from Arthur B. Sinkler

Transcription

1 from Arthr B. Sinkler This special "Tari:ff Edition" has be Prepared to answer qestions on this isse Which is Vital to Hamilton and the jeweled American watch indstry, I commd it to Yor atttion.

2 timely TOPICS April-May 1964 in this isse. Letter from the Presidt 3 Is Made In U.S.A. Here To Stay? Who's Who in the Swiss Watch Cartel... 6 Glossary of Terms Watches, Tariffs and the Law Honor Roll Anniversaries Cover: Magnified 30 times, "Hamilton-U.S.A.'' is easy to read on the poplar grade 761 ladies 22- jewel movemt. Will the "U.S.A.'' remain on the bridge of Hamilton watches? The cover article beginning page 4 offers some facts on the qestion. Editor...._... Richard F. Charles Photographers: Harold W. Richter-Wallingford, Robert Taylor-Lancaster Regional Corresp0ndts: L. J. Lane--Canada, Mary Brgess-Milford, Conn., Trdy Born-Bine, Switzerland, Mary C. Gestey-Wallingford. Gestey-W allingford. Reporters: Lancaster-Wally Bork, Sally Bshong, Max Caldwell, Ray Ellis, Ron Fstermaker, Sam Gast, Marilyn Kntz, Charles McCamey, Thomas Reese, Frank Remley, Ronald Roschel, Carl Yecker, Wallingford-Alfred Draghi, Fred Long, Robert Mc Gire, Jean Case. 2 timely TOPICS is pblished bimonthly for employees of the Hamilton Watch Company, its divisions and sbsidiaries by the Pblic Relations Departmt. CCopyright 1964 by Hamilton Watch Company, Lancaster, Pna. Contts may be reprodced with credit.

3 HAMILTON WATCH COMPANY LANCASTER, PENNSYLVANIA Arthr'.18. Sinkler PRESIDENT To: All my Fellow Employees This isse of timely TOPICS is arriving in yor homes jst prior to the company's appearance before the Tariff Commission in Washington beginning May 12. On that day Hamilton, Elgin and Blova will appear to prest the watch indstry's case for the preservation of domestic watch manfactring. Yo will be reading mch abot this case in the newspapers. The basic facts of the matter, together with opposing points of view, are inclded to give yo the fllest possible nderstanding of the s ita ti on. For a qick smmary of or activities see the section titled What Are We Doing on page 13. Sincerely, Arthr B. Sinkler

4 HERE TO STAY? "YES!" say Blova, Elgin and Hamilton as the remaining U. S. jeweled watch makers battle the Swiss Cartel. RAREL y DO COMPETITORS in the same bsiness agree on major isses. Bt on May 12 the three American watch manfactrers-blova, Elgin and Hamilton-will pt competition aside and appear jointly before the Tariff Commission to prevt the Swiss watch cartel from gaining complete control of the U.S. market for jeweled lever watches. The Swiss watch cartel has be attempting for years to gain complete control of the American watch market becase it is the largest and most profitable. With the passage of the Trade Expansion Act of 1962 and the advt of the "Knedy Rond" of CATT negotiations, "The Swiss have decided that now is the time to strike and knock s ot," says Hamilton Presidt Arthr B. Sinkler. "They want to close or research laboratories, disperse or gineers, and take the whole American market for themselves." So once again the domestic manfactrers will jorney to Washington in defse of a meager 153 of the jeweled lever watch market and prevt what has traditionally be anathma to or governmt and American consmers: monopolistic control of a market or prodct. The Gist of the Sitation The Swiss watch indstry, throgh its governmt, has pressed the U.S. State Departmt to reconsider the 1954 escape clase action which raised dties on most categories of watches. The Swiss say that the 1954 increase in tariff on watch imports has be harmfl to the watch bsiness, has held back qality prodct developmt and died the American consmer the best watches at the lowest cost. Frther, they contd, the tariff increase hasn't helped those it was designed to aid (the domestic manfactrers) and has additionally stimlated large-scale smggling and absive se of legal loopholes. The U.S. watch manfactrers point ot that any across-the-board redction of dties will make it economically impossible to contine watch manfactre in this contry; that prodction capacity is now at a point of irredcible minimm; that any sch action wold hand the Swiss the fll monopoly which a Federal Cort decree, rectly issed, was designed to prevt and, finally, that the U.S. wold wind p as the only major nation with no jeweled watch manfactring indstry. This reservoir of skills and facilities wo'ld ths be navailable for defse needs in time of emergcy. They add that the Swiss already joy all bt a small perctage of the U.S. market bt are seeking 1003 domination. Pertint Backgrond Review The three jeweled watch manfactrers, Blova, Elgin and Hamilton in 1951 prodced over 3,000,000 movemts and employed 8,400 watch workers. By 1962, prodction had declined to abot 1,300,000 with employmt down to approximately 2,500 watch workers. 4 timely TOPICS

