[Congressional Record Volume 142, Number 100 (Tuesday, July 9, 1996)]
[Extensions of Remarks]
[Pages E1226-E1227]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]




   INTRODUCTION OF LEGISLATION REGARDING THE COUNTRY OF ORIGIN RULES

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                       HON. ENI F.H. FALEOMAVAEGA

                           of american samoa

                    in the house of representatives

                         Tuesday, July 9, 1996

  Mr. FALEOMAVAEGA. Mr. Speaker, I rise today to introduce legislation 
which would retain the country of origin rules in effect on June 30, 
1996 for apparel items produced in American Samoa. This legislation is 
limited in scope, and it will have a limited impact on U.S. trade. It 
is, however, critical to the economic development of American Samoa.
  Mr. Speaker, the American Samoa Government has been pursuing outside 
investment opportunities for many years. Recently, a garment 
manufacturing company has begun production in American Samoa--the first 
significant new outside industry to invest in the territory since the 
1960's. The new industry provides jobs for our people, tax revenues for 
the local government, and secondary revenue for a variety of private 
sector businesses.
  The industry is small by U.S. standards, it employs fewer than 500 
local people at this time, but it represents diversification for our 
economy, and its presence lessens our dependence on the Federal 
Government. The plant is running smoothly and is ahead of schedule with 
respect to production levels.
  Because this is a new industry for American Samoa, it requires a 
significant amount of

[[Page E1227]]

planning and training of the local work force. While our people need 
time to develop the sewing skills needed to be competitive on a 
worldwide basis, we are very good at cutting--regularly meeting or 
exceeding the quantitative standards.
  To take advantage of our cutting skills, the existing garment 
manufacturing company is proposing a three-phase expansion. The 
expansion plans call for the construction of an enlarged cutting 
facility where fabric of U.S. origin will be cut, a dye plant in which 
grey goods or pre-dyed fabric of U.S. origin will be dyed and a 
knitting facility where yarn of U.S. origin will be knit into fabric.
  This will be good for the U.S. textile industry--in American Samoa 
and on the mainland. We estimate that an additional $5 to $7 million 
can be generated for the mainland U.S. textile industry if the 
expansion goes forward as planned. In addition, sewing capacity in 
American Samoa will increase in order to handle the larger output of 
material. The total required work force after 3 to 5 years is estimated 
to be in the range of 2,000 persons.
  Mr. Speaker, this is a very small number in U.S. mainland terms, but 
it is of great significance on an island whose population totals 60,000 
people.
  It now appears that a recent change in U.S. Customs regulations will 
jeopardize our infant garment industry and its future growth. As of 
July 1, 1996, garments produced almost entirely in American Samoa lose 
their previous Customs treatment even if only a relatively small 
portion of the production process is performed in a foreign country.
  The garment company doing business in American Samoa would like to 
import United States yarn to American Samoa, knit or weave it in 
American Samoa, dye it in American Samoa, cut it in American Samoa, use 
what the plant in American Samoa can sew, ship only the excess out to 
another country for sewing, bring it back to American Samoa for final 
assembly and packaging and have the finished goods enter the United 
States as products of the United States.
  This was possible under the old regulations; under the new 
regulations which took effect on July 1st of this year, this can no 
longer be done. It does not make good business sense for this company 
to expand as it is proposing in American Samoa unless this expansion is 
economically feasible. The legislation I am introducing today, if 
enacted into law, would grandfather the nascent American Samoa garment 
industry under the old rules, enabling the industry to operate 
successfully in American Samoa and allowing the existing company to 
build a larger production facility and finance an orderly expansion.
  I believe that this legislation is reasonable and fair and in the 
best interest of the U.S. textile industry as a whole and the U.S. 
territories in particular.
  My legislation is limited in scope and will merely preserve the old 
country of origin rules for garment producers in America Samoa.
  My legislation will help other manufacturing companies who may 
contemplate locating in American Samoa.
  This industry is already providing more than 400 new local jobs in 
American Samoa, and will provide hundreds more if the expansion plans 
can be implemented. The infant industry and its future growth are at 
stake.
  This is an important test case which will prove whether or not new 
export industries can be successful in American Samoa. The implications 
of the success, or failure, of the expansion project are critical for 
the economic future of the territory.
  Mr. Speaker, the experience of the people of American Samoa is a good 
example of the difficulties the United States territories face in 
attracting businesses to invest in our economies.
  American Samoa's economy has been hampered by our isolation from 
world markets and world shipping lanes. We have relied on incentives 
such as the possessions tax credit and the advantages offered under 
General Note 3(a) of the Harmonized Trade Agreement to help attract the 
outside investment our economy needs to grow, but those incentives are 
disappearing.
  Over time, the advantages of doing business in the U.S. territories 
may be outweighed by the emergence of low-cost alternatives engendered 
by NAFTA and GATT/WTO policies. Countries with lower wage scales, such 
as Mexico and others in Central America and the Far East, could lure 
business away from the United States.
  Under our analysis, sewing in higher wage countries will continue to 
be reduced, and there may not be a domestic U.S. sewing industry in ten 
years. I believe that this legislation will better position the United 
States to keep as much of the industry in U.S. hands as possible, and I 
look forward to seeing this bill enacted into law.

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