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Under sections of the Internal Revenue Code, domestic articles transported into a foreign trade zone are considered to be in a stage of exportation and are therefore not subject to manufacturers excise taxes. Such products could, under the revenue code, be resold in the zone to travelers on international flights with destinations other than the United States. On the other hand, products of foreign manufacture would be subject to regular customs duties and could be resold in the zone only after such duty has been paid. This regulation in essence might nullify any competitive advantage that some of these products might have in a market of this nature. However, this stipulation does not apply to articles imported into a bonded warehouse for future exportation. Therefore a bonded warehouse could conceivably be established at the airport and certain products imported and resold for export without being subjected to customs duties.

The responsibility, however, for determining the feasibility of establishing such a zone as proposed in S. 2484 in light of the volume of air traffic, rests with the Departments of Commerce, Treasury, and Army. Therefore, the Department of Agriculture defers final judgment on this legislation to those departments with primary responsibility in such matters.

The Bureau of the Budget advises that there is no objection to the presentation of this report from the standpoint of the Administration's program. Sincerely yours,

OBVILLE FREEMAN, Secretary.

DEPARTMENT OF THE AIR FORCE,

Washington, D.C., January 31, 1962. Hon. WARREN G. MAGNUSON, Chairman, Committee on Commerce, U.S. Senate

DEAR MR. CHAIRMAN: Reference is made to your request to the Secretary of Defense for the reviews of the Department of Defense with respect to S. 2484, 87th Congress, a bill to provide for establishing and operating a foreign-trade zone, a Hall of States, and an international reception and information center at the Anchorage International Airport, Anchorage, Alaska, and for other purposes. The Secretary of Defense has delegated to the Department of the Air Force the responsibility for expressing the views of the Department of Defense.

The general purpose of this legislation is to create for foreign visitors a climate for better understanding the United States and its ideals and to encourage foreign commerce.

The bill would authorize the U.S. Information Agency to establish an international reception and information center at the Anchorage International Airport, Anchorage, Alaska, and at the same time provide a facility for the operation of a foreign-trade zone and a Hall of States.

The Department of Defense has no direct interest in the proposed legislation and, therefore, the Department of the Air Force, on behalf of the Department of Defense, defers to the views of the U.S. Information Agency and the Department of Commerce concerning this subject.

This report has been coordinated within the Department of Defense in accordance with procedures prescribed by the Secretary of Defense.

The Bureau of the Budget advises that, from the standpoint of the administration's program, there is no objection to the presentation of this report for the consideration of the committee. Sincerely,

JOSEPH S. IMIRIE, Assistant Secretary of the Air Force.

CIVIL AERONAUTICS BOARD,

Washington, D.C., September 12, 1961. Hon. WARREN G. MAGNUSON, Chairman, Committee on Commerce U.S. Senate, Washington, D.C.

DEAR MR. CHAIRMAN : This will acknowledge your letter of September 1, 1961, with which you enclosed a copy of S. 2484, a bill to provide for establishing and operating a foreign-trade zone, a Hall of States, and an international reception and information center at the Anchorage International Airport, Anchorage, Alaska, and for other purposes.

The proposed legislation relates to matters outside the jurisdiction of the Civil Aeronautics Board, and we have no comment to make on it. Sincerely yours,

ALAN J. BOYD,

Chairman.

COMPTROLLER GENERAL THE UNITED STATES,

Washington, September 12, 1961. Hon. WARREN G. MAGNUSON, Chairman, Committee on Commerce, U.S. Senate

DEAR MR. CHAIRMAN : Your letter of September 1, 1961, acknowledged September 5, requests our comments on S. 2484, a bill to provide for establishing and operating a foreign-trade zone, a Hall of States, and an international reception and information center at the Anchorage International Airport.

We have no particular information concerning the subject matter of the proposed legislation and therefore we have no recommendation to offer. Sincerely yours,

FRANK H. WEITZEL, Assistant Comptroller General of the United States.

DEPARTMENT OF COMMERCE,

Washington, D.C., February 9, 1692. Hon. WARREN G. MAGNUSON, Chairman, Committee on Commerce, U.S. Senate, Washington, D.C.