5 Voicing concern for the American jeweled watch indstry, the heads of the remaining domestic manfactrers appeared jointly before the U.S. Tariff Commission. From left: Hry Margolis, Elgin presidt and chairman; Arthr B. Sinkler, Hamilton presidt and chairman; and G. Omar N. Bradley, Blova chairman. U.S. Technology: On a prodction-hors-permovemt basis, American plants of the three companies are operated with slightly greater efficicy than comparable plants in Switzerland. This incldes the three plants which the domestic companies own in Switzerland. Frthermore, United States watch technology is eqal to, and in many cases, srpasses that of the Swiss. In rect years domestic prodcers have become the leaders, as evidced by the Hamilton electric watch and the Blova electronic "Acctron," both of which were researched and developed to a prodction basis in this contry. The Swiss as yet have not marketed a sccessfl battery-powered wrist watch. Swiss Cartel: The high degree of Swiss domination of international trade in jeweled watches is gerally attribted to the close control of prodction and marketing exercised by tlie Swiss Governmt in collaboration with varios grops of prodcers and wholesalers of parts, watch tools and machinery. (This, in part, explains the restrictions on prodction of watches and exportation of parts and machinery.) The Federal Cort in New York, after eight years of legal battling on an anti-trst case, rectly held that this cartel imposed severe restrictions against American companies, and had crippling effects which violated the U.S. antitrst laws. The natre of the restrictions were described by the U.S. Departmt of Jstice wh it filed the sit. "This complaint attacks restrictive controls pon the American jeweled watch indstry which have retarded the growth of the indstry and weaked its competitive position. It is imperative that or domestic watch indstry be free from practices which crtail domestic prodction and restrict the importation and exportation of watches." Despite this decision, the cartel is contining its efforts to drive what is left of the U.S. indstry ot of bsiness and obtain the remaining 153 of the U.S. jeweled watch market. Defse Importance: The domestic watch manfactrers are crrtly doing vital design, research and prodction work on a wide variety of military and space projects. Spporting this diversification of domestic prodcers into defse and space assignmts are the constant technological and prodction demands of watch manfactre that sstain and norish the mici ominiatrized skills. If domestic manfactre is eliminated, it will not be possible to maintain these trained people and facilities, ths making the U.S. the only major power to eliminate a domestic indstry nder the banner of free trade. Other nations-rssia, France, Japan, Great Britain-have tak vigoros and sccessfl action to develop and to maintain domestic watch-making indstries. Regardless of all other argmts, the NUB of the matter is this: If the Swiss scceed in ob- April-May

