When the House last October passed H.R. 8149 - "the customes procedural reform bill" - most members thought they were voting for a fairly innocuous measure that would please most Americans.
The bill increased the value of goods travelers could bring home duty free, and reduced some of the Customs Bureau's authority to levy stiff penalties against people who made honest errors in reporting the value of the goods.
Now, however, representatives of the Zenith Corp, say something much less innocuous was buried in the technical language of H.R. 8149. They say that if House and Senate conferees next wek approve the House version, it could have the effect of granting retroactive immunity to Janpanese television manufacturers and U.S. importers now under civil and criminal investigation for falsifying customs documents.
The investigation has centered around alleged illegal rebates, kickbacks and other payments by the Japanese manufacturers to the importers as a way of evading federal "antidumping" laws.
Federal agents want to learn whether such rebate schemes meant that the importers, in effect, purchased the TV sets for less than the price reported on customs forms.
The flood of Japanese TV sets into this country has been a major issue between the United States and Japan. According to an distimate, 70,000 jobs have been lost in the U.S. electronics industry as a result of the imports. Zenith plans to lay off 5,000 of its 21,000 TV workers in this country in the near future.
Deputy Attorney General Benjamin [WORD ILLEGIBLE]has announced that the criminalDivision of the Justice Department is looking into the charges, and grand juries reportedly have begunexamining evidence. Justice Department officials last week described this investigation as "active".
The history of H.R. 8149 provides an example of the role of corporate interests in making of seemingly technical and noncontroversial legislation. On the face of it, the House and Senate versions of the bill contain only minor differences. Yet these differences, which emerged as the result of the backstage work in congressional offices by huge, opposing corporate interests, involve potentially tens of millions of dollars.
The bill was introduced in the House Ways and Means Committee by Rep. James R. Jones (D-Okla). Jones last week defended the measure as one that does away with an existing law that was frequently abused by "trigger-happy government prosecutors and bureaucrats."
"There wasn't a single company or labor union that opposed this," said Jones.
Zenith representatives charged, however, that the House version was skillfully tailored to the narrow interests of the Japanese manufacturers and their customers, under the guise of customs law reform.
Washington attorney Bernard Nash, repressenting Zenigh, said the House bill could undo years of investigative work. He said it would be difficult for the government to grove fraud. Under the alleged rabate scheme, he noted, the federal government collected more in customs duties thatn it would have if accurate values and prices of the goods had been reported.
Under the present law, Nash said, it is necessary only for customs authorities to determine that a false statement has been made for them to assess penalties up to the full value of the imported goods. This could be done merely by ascertaining that the cost of the goods was different from that reported on the customs declaration.
In its House version, the proposed law prescribes penalties for fraud, gross negligence and negligence, but not merely for intentional misreporting. Senate aides said last week that it might be difficult for the government to prove fraud. This is because in the alleged rebating scheme, rather than suffering a loss the U.S. government may have collected more customs duties than warranted by the real costs of the sets. Thus it could be difficult to show that the government was defrauded.
Also, the new law would require more stringent standards of proof of wrongdoing.
Taken together, Nash said, these changes could reduce penalties or even immunize any wrongdoers from prosecution.
William D. Outman, an attorney for the Chicago-bassed international law firm of Baker & McKenzie, said an adlhoc committee consisting of some 14 private business and trade groups had participated in the drafting of the House legislation among those represented were television importer, he said.
Outman said tha he participated in the drafting process without fee because of his convinction that the present customs law is a "vindictive, barbarous statute."
Baker & McKenzie is counsel for Mitsubishi Electric Corp., one of the largest-Japanese manufacturers of television sets. The firm has defended Mitsubishi in a Treasury antidumping case, and it represents the Japanese firm in a private antitrust case brought in Philadelphia by Zenith.
Once the liberal refrom bill favored by television importers passed the House, Zenith went into action in the Senate.
"We spent three full week's up there trying to show the implications of the House bill for the Japanese television manufacturers," said Nash."Zenith won't get a panny out of this. It involves an issue of fairness."
As a result of Zenith's work, the Senate on June 7 passed a measure with an amendment cosponsored by Sens. Carl T. Curtis (R-Neb.) and Robert B. Morgan (D-N.C.). Their version leaves the House changes - except that the Senate would apply the present law to cases involving ongoing investigations and intentional violations. Outman called on Senate offices last week to express concern over the Senate version.
Which verison gets approved will be decided this week, when conferees of the Senate Finance Committee and House Ways and Means Committee are to finalize the bill.
The legislative controversy is only one limited skirmish in a long and bruising war between the Japanese and American television industries.
In 1971, the Japanese industry was found guilty of dumping by U.S. authorities, but penalities have not been assessed. Zenith lost a round last week when the Supreme Court ruled that Japan's practice of levying a "commodity tax" on its domestically sold television sets but not on imported sets, does not constitute an unfair trade practice. That decision headed off possible U.S government retaliation.
But the federal investigations into the alleged rebating schemes could produce the most dramatic developments yet in the long-standing warfare - depending on the outcome of the House-Senate conference.
If the present law applies, customs authorities could finds the Japanese exporters the full value of each set imported under the rebating schemes.
Some clues as to the nature of the complaints have emerged in the private antitrust suit filed by Zenith in Philadelphia. Named as defendants are Mitsubishi, Matsushita, Toshiba, Hitachi, Sanyo, Sharp, Motorola, Quasar and Sears, Roebuck, Zenith's case against Sony has been settled.
The benchmark for Japanese television prices are the so-called "check prices" posted by the Ministry for International Trade and Industry (MITI). Manufacturers who report these check prices to MITI are forbidden by Japanese statute to sell the sets abroad for less. The U.S. government would also charge dumping penalties on such sales.
Therefore, importers pay the manufacturers the MITI "check price". But complaints allege that the manufacturers have rebated them later in various ways. The rebates could take the form of bills for "service" to television sets delivered in faulty condition. Tracing the transactions has been difficult because some of the U.S. importers established subsidiaries in Japan to handle the transactions with the manufacturers.