DEAR MR. CHAIRMAN: This is in further reply to your request for the views of this Department with respect to S. 2484, a bill to provide for establishing and operating a foreign-trade zone, a Hall of States, and an international reception and information center at the Anchorage International Airport, Anchorage, Alaska, and for other purposes.

This bill would authorize the U.S. Information Agency, acting in cooperation with State and local officials of the State of Alaska, and with agencies of the Federal Government concerned with foreign policy and other international objectives of the United States, to establish an international reception and information center at the Anchorage International Airport. USIA would be empowered to prepare plans and specifications for the construction of a suitable building; to accept a lease or conveyance from the State of Alaska of the necessary land; and, in return for such lease or conveyance, to make available to Alaska or the city of Anchorage sufficient space in the center so that the State or city could then establish, operate, and maintain certain facilities. These facilities would include (a) a Hall of States wherein each State could display information concerning its traditions and sell at retail merchandise it produces ; (b) a foreign-trade zone in which foreign and domestic commodities might also be sold at retail; and (c) lounges and concessions for the comfort of foreign visitors. The Foreign-Trade Zones Act (19 U.S.C. Secs. 81a-81u) would govern sales in both the proposed Hall of States and the other parts of the center.

Having in mind the steadily increasing importance of Anchorage as the major stop in the United States for foreign travelers flying the trans-polar route between Europe and the Far East, this Department is in accord with what we understand to be the main purpose of S. 2484. As stated by Senator Gruening, a sponsor of the bill, this objective is to show to the many foreign visitors who pass through the Anchorage International Airport "by word and picture democracy's ideals and to wind them over to the side of freedom. In the great world struggle for the minds of men in which we are now engaged it is certainly a wasted opportunity not to welcome to our shores these thousands of foreign visitors and seek, in the brief space of time available, to give them something of the flavor of the United States and of the democratic principles under which we live.” (Congressional Record, August 30, 1961, pp. 16338–16339.)

In keeping with this goal our U.S. Travel Service would be glad to furnish to an international reception and information center at the Anchorage International Airport appropriate informational materials designed to encourage these

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foreign travelers to return for a longer stay in the United States. We are sure that other Federal Government agencies would likewise wish to help provide these foreign visitors a full and true understanding of our country. The contemplated state activities in the proposed Hall of States would, of course, contribute greatly to the acomplishment of this important objective.

The further aim of S. 2484, to provide for the comfort and pleasure of these foreign visitors passing through Anchorage, is certainly also desirable. As we understand it, there would be lounges and concessions at which foreign and domestic merchandise could be sold, while the products of our States would be especially available for sale in the Hall of States. As Senator Gruening has indicated, what is contemplated is a retail sales operation like that at the Shannon, Ireland, international airport (Congressional Record, p. 16339). The key to successful operation of a business of this kind would appear to be the ability to sell domestic and foreign merchandise to departing travelers on a taxfree and duty free basis. Evidently for the purpose of achieving this freedom from U.S. taxes and duties on merchandise sold, the bill proposes that retail sales activities at the center be carried on through the mechanism of a foreign-trade zone established under the Foreign-Trade Zones Act.

Although we favor these basic purposes of S. 2484, there are, in our opinion, two features of the bill that present substantial problems. These pertain to (1) the proposal to establish a foreign-trade zone, and (2) the question of Federal payment of the cost of building and operating the proposed center. We comment on these subjects, not in criticism of the objectives of the bill, but in keeping with the expressed desire of Senator Gruening “to stimulate thinking and discussion on this proposal and to receive suggestions for the improvement and refinement of this idea.” (Congressional Record, p. 16339).