6 Who's Who MADE IN U.S.A. (contined) taining a redction or elimination of tariff dties, (a) The Presidt wold, in effect, be handing the Swiss Cartel the very monopoly which the Federal Cort's rect decree is designed to prevt, and ( b) The U.S. wold wind p as the only major power with no jeweled watch manfactring indstry available for marshalling in defse emergcy sitations, and ( c) We wold face the niqe and distrbing sitation where foreign interests, giving nothing in retrn, forced the elimination of a domestic American indstry. Some Additional Fndamtal Considerations World trade is a two-way street. The Swiss interests who are asking for free trade and elimination of tariffs in the United States have historically prevted any importation of watch parts or movemts into Switzerland. While there are no dties on watches going into Switzerland, watches made in other contries are simply not handled by Swiss retail otlets. For example, the Swiss cartel has repeatedly refsed Blova, Hamilton and Elgin permission to bring into Switzerland for incorporation in their own Swiss watches, in their own Swiss plants, certain parts which the U.S. companies Effective control of the manfactre and distribtion of Swiss watch prodcts is achieved by the watch cartel exercising total control in Switzerland and extding its control to Swiss watch sales organizations in other contries inclding the United States. The Collective Convtion (cter of chart) is the basic contractal agreemt betwe the three main manfactring nits (Watch Federation, Ebaches, S.A., and United Parts Manfactrers). Throgh this agreemt the cartel reglates prodction, arbitrates differces and condcts inspections and investigations. Other important cartel affiliates are: Swiss Watch Chamber: an association of watch indstry organizations fnctioning as the link betwe the Swiss Governmt and the watch indstry. The Chamber also administers reglations governing exports, defds the watch indstry and stdies foreign competition. Sperholding Organization: Swiss corporation organized in 1931 to control prodction of the most esstial watch parts. Ebaches, S.A.: owns or controls stock of other corporations gaged in the manfactre of incomplete jeweled-lever watch movemts (known as ebaches) in Switzerland. Organized in United Parts Manfactrers: an association of manfactrers of parts other than ebaches, organized in Watch Federation: association of assemblers and manfactrers prodcing finished watches, organized in Watchmakers of Switzerland Information Cter, Inc.: a New York corporation organized. in 1948 with stock owned eqally by the Watch Federation and Ebaches. This organization promotes sale and repair of Swiss watches, serves as propaganda agcy for the Swiss watch indstry and liaison with the U.S. market. It also maintains srveillance over watch activities in this contry and rders weekly reports to the Federation and Ebaches. The American Watch Association: an association of importers of Swiss jeweled lever watches and movemts with headqarters in New York City. Members inclde: Brs, Gr, Longines-Wittnaer, Eterna, Rolex, Movado, Cyma, Wyler and others. 6 timely TOPICS

7 in the Swiss Watch Cartel... ~... Federal Governmt of SWITZERLAND ~l.jl J2..JU J;L.W.Jl..1l. I SWISS WATCH CHAMBER I Co,yJi?i t c.:.:_f4(';- Inflce or Liaison Control or Stock Ownership SUPERHOLDING ORGANIZATION '' COLLECTIVE CONVENTION (Controls and Enforces Cartel Reglations) EBAUCHES, S. A. (Plates, Bridges, Pinions, Train) UNITED PARTS MANUFACTURERS WATCH FEDERATION (Manfactrers and Assemblers of Finished Watches) Watchmakers of Switzerland Information Cter r z ::!: Cl. a: w > w...j -' ~ c.!l I Z ~ a: Cl. w z a: :3 I al r- z ::!: Cl. a: Cl z ::; >- -' c.!l z ~ er..., Cl. c.!l z I ~ z ~ -' ~ ::!: I -' -' -' Ci r- -' Ci Cl r- -' z ::!: -' a: Cl ::!: Cl Cl >- r- I r- -' a: z > 0 -' ::!: z -' c.!l Cl. -' r- :;:; "' c.!l :;:; B ~ :J I E "' ~ ::; B :J c.!l 0 ~ z Cl. r- z r: 0 :J ~ E > Q a: z ~ a: a: -' 0 -' Cl Cl z :J 0.. z a: a: > w w :J -0 Cl a: z I c: x :J z r- "' :J 0 -' aj -' > I.. 0 w z -' c.!l % owned by other Wa tch Indstry Orga nizations Sorces: La Sisse Horlogere U. S. Commerce Departm t April-May

