockefeller Institute. They are best qualified to determine the scientific instruments best adapted to their requirements and also to determine whether any domestic instrument has "equivalent scientific value" for the particular application. Complete reliance can be placed in the heads of these nonprofit institutions to render objective judgment on these matters and the Government would be fully justified in relying completely upon certificates executed by the heads of these nonprofit institutions.

(4) The bill calls for a review by a Government bureau of decisions made by qualified educators and scientists. Even assuming that the Government bureau could be adequately staffed with scientists qualified to overrule our best educational and research personnel, staffing for such a function would be a terrific waste of skilled and scarce manpower.

(5) The Federal Government finances over 60 percent of research work; and Government purchases represent a very substantial portion of imported scientific instruments of types not available in this country. To the extent that the instruments are being purchased out of Government funds, the determination of the duty-free status has no meaning. What is paid by one agency is collected by another. It would be a terrific waste of manpower and money to process Government procurements through the maze of procedures and red tape called for by the bill.

SUMMARY OF RECOMMENDATIONS

The delays which will be caused by the proposed procedures for determining "equivalent scientific value" can be eliminated by the acceptance of a certificate signed by a responsible representative of the educational or research institution making the purchase.

The requirement that orders be placed "with a foreign supplier” should be eliminated. The institution should be permitted to place the purchase order either directly with the foreign supplier or through the domestic organization engaged in the importation, distribution, and servicing of such instruments.

The purchase of scientific equipment or apparatus purchased with Federal funds should be excluded from the bill.

DELAYS

H.R. 8664 would establish administrative procedures which automatically would cause substantial delays in the procurement of scien

tific instruments. These procedures would create a built-in delay of a minimum of 90 days. This does not include the time required for the preparation of the application, nor does it include the delays inherent in having the equipment shipped from abroad rather than delivered from domestically available stocks. It is conceivable that domestic manufacturers may challenge every application and it has been suggested that the decisions of the Department of Commerce should be subject to judicial review. Such delay is intolerable for a scientist working on an important research project. Such a delay would also create complications for institutions which operate on budgets or grants which have definite expiration dates as to the availability of funds. The net effect of these time consuming procedures in many instances would be the acceptance of equipment less suitable for the use for which it is required.

It is no answer that the proposed bill provides for reliance upon prior findings. The infinite variety of scientific instruments, their modifications for particular applications, and the rapid developments in the industry, would substantially prevent any use of prior findings. In fact, it would complicate matters inasmuch as it would require the research scientist not only to know what instrument is best suited for the particular application for which he uses it but also to be familiar with the details of the instrument and the particular application upon which the prior finding was based.

Instead of facilitating the flow of scientific annaratus to research institutions and scientists, the procedures provided in the present bill would seriously impede such flow and handicap the scientist in obtaining the equinment best suited for his work.

I have noted that no administration witness has told this committee what other signatory countries have done in the way of implementing legislation. We have inquired and are informed that in England, France, and Germany, simplified procedures have been established which permit the user to obtain the equipment usually in a matter of a few days. In England provision is also made for the release of the equipment pending the issuance of a duty-free direction and any duty paid is refunded upon the issuance of the direction. A substantial amount of American manufactured goods is shipped from the United States to European countries under their implementing legislation with no significant delavs and a minimum of paperwork. In Germany alone, close to $10 million of American-made scientific instruments were imported duty free last year under the provisions of the Florence Agreement. Our procedures should be reciprocal and no more restrictive than those of other signatory countries.

REQUIREMENT REPLACING OF ORDER WITH "FOREIGN SUPPLIER"

The bill provides also that after the purchase of scientific equipment is finally approved the order must be placed "with a foreign supplier" on or before the 60th day following the publication in the Federal Register of a favorable finding by the Secretary of Commerce. If the words "with a foreign supplier" are in the bill as finally enacted. a question arises as to how they will be interpreted.

If they were to be interpreted to mean the circumvention of existing distribution channels, it would be unfortunate from the point of view of the scientist and the using institution for many reasons. Representatives of organizations distributing foreign instruments are con

stantly calling the attention of the scientist to new developments which have a bearing upon the work being done by the scientist. If there is interest, the organizations demonstrate the equipment and if it is purchased set it up and see that it is properly adjusted and that the individuals using the equipment are given proper instruction. These organizations also provide for the subsequent service of the equipment. If the effect of the bill were to restrict the relationship between the scientists and the distributors of foreign scientific instruments, it would be a great disservice to the scientist doing research work.