(1) As one of the Federal Departments charged with responsibility to oversee the establishment and conduct of foreign-trade zones in the United States, we must point out that, in our opinion, a zone operation would not especially facilitate, and to some extent might limit, retail sales at the proposed center. The Foreign-Trade Zones Act is basically designed to provide zoned areas in or near U.S. ports of entry wherein foreign-origin goods may be manipulated and manufactured, with or wtihout an admixture of domestic goods, and then shipped out of the United States, without payment of import duty on the foreign goods brought into the zones. Only if the resultant goods are instead bought into the commerce of the United States is duty payable, and then only on the actual quantity of the foreign material incorporated in the goods brought from the zone into the commerce of the United States. Although a zone operation, accordingly, affords great benefits for many kinds of manufacturing and wholesale activities related to our export-import trade, it is not particularly suitable for a Shannontype retail sales activity. Section 15 of the act (19 U.S.C., sec. 810(d)) expressly restricts retail trade in a zone to such "domestic or duty-paid or duty-free goods as are brought into the zone from customs territory.” Under this provision the only kinds of foreign goods that may be sold at retail in a zone, along with domestic goods, are those on which duty has been paid and those importable into the United States free of duty. However, dutiable kinds of foreign goods (like watches) are saleable at retail in a zone only if duty has been paid on them, and no foreign goods of any kind may be brought directly into a zone for retail export sales. Furthermore, it is our understanding that, although domestic goods may be brought into a zone for export purposes, free of internal revenue taxes, a zone operation is not essential to obtain that benefit.

This Department is, of course, not in a position to recommend an alternative procedure which would permit all kinds of domestic and foreign goods to be sold at retail at the Anchorage International Airport. We understand, however, that the Treasury Department has been asked to comment on this bill and we believe that their comments may suggest other avenues for the solution of this problem more simply and comprehensively, and less expensively, than the proposed foreign-trade zone approach.

(2) Our last comment on S. 2484 relates to the question of payment of the cost of construction and operation of the proposed international reception and information center and Hall of States. Section 3 provides that USIA shall prepare plans and specifications for the construction of a suitable building with requisite equipment, approaches, architectural landscape treatment of the grounds, and connections with public utilities; and that the same agency shall staff and operate the center. Section 6 authorizes appropriation of funds necessary to carry out the provisions of the bill. A resolution adopted by the Anchorage Chamber of Commerce, reprinted at page 16339 of the Congressional Record,

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asks, in effect, that the Federal Government pay for construction of the necessary building and related facilities.

It is our opinion that the above-described nationwide benefits of the proposed center may be appropriately compensated by the Federal Government on a space rental basis. We believe, however, that the main cost of a center of this kind, with its proposed retail sales facilities, should be locally sponsored and paid for. Whatever arguments might be made for Federal construction of this center, because of the present unique character of the Anchorage air route and its foreign air travelers, would not, in our judgment, be sufficient justification for the large Federal expenditure that would probably be involved, especially as it might turn out to be a precedent for efforts to establish similar facilities at other U.S. ports.

The Bureau of the Budget advised there would be no objection to the submission of this report from the standpoint of the administration's program. Sincerely yours,

EDWARD GUDEMAN, Under Secretary of Commerce.

GENERAL SERVICES ADMINISTRATION,

Washington, D.C., January 19, 1962. Hon. WARREN G. MAGNUSON, Chairman, Committee on Commerce, U.S. Senate, Washington, D.C.

DEAR MR. CHAIRMAN: Your letter of September 1, 1961, requested the views of the General Services Administration on S. 2484, 87th Congress, a bill to provide for establishing and operating a foreign-trade zone, a Hall of States, and an international reception and information center at the Anchorage International Airport, Anchorage, Alaska, and for other purposes.

This bill would authorize the U.S. Information Agency to accept from the State of Alaska a site at or adjacent to the Anchorage International Airport, and to prepare plans and specifications for the construction thereon of a suitable building within which space would be provided for the purposes specified above.

The proposed legislation would affect the responsibilities of the General Services Administration to the extent that the bill provides that the preparation of drawings and specifications and all work incidental thereto shall be under the supervision of the Administrator of the General Services Administration in accordance with the provisions of the Public Buildings Act of May 25, 1926, as amended. Since the said act of May 25, 1926, as amended (except for secs. 3 and 8 which are not applicable to the subject of the proposed bill), has been repealed by section 17 (19) of the Public Buildings Act of 1959, the following change is suggested on page 3, lines 4, 5, 6, and 7 of the bill: “shall be under the supervision of the Administrator of General Services."

With respect to the merits of S. 2484 the General Services Administration defers to the views of those agencies which are more directly concerned with the trade and foreign objectives of the bill.