8 MADE IN U.S.A. (contined) consider sperior to those available in Switzerland. The Swiss, who now have 833 of the U.S. market, seek 1003 and wold be hardpressed to meet the prodction demands. For some years now Switzerland has had a labor problem to the extt that 253 of its workers are imported and on temporary visas. In the watch indsh y the labor force is 103 foreign. In March of 1964 a governmt decree froze employmt at prest levels in all indstry in Switzerland. Contrary to poplar opinion, the watch bsiness does not constitte the blk of the nation's income. Watches accont for only 153 of Switzerland's exports. Smmary of Basic Isses Under terms of the Trade Expansion Act of 1962 and prior to that act nder Exective Order 10401, the U.S. Tariff Commission is obliged to srvey the sitation annally and make a report to the Presidt. Eight sch reports have be made-from 1956 throgh 1963-which have repeatedly spported the necessity of maintaining the 1954 decisions. Over this period there has be a pattern of consistcy to the argmts of the Swiss that able s to anticipate with some assrance the argmts which will again be advanced for the elimination of the escape clase relief and for frther redctions in tariffs. The following is a re-cap of the opposing points of view on the major isses. Effect of Tariff on Swiss Watch Indstry fl Swiss Cartel Position: The Swiss grop maintains that the tariff discriminates against them and conseqtly hrts the Swiss economy. U.S. Manfactrers' Position: Dring the last decade, and while the U.S. market was nder the escape clase proclamation, Swiss watch prodction grew 573 from an annal average of 28 million watches to 44 million in Most of these ( 38 million ) are jeweled-lever watches. The Swiss jeweled watchmaking indsh y not only has most of the American market, bt the major share ( 613 ) of the free world sales as well. It is not possible-by any yardstick-to show injry to the Swiss economy or the watch cartel. Defse Importance of U.S. Watch Indstry P Swiss Cartel Position: In 1958 the Governmt fond that the domestic watch manfactring indstry was not esstial to the national secrity and that the import of watches posed no threat to the defse effort. U.S. Manfactrers' Position: The 1958 decision was not a trly military decision. It was a stdy made pon application by the U.S. indstry for frther tariff assistance. The defse importance of the U.S. watch 8 timely TOPICS

9 40 FREE WORLD JEWELED 35 LEVER WATCH 30 PRODUCTION 25 MILLIONS OF UNITS 20 Sorce: Ta riff Commission ~ FRANCE JAPAN SWITZERLAND UNITED KINGDOM UNITED STATES WEST GERMANY indsh y was previosly established by reports to Presidts Trman and Eishower by the National Secrity Resorces Board and the Office of Defse Mobilization. The same conclsion was reached, nanimosly and bipartisanly, by the Preparedness Sbcommittee of the Sate Armed Services Committee. The 1958 reslt was inflced by the Swiss cartel and the American importers and a desire of the governmt at that time to avoid frther tariff increases. The actal demands of the military services for assistance from the U.S. jeweled watch companies-especially in new weaponshas not slacked. Frther, the strategic importance of a domestic jeweled watch indstry to national secrity has be recognized by sch other nations as France, Japan, Germany and Rssia, all of whom protect and spport their domestic watch indstries. The Swiss themselves "protect" their indstry by stattes and agreemts. Swiss watch reglations extd ev to control or prohibit the exchange of parts from the U.S. plants of Blova, Elgin and Hamilton and their Swiss-based operations. Effect of Tariffs on U.S. Watchmakers fl Swiss Cartel Position: The U.S. watch indstry can operate withot dties becase the world knows U.S. firms have the ingity and know-how to compete with any prodct in world markets. U.S. watch indstry cold contine to operate profitably nder lower dties. U.S. M. an. factrers' Position: Blova, Elgin and Hamilton all have plants in Switzerland from which they import into the U.S. and export to world markets. These plants are no more efficit than Blova, Elgin and Hamilton's domestic operations. In spite of the efficicy of their U.S. plants, the disparity of labor rates-i.e. United States of $3.24 vs. Swiss $1.22 (inclding fringe befits) per horwold not permit them to contine prodcing domestically if tariffs were redced. U.S. watch companies do not dispte the fact that they cold operate profitably as importers -all of them import sbstantial qantities of jeweled watches from their Swiss plants, and have diversified their U.S. operations. The real isse is that, with across-the-board dty redctions, the U.S. wold lose the small remaining part of its jeweled watchmaking indstry and the accompanying skills and technology. Tariff Help To Domestic Prodcers P Swiss Cartel Position: The domestic prodcers were not aided appreciably by the tariff boost of U.S. Manfactrers' Position: The main reslt of the tariff increase in 1954 is that the United States indstry is still in April-May

