[Congressional Record Volume 142, Number 109 (Tuesday, July 23, 1996)]
[Senate]
[Pages S8553-S8555]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]

       By Mr. HOLLINGS (for himself, Mr. Thurmond, Mr. Robb, Mr. 
     Warner, Mr. Rockefeller, Mr. D'Amato, Mr. Helms, Mr. 
     Faircloth, Mr. Cohen, Ms. Snowe, Mr. Campbell, and Mr. Ford):
  S. 1982. A bill to provide a remedy to damaging imports of men's and 
boys' tailored wool apparel assembled in Canada from third country 
fabric and imported at preferential tariff rates; to the Committee on 
Finance.


                  The Emergency Safeguard Act of 1996

  Mr. HOLLINGS. Mr. President, I rise today to introduce legislation to 
correct a grievous error committed by U.S. negotiations in the final 
hours of the NAFTA negotiations. This error has ripped apart the social 
fabric of dozens of communities as factory after factory in the wool 
and wool apparel industry have shut their doors. Let me state for the 
record that I supported the Canadian Free-Trade Agreement, but I was a 
vigorous opponent of the North American Free-Trade Agreement. The bill 
I introduced today is not aimed at scuttling the NAFTA. At another time 
I will debate the merits of the NAFTA. Instead the bill is designed to 
close a loophole in the NAFTA that has exposed the wool and wool 
apparel industry to a tidal wave of Canadian imports and has left the 
industry without a fundamental right to impose a safeguard against 
import surges. How this industry lost its right to impose a safeguard 
is one of the tragic stories in the history of trade agreements. In the 
wee hours of the morning our negotiators bargained

[[Page S8554]]