If the funds which would be authorized by this bill are appropriated to the U.S. Information Agency, its enactment would not affect the budgetary requirements of GSA.

The Bureau of the Budget has advised that, from the standpoint of the administration's program, there is no objection to the submission of this report to your committee. Sincerely yours,

BERNARD L. BOUTIN, Administrator.

DEPARTMENT OF STATE,

Washington, D.C., January 26, 1962. Hon. WARREN G. MAGNUBON, Chairman, Committee on Commerce, U.S. Senate.

DEAR MR. CHAIRMAN: Your letter of September 1, 1961, submitted to us for comment a copy of S. 2484, a bill to provide for establishing and operating a foreign-trade zone, a Hall of States, and an international reception and information center at the Anchorage International Airport, Anchorage, Alaska, and for other purposes.

This Department has been corresponding with the mayor of Anchorage regarding the establishment at the Anchorage Airport of some means of providing information about the United States to international travelers whose planes stop at Anchorage for refueling in the course of northern circle flights between Europe and the Far East. In this correspondence the mayor has used the term “reception center" to describe what he has in mind.

The Department of State, with financial support from the Agency for International Development, maintains reception centers in New York, Miami, New Orleans, San Francisco, Seattle, and Honolulu. They occupy small offices in the business districts of these six cities. Their staffs have two main functions. First, they meet foreign visitors (not including students) who come to the United States as recipients of travel and study grants given them by the Department of State or AID, and assist them with entry formalities, hotel accommodations, and onward travel. They give similar help to departing grantees. Second, when such foreign visitors come to these cities in the course of their travel within the United States, the staffs of the reception centers arrange local appointments and hospitality for them.

These are not the kinds of services which would be required of the proposed International Reception and Information Center at the Anchorage Airport. There the primary need, as we understand it, is to provide intransit foreign travelers with information about American institutions and ideals during brief stopovers of an hour or two. This is a worthwhile objective, and the Department of State believes that it is a proper concern of the Federal Government.

A Hall of States, which the bill provides, would be arranged by the State of Alaska or the city of Anchorage, would be a significant addition to the facilities of the proposed information center.

With respect to the bill's provision that a foreign trade zone be established at the Anchorage Airport, we defer to the judgment of the Department of Commerce and the Department of the Treasury.

The Department has been advised by the Bureau of the Budget that, from the standpoint of the administration's program, there is no objection to the submission of this report. Sincerely yours,

FREDERICK G. DUTTON,

Assistant Secretary (For the Secretary of State).

THE GENERAL COUNSEL OF THE TREASURY,

Washington, February 5, 1962. Hon. WARREN G. MAGNUSON, Chairman, Committee on Interstate and Foreign Commerce, U.S. Senate, Washington, D.C.

DEAR MR. CHAIRMAN : Your letter of September 1, 1961, requests the views and recommendations of this Department on S. 2484, introduced by Mr. Gruening (for himself and Mr. Bartlett), to provide for establishing and operating a foreign trade zone, a Hall of States, and an international reception and information center at the Anchorage International Airport, Anchorage, Alaska, and for other purposes.

The bill would allow the sale to foreign visitors of foreign and domestic merchandise under the provisions of the Foreign Trade Zones Act of June 18, 1934, as amended, in a foreign trade zone and the Hall of States located at an international reception and information center to be established at the international airport at Anchorage, Alaska.

We understand that it was the intent of the sponsors of the bill that sales be made on a retail basis in the foreign trade zone, without the payment of taxes or duties, to passengers waiting to board foreign-bound aircraft. The Foreign Trade Zones Act (19 U.S.C. 810 (d)) forbids retail trade in a zone except under permits issued by the Foreign Trade Zones Board and limits the permissible trade to sales of such domestic or duty-paid or duty-free goods as are brought into the zone from customs territory. We understand that the report of the Department of Commerce will cover that aspect of the bill.

We wish, moreover, to direct attention to the provisions of sections 311, 555, 557, and 562 of the Tariff Act of 1930, as amended (19 U.S.C. 1311, 1555, 1557, and 1562), and the customs regulations issued with respect thereto which are set forth in part 19 of title 19 of the Code of Federal Regulations. These stat

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