10 MADE IN U.S.A. (contined) Defse and Space Contribtions of U.S. Watch Indstry Blova, Elgin and Hamilton have made extsive research, developmt and prodction contribtions to America's defse and space programs. A partial list of projects: Space Exploration Apollo Explorer Gemini Mariner II Mercry X-15 Space Commnication Satellites Missiles Nimbs Relay Syn com Atlas Bomarc Terrier Tartar Redstone Polaris Minteman Tel star Tiros Sidewinder Talas Shillelagh Corvs Sparrow Hawk Pershing existce. At the time of the 1954 hearings, the U.S. indstry was fond by the Tariff Commission to have sffered serios injry. The injry fond was already so great that Waltham was not able to recover. Blova, Elgin and Hamilton have be able to maintain prodction, which wold have be impossible withot the increase. Imports of jeweled watches have leveled off and so has U.S. prodction. The 1954 increase was obviosly of assistance in bringing abot this precarios balance. Tariff Trds In World Bsiness Swiss Cartel Position: Tariffs are conn trary to the prest trd in world trade. r Failre to redce U.S. tariffs on watches is not in keeping with the U.S. policy toward the "Knedy Rond" of negotiations. U.S.!Janfactrers' Position: U.S. policy toward redction of tariffs was applied to the watch indstry in the early stages of U.S. efforts to foster world trade. The 1936 trade agreemt with Switzerland oped U.S. markets to the Swiss, as evidced by the great increases in imports sbseqt to the agreemt, particlarly after World War II. Perhaps no other indstry in the United States has a smaller share of its own market. U.S. trade policy and the policy of all other trading nations has be to reserve the right to take an "escape" where necessary. This escape, in the case of U.S. watches, was tak only after the 10 timely TOPICS