A further reason why American institutions should not be required to deal directly with the foreign supplier is that foreign manufacturers are not equipped to deal directly with purchasers in the United States and very few, if any, institutions in the United States are equipped to handle problems involved in foreign procurements. In order to avoid delays, errors, and so forth, it is essential that orders be channeled through experienced organizations equipped to handle them.

In England, France, and Germany the importance to the user of the functions performed by the importer is fully recognized and users may deal through the regular importer rather than dealing directly with the foreign factory.

To avoid any possibility of scientific and educational institutions being deprived of the services rendered by distributors of foreign instruments, the words "with a foreign supplier"-should be deleted from the bill.

DETERMINATION OF "EQUIVALENT SCIENTIFIC VALUE"

In every agency or institution doing research work, procedures have been set up to evaluate equipment to be purchased and to make a determination of "equivalent scientific value" when foreign products are to be purchased. Such institutions are continually in contact with representatives of both domestic and foreign products and are in position to know the latest types of equipment which have been developed and which are available. Recommendations are made only after a careful examination of all available equipment both foreign and domestic. The research scientist must convince the group leader or the sponsor of the program that the equipment requested is best adapted for the particular project.. The fact that foreign-made research equipment is often more expensive than domestically-produced equipment assures careful scrutiny by the approving authorities.

It is difficult to believe that a staff could be assembled by the Department of Commerce or the Bureau of Standards qualified to overrule the determination of the research organization responsible for the work with respect to the scientific value of the instrument selected for the particular application.

The qualification of a scientific instrument for duty-free entry should be based upon a certificate signed by a responsible representative of the educational or research institution making the purchase. The certificate should describe the instrument being purchased and the use to which it will be put and should contain a statement that no domestic instrument of equivalent scientific value is available, and if considered necessary may contain a statement as to the steps taken by the institution to ascertain the availability of a suitable domestic instrument.

It is quite obvious that the scientists in research institutions such as Rockefeller Institute or the Sloan-Kettering Institute for Cancer Research, or the educators in any of the great universities, either State or private, are thoroughly competent to evaluate scientific equipment and would be completely objective in their determinations as to the relative scientific value of domestic and foreign instruments.

WASTE OF MANPOWER

There has existed for some time and presumably there will continue to exist a shortage of qualified scientists. It would be most unfortunate if a scientist working on research problems were required to devote time for the preparation of elaborate forms, to follow them through the various agencies, and possibly to appear before a representative of the Department of Commerce to justify his selection of equipment needed. Moreover, if the Department of Commerce is properly to fulfill its obligation to determine the scientific value of various instruments for special applications, it would have to build up a staff of scientists and work out a program to keep them up to date on all new developments of equipment used in all phases of research. Such scientists would not be doing constructive scientific work but merely determining whether certain instruments should be imported without the payment of duty, to the extent that the instruments are being purchased out of Government funds, the determination of the duty-free status represents merely an allocation of funds between departments.

The foregoing waste of manpower applies primarily to scientists. However, the processing of all of the paper work including the individual importations would involve substantial additional manhours.

EXCLUSION OF PURCHASES BY GOVERNMENT AGENCIES

The objections to the provisions of the bill would apply to any educational or scientific institution having a requirement for foreign-made scientific apparatus. It is believed that substantial changes in the bill will be required to protect the position of nongovernment institutions and the scientists associated with them.

However, with respect to federally financed educational or scientific procurements there is a much simpler and effective solution; namely, to provide that no application for duty-free entry be made with respect to any scientific equipment or apparatus being purchased with Federal funds.

There is ample precedent for this approach. During the period of excise taxes, Government agencies were entitled to refund of taxes paid by importers; but as a matter of policy they were never allowed to make applications for excise tax refunds on imported products. The reason is perfectly clear. The processing of the refund would involve substantial expense for the Government and when it was finished the money simply would be transferred from one Government department to another. Similar policies have been adopted with respect to tariffs. If Government agencies using scientific equipment are excluded from the provisions of the bill they will be in exactly the same position as they are today-with each department making its own determination of "equivalent scientific value" in accordance with pro