February 11, Heidelberg is strongly opposed to the enactment of this legislation, for the following reasons:

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1 February 11, 1987 STATEMENT OF HEIDELBERG EASTERN, INC. IN OPPOSITION TO THE ENACTMENT OF HR 34 My name is Leonard Lehman. I.am a partner in the firm of Barnes, Richardson & Colburn, 1819 H Street, N.W., Washington, D.C. I am submitting this material on behalf of Heidelberg Eastern,^Inc. ("Heidelberg"), a United States importer of graphic arts equipment, including offset printing presses weighing more than 3500 pounds, into the United States. Heidelberg's principal place of business is located in Glendale, New York. We wish to state our opposition to the enactment of HR 34, a bill to lower for a 2-year period the Column 2 duty rate on offset printing presses of sheet-fed type weighing 3500 pounds or more, provided for in Item of the Tariff Schedules of the United States. Under present law, the foregoing presses imported from so-called "Column 2" countries, which are not entitled to Most Favored Nation tariff treatment, are subject to a 25 percent ad valorem rate of duty. HR 34 would lower the Column 2 rate to 10 percent, during its period of effectiveness. Heidelberg is strongly opposed to the enactment of this legislation, for the following reasons: (a) Heidelberg and other companies presently import offset printing presses classified under Item of the Tariff Schedules from Most Favored Nation countries which are our major trading partners. Despite the favorable tariff rate available to Heidelberg and similar importers,

2 Page 2 offset printing presses of the same kind, even after payment of duty, enjoy a competitive price advantage when they are imported from Column 2 non-market economy countries. In these circumstances, the proposed reduction in the Column 2 rate of duty would result either in further competitive disadvantages to domestic importers who deal with our Most Favored Nation trading partners, or simply increased profits in the pocket of importers from Communist countries. Furthermore, such potential price advantages must necessarily serve as an inducement to importers to switch their sources of supply to Communist nations from our traditional trading partners. (b) Historically, we have established very strict rules with which Communist bloc countries must comply, before they are offered the economic benefits that we make available under our Most Favored Nation arrangements. Although HR 34 would not reduce the tariff rate on these printing presses completely to the Column 1 rate, the substantial reduction proposed in this bill is being offered without any strings attached or requirements for other changes by any Communist bloc countries that may supply such machines to the United States. Such a proposal would appear to be inconsistent with national policy. (c) In the 99th Congress, at the time that a predecessor identical bill (HR 3797) was being considered, a statement was made by the president of Royal Zenith, an importer and the only company that would benefit from its enactment, that "there are no U.S. companies manufacturing offset printing presses of the sheet-fed type weighing 3500 pounds or more." Written Comments

3 Page 3 on Certain Tariff and Trade Bills, Volume II, 99th Congress, Second Session, at page 424 (May 1, 1986). In that statement, the author later observes that there.is one company claiming to be a domestic producer but he states that "it is our understanding that this company actually imports the product from West Germany to be partially assembled in the United States." We have been informed by Mr. Kent Martin, president o*ifr<v<jrr of the Miller Print ing <49BSESBH9r Company in Pittsburgh, Pennsylvania, the company to which the foregoing statement refers, that in point of fact the component parts of these large presses that it imports from West Germany are subjected to substantial machining, as well as component assembly, at the Company's plant, and that the Company employs approximately 180 factory workers, as well as 75 support employees, at its plant in connection with this domestic business activity. The proposed tariff reduction for Column 2 importations that compete directly with Miller's business constitutes a direct threat to an ongoing and viable domestic enterprise and its ability to employ U.S. workers in its activities in the United States. We understand that at least 2 other producers in the United States of like products that would be classified under Item , if imported, are known to the International Trade Commission. (d) Although Heidelberg may not be engaged in similar processing of its importations, it is nonetheless an employer of U.S. workers as part of its importing business. There is no reason that justifies the shift of U.S. employment from Heidelberg and others who import from our major trading partners to one importer from Communist bloc countries, which compete with our trading

4 Page 4 partners while flouting the standards for human rights behavior and other conditions that we have made a prerequisite to their qualification for preferential tariff rates. (e) Attached Table I sets forth the quantities of offset printing presses classifiable under Item during the nine months ended September 30, 1986 from source countries. It should be noted that of the total of 1489 importations from all countries in the first nine months of 1986, only nine such machines were identified as having their country of origin in East Germany ("German DC"). Similarly, as shown in Table II, for the full year 1985, only ten of a total of 2409 such machines were identified at the time of importation as originating in East Germany, the only Column 2 country that is a source of such machinery. It is clear that HR 34, as proposed, would merely induce a shift of source of supply for such machinery from other Column 1 countries, primarily West Germany, to the non-market economy of East Germany, which already is in a position to fix its prices without regard to actual costs and would benefit substantially from reduced duty rates. Indeed, in view of the very small number of machines that apparently now originate in East Germany, according to U.S. Customs documents, it is difficult to see how the proposed legislation can be construed as anything but an inducement to subsidize the development of East German production, without a-negotiated quid pro quo, «^ and at the expense of our West German allies. The result will be not "greater competition among foreign suppliers",

5 Page 5 because the alleged competitors are not similarly motivated by profit motives; rather, the result will be a gratuitous preference for East German machines at the expense of the West German market and U.S. employees. In summary, we urge that this extremely controversial proposal as set forth in HR 34 be rejected as being adverse to actual domestic employment in the United States; as increasing an unfairly competitive advantage that already exists for the few machines that admit at the present to have East Germany as their country of origin; and as conferring a detriment upon our traditional trading partners in favor of a Column 2 country without any of the kinds of quid pro quo that we have traditionally negotiated with Communist nations as a condition to beneficial tariff treatment. Respectfully submitted, LL/ajd Leonard Lehman