11 UNITED STATES JEWELED LEVER WATCH PRODUCTION MILLIONS OF UNITS Sorce: Tariff Commission r;;k ~ '52 '53 '54 '55 '56 '57 '58 '59 '60 '61 '62 '63 U.S. indstry had be redced below safe minimms. Other contries have be forced to take similar action to protect their indstries from Swiss watch imports. The prposes and befits of free world trade are not served wh an indstry vital to one trading nation is destroyed by the cartel of another nation. Indeed, the cartel itself is a restraint to free trade. Watch Tariffs and the Swiss Pblic fl Swiss Cartel Position: The Swiss people believe in free trade and look to the United States as the leader. The Swiss press and the Swiss people will not nderstand any failre of the U.S. to redce dties on watches. U.S. Manfactrers' Position: The Swiss people and the Swiss press flly nderstand the need for protection on certain Swiss items despite the international move toward freer trade-for example, the Swiss governmt's protection of local agricltre. With respect to watches, the position of the Swiss press and the Swiss people reflects the attitde of the Swiss Governmt and the Swiss watch cartel. The Swiss have an "arm" called the Watchmakers of Switzerland Information Cter, Inc., designated as its "propaganda agcy." The Watchmakers of Switzerland activity is spported by a fee or tax of 121/2 cts on every watch movemt exported from Switzerland inclding those imported by Blova, Elgin and Hamilton from their own Swiss plants. This money is sed in Switzerland and in the United States to frther the efforts of the Swiss watch cartel to obtain a redction in U.S. dties. Watch Smggling and Tariff Laws P Swiss Cartel Position: The high tariff has led to sbstantial increase in watch smggling. As long as the dty contines to offer increased temptation, smggling will contine to florish-and it now represts betwe a half-million to three million watches and watch movemts annally. U.S. Manfactrers' Position: Smggling was a problem long before the tariff increase, and it is always a problem where there is a dty on any article of vale that can be concealed easily. The interest of the U.S. prodcers in sppressing smggling is greater than that of the Swiss. Virtally all smggled movemts are made in Switzerland. Nevertheless, the U.S. indstry is in complete agreemt with the Swiss and other elemts of the watch indstry that effective legislation shold be acted in the crrt session of Congress. A legislative proposal worked ot with the Brea of Cstoms has be introdced (HR 6426, HR 6427). It is not ssible to eliminate smggling by measres that wold also eliminate the U.S. April-May

12 MADE IN U.S.A. (contined) Glossary of Terms Cartel... an international syndicate, combine or trst gerally formed to reglate by agreemt some field of bsiness. Concession... agreemt by a contry to redce a tariff, sally based on mtal redctions. Dty, dties... a levy or tax on goods imported into a contry. (Also called tariff.) Escape Clase... provision of the Reciprocal Trade Agreemts Act (1934) permitting the Presidt to increase tariffs or impose qotas after a finding by the Tariff Commission that increased imports case or threat to case serios injry to domestic indstries. GAIT... Geral Agreemt of Tariffs and Trade. An international accord signed in 1948 to foster world trade. Agreemt consists of tariff rates agreed to by negotiations and geral rles for fair condct of international trade. It provides a form for tariff negotiations and a means for settling trade disptes. The 58 nations signing the accord accont for more than 80 perct of non-commnist world trade. Knedy Rond... The informal designation of the 1964 GAIT negotiations. So called becase the impets came from passage of Presidt Knedy's 1962 Trade Expansion Act. Qota... a restriction on the qantity of a particlar commodity which can be imported dring a specified period, sally a yearly limitation. Tariff Commission... A six member commission created in 1916 by act of Congress. Its members are appointed by the Presidt for six-year terms. They advise the Presidt and the Secretary of the Treasry on the effect of specific imports on domestic indstries. Trade Expansion Act... A 1962 U.S. law providing the Presidt with broad powers of tariff negotiation with other nations. The act also provides for relief of domestic indstries adversely affected by redctions and for restrictive action to be tak against prodcts imported by members of a cartel. indstry, especially wh other measres are available. Legal Loophole-Virgin Islands fl Swiss Cartel Position: Maintance of a tariff wall is inconsistt with officially sanctioned alternatives, sch as the importation of jeweled watch movemts, dty-free, throgh the Virgin Islands. In effect, the tariff barrier corages abse of the dty-free privilege giv the Virgin Islands to stimlate indstrial developmt. U.S. Manfactrers' Position: The U.S. indstry can be destroyed by dty-free imports throgh the Virgin Islands jst as effectively as it cold be destroyed by dtyfree or low dty imports directly from Switzerland or any other contry. The legal loophole as represted by the Virgin Islands sitation shold-and mst-be closed. Again, however, the soltion is not redction of the U.S. dty. To eliminate the prest tariffs and thereby destroy the American watch manfactring indstry, as a soltion to the problem, is no more realistic than ctting off a foot to cre an ingrown toail. The most effective soltion wold be to remove watches completely from eligibility for dty-free treatmt nder the law relating to the U.S. territories or to reqire that ogh local Virgin Islands' labor be employed on those 12 timely TOPICS

13 UNITED STATES 9,000 Sorce: Tariff Commission JEWELED 8,000 LEVER 7,000 WATCH 6,000 PRODUCTION WORKERS 5,000 4,000 3,000, 2,000 1, '52 '53 '54 '55 '56 '57 '58 ' 59 '60 '61 '62 '63 prodcts to make manfactring costs rise to more nearly meet the "landed" costs of watches prodced in contries that mst pay tariffs. What Are We Doing? The final decision depds on the findings of the Tariff Commission and the action to be tak by the Presidt. However, the American watch manfactrers are exerting all efforts to lay the facts prested here before the proper athorities. The following actions have tak place or are planned: March 13, 1964-U.S. watch manfactrers appeared jointly before the U.S. Tariff Commission to prest facts concerning watches containing more than 17 jewels. April 15, 1964-Hamilton and Elgin* filed a complaint with the Tariff Commission charging that the Swiss watch indstry is a cartel operating in violation of United States anti-trst and tariff laws. The complaint states that watches made by the Swiss shold be exclded from the United States ntil the illegal activities of the cartel are stopped. * No adverse inferce shold be drawn from the failre of Blova to join in this complaint. Blova is a defdant in the watch cartel case (U.S. v. The Watchmakers of Switzerland Information Cter, Inc., et al.), in which it and the other defdants have filed notices of appeal to the Spreme Cort from the final jdgmt tered on Janary 22, In addition to the varios cartel nits described on pages 6 and 7, companies charged with violation of United States laws inclde: Brs, Concord, Etema, Gr, Movado, Girard Perregax, Omega, Cyma, Rolex and Longines Wittnaer. April 15, 1964-Hamilton, Elgin and Blova prested another petition to the Tariff Commission nder provisions of the 1962 Trade Expansion Act asking the Commission to recommd that the Presidt impose import qotas on Swiss watches. May 12, 1964-Hearings will be held by the Tariff Commission on watches of 17 jewels and less. Blova, Elgin and Hamilton will again make a joint declaration of facts. In addition to the formal hearings, the individal companies have also met with appropriate governmt represtatives to acqaint them with the threat to the American watch indstry. And what of the ftre? According to Mr. Sinkler, "In my dealings with the Tariff Commission, I have always fond them to be fair m who rder eqitable decisions. Withot attempting to predict their final decision, I feel the weight of evidce is on the side of the American indstry, and the Tariff Commission will reaffirm its earlier jdgmts. The otlook is hopefl." April-May

14 "The Congress shall have Power to reglate Commerce with foreign Nations, and among the several States and with the Indian Tribes... "The exective Power shall be vested in a Presidt of the United States of America."... Excerpts from Articles I and II of the Constittion of the United States, September 17, Watches, Tariffs and the Law DURING THE FLEDGLING years of the American Repblic, the reglatory and exective powers of Congress and the Presidt combined to set p and collect tariffs or import taxes on commodities prodced abroad and offered for sale in the United States. The prpose of the tariff was twofold: firstand in those years, foremost-it served as a sorce of reve. As a matter of fact, tax on imported goods was the major sorce of federal income dring the early days of the Repblic. A second role of the import tariff-of increasing importance as or nation developed-was to give a price advantage to American prodcts as they competed with foreign goods in the U.S. market. As America grew from an nder-developed nation to an indstrial power, the fnction of tariffs as a sorce of federal income lessed and the import dty became the chief method of aiding certain American indstries which were sbject to injry from foreign prodcts. This import dty also coraged developing indstry and relieved it from the nfair practices of international bsiness monopolies or cartels attempting to "comer" the U.S. market for a particlar commodity. In 1922 the U.S. Congress, recognizing the 14 needs of the American watch manfactring indstry, passed the Fordney-McCmber Tariff Act establishing a cstoms dty on watches containing more than 17 jewels. This dty was contined in the 1930 Tariff Act which established other rates for all. watches and parts inclding watches containing 17 jewels or less. In an effort to improve international trade and relations, the Congress in 1934 acted the Reciprocal Trade Agreemts Act. This act gave the Presidt athority to negotiate dty redctions with nations who wold reciprocate with eqivalt lowering of restrictions. Frther, the 1934 act also gave the Presidt the athority to revoke concessions if a vital American indstry was dangered. This latter is the so-called "escape clase" provision. It was with the hope of mtal advantage to the U.S. and Switzerland that a redction of American watch dties was made in The rates established at that time were in effect ntil 1954 wh the Presidt-on the advice of the Tariff Commission - exercised his escape clase" athority and withdrew a sbstantial part of the 1936 watch tariff concession. The 1954 Presidtial rling is still in effect. Each scceeding year throgh 1962 the Tariff Commission and the Presidt fond that no reconsideration of the 1954 action was necessary. De to a change in the law, the Commission's 1963 report made no finding either way, bt said the long-term trd of the domestic watch indstry remained as in previos years. The Congress-again looking to expand international commerce-passed the Trade Expansion Act in Among its many provisions the act states that prodcts nder "escape clase" proclamation can not be listed for tariff negotiations with other contries. Watches, of corse, are in this category. Late in 1963 the Swiss watch cartel, acting throgh the Swiss Governmt, pressed the U.S. State Departmt to reop the tariff qestion and ths possibly remove watches from the "escape clase." Frther, the Swiss Governmt threated to refse to bargain dring forthcoming world trade conferces if watch dties were not on the U.S. list for negotiations. To settle the qestion, the U.S. Tariff Commission decided to hold a complete reevalation of the reglations and rates concerning watches in March and May of The reslts of these hearings will not be known for some months. timely TOPICS

15 March-April-May 1964 HONOR ROLL ANNIVERSARIES Agsts Rice, Plate (Wallace) Charles M. Habecker, Flat Steel Florce E. Hag, Watch Assembly Lloyd E. Fichtner, Models Lab Cecil D. Hamric, Service James E. Jolly, Tool (Wallace) Margaret L. McCe, Service Mary S. Smith, Tablating Ralph W. Ulmer, Atomatic George Bonyai, Wallace Design Harriet H. Brachdorf, Movt. Assembly Walter F. Bre, Jr., Watch Assembly Catharine R. Breman, Train John K. Dlinger, Machine Shop Harry P. Gerlach, Maintance Jane H. Mann, Plate Fred J. Strab, Prchasing (Wallace) Richard Weaver, Train Robert P. Wchert, Hand Die (Wallace) Arthr H. Dirks, Atomatic Rth K. Harple, Movt. Assembly Charles K. Hickey, Watch Assembly Mildred E. Rineer, Dial R. Donald BHmyer, Machine Shop James S. Cnningham, Manfactring Stocks Roy D. Gable, Movt. Assembly Charlotte F. Herr, Spring William S. Kreider, Spring Catherine C. Reynolds, Atomatic G. Earl Rinier, Jr., Small Tool Donald D. Scacchetti, Silversmiths Craig A. Banner, Parts Schedling Hry Blmshine, Metals Processing Philip Blmsh~e, Metals Processing James P. Brger, Escape Walter J. Camp, Spinner (Wallace) Joseph A. Grbb, Inspection Richard S. Gndaker, Dial Gloria J. Heiser, Escape Joseph Jason, Hand Die (Wallace) Katherine V. Kolb, Inspection Gladys LaCroix, Sterling Flatware Dorothy E. Martin, Mfg. & Ind. Prod. Dorothy G. Poff, Contract Casing John Reber, Jr., Watch & Parts Mfg. John A. Van Hom, Research April-May

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