away the wool and wool apparel industry in order to secure the 
Canadians agreement to several provisions of the NAFTA. Mr. President 
the NAFTA contains a rule of origin for textile products that was 
supposed to benefit and encourage production in North America. A 
special tariff preference level was established for fabrics that were 
in short supply or unavailable. A gentleman's agreement was reached 
that the products coming in under the TPL would be spread out over a 
broad range of product categories. Instead, the Canadians have flooded 
the United States market in one product category, wool suits. These 
suits which have been dumped into the U.S. market are not made of North 
American fabric, which is readily available. Instead these suits are 
made of fabric produced in China, Turkey, and Italy. The last I 
checked, these countries are not in North America.
  Since 1988 as a result of the abuse of the TPL, production of wool 
suits has declined by 40 percent. Dozens of companies have suffered 
losses, layed off employees, or in some cases declared bankruptcy. 
Grief, the third largest manufacturer of suits in the United States, 
was forced to close plants in Virginia and Pennsylvania. Over 1,300 
workers have lost their jobs. The 500 Fashion group, makers of Botany 
500, announced that it will close two plants in Pennsylvania and one 
plant in Florida. Over 1,000 people are now without work.
  Plaid, the second largest manufacturer of suits, was forced into 
bankruptcy. Plants were closed in Georgia, Maryland, Delaware, and 
Pennsylvania, and 1,500 jobs were eliminated. The same sad story can be 
told in the fabric industry. Frostman Co., the second largest producer 
of wool fabric, was forced into bankruptcy. Burlington Industries, the 
largest producer of wool fabric, has suffered a 30-percent drop in its 
menswear wool fabric, business and laid off over 1,000 employees.
  What recourse do these companies have? Can they, like every other 
industry in America turn to their Government to seek relief? No, that 
option was dealt away in the dark of night. So the bill I introduce 
will correct that situation. It directs the United States Trade 
Representative to negotiate an agreement with the Canadians. The bill 
would permit Canada to maintain the same overall level of wool apparel 
exports to the United States while at the same time preventing serious 
injury to the United States industry by adjusting the distribution 
among different product lines. If the Canadians fail to come to an 
agreement the bill requires that the President apply MFN duty rates to 
all wool apparel TPL imports from Canada as of March 1, 1997. Mr. 
President the men and women were unfortunate pawns in an international 
negotiation. It's time we stood with them and gave them there rights 
back and protect their jobs.
  Mr. ROCKEFELLER. Mr. President, I join Senator Hollings and others as 
a cosponsor of the Emergency Safeguard Act of 1996, and call on the 
Congress to move this bill with great haste. This is vitally important 
to over 600 employees of Corbin Limited in West Virginia, who are 
facing an unprecedented threat from a surge in imports of wool suits 
from Canada.
  Those of us who opposed the North American Free-Trade Agreement 
[NAFTA] did not want to find ourselves with situations like this, but 
we certainly feared they would occur. In this case, decisive action is 
now needed to stand up for American workers and industries facing an 
unfair threat.
  Three years ago, when explaining my vote against the NAFTA, I pointed 
to the disparities between the economies of Canada, the United States, 
and Mexico, as a primary reason for opposing the trade agreement. At 
that time, I did not think it was right to ask West Virginia and other 
States with fragile economies to absorb the brunt of forced integration 
with Mexico. I was particularly concerned that workers in our labor 
intensive industries would face a considerable threat from much lower 
wage Mexican workers.
  Since that time, in the last 2-plus years, many of my concerns have 
proved well founded. Certainly, last year's bailout of the Mexican peso 
is the most conspicuous evidence of problems raised by the NAFTA, but 
today I am here for a wholly different reason.
  Today, I am forced to discuss a problem with our neighbors to the 
North--specifically to textile manufacturers in Canada.
  During consideration of the NAFTA, a provision was inserted at the 
last minute which allowed Canadian manufacturers to import fabrics from 
third countries nearly duty free--compared with the 36 percent duties 
that we pay--and then export finished garments to the United States 
regardless of the harm they might do to American industry and workers.
  Specifically, the provision precluded taking what are known as 
``safeguard'' measures under the NAFTA for wool apparel exported to the 
United States under the tariff preference levels established during the 
Canada-United States Free-Trade Agreement. At that time, the Canadians 
assured our negotiators that this loophole was needed simply to protect 
the existing levels of exports of various categories of low cost wool 
products; things such as caps, sweaters, knits and socks. At that time, 
10 percent of Canadian wool exports were high end products such as 
suits.
  However, Mr. President, since the NAFTA went into effect, nearly all 
Canadian wool exports have been suits, and of that, virtually all of 
them are coming from one Canadian company. Contrary to the stated 
intention of the negotiators, suits now account for 90 percent of 
Canada's wool exports, instead of 10 percent when the deal was made. 
This has done grievous harm to American suit manufacturers, who were 
blindsided by this shift in Canadian export patterns.
  Under normal circumstances, when you have an import surge of this 
sort, and obvious harm is being done to a domestic, American industry, 
the American companies and its workers can seek relief. They can take 
action under the trade laws to stem the surge, and get remedies from 
unfair and injurious trade. You can do this in every area we trade in 
but one, textile and apparel from Canada. In fact, if these very same 
imports were from Mexico instead of Canada, the United States industry 
and its workers could petition the United States Government for a 
safeguard to prevent serious injury.
  That is why this legislation is needed, and needed in a hurry. When I 
opposed the NAFTA I was afraid this kind of thing would happen. We may 
not be able to rewrite history and undo the NAFTA, but we can take 
reasonable steps to stem the hemorrhaging. I know the calendar shows 
very few days in which this body will be conducting legislative work, 
but I hope the majority leader will work with us to make this into law 
before even more harm is done.
  This Senator counts the creation of new and better paying jobs for 
the people of West Virginia as one of the most important things he can 
do to help improve the way of life of the good people of his State. But 
just as important is maintaining the jobs we already have. This 
legislation is necessary, and should be passed.
  Mr. THURMOND. Mr. President, I rise today to join with my colleague 
from South Carolina, Senator Hollings, and several others Senators to 
sponsor the Emergency Safeguard Act of 1996. This legislation corrects 
a loophole created by the passage of NAFTA that has allowed Canadian 
suit makers an unfair advantage in the United States marketplace. 
Currently, over 140,000 people are employed in the textile and apparel 
industry in South Carolina. Several thousand of these jobs supply or 
manufacture men's and boys' wool suits, sport coats, and slacks. These 
jobs are in jeopardy due in part to a manipulation of the tariff 
preference level [TPL] by Canada.
  The TPL, which was established under the Canadian Free-Trade 
Agreement, was originally designed to allow special trade benefits to 
wool products made in Canada from foreign wool fabric when that fabric 
could not be sourced in either Canada or the United States. However, 
Canada has begun sourcing wool fabric from other countries, despite the 
fact that fabric is available from NAFTA countries. Canada has been 
importing fabric from Turkey, Italy, China, and Korea to make items 
which are shipped into the United States under the favorable NAFTA 
tariffs.
  Canada has seized on the TPL loophole to specifically target and 
flood the United States market with men's and boys' tailored wool 
apparel. The import surges are causing layoffs and is putting the 
future of the domestic wool apparel industry in jeopardy.

[[Page S8555]]

  Mr. President, this legislation would place a reasonable sublimit on 
tailored wool apparel exported through the TPL to the United States by 
Canada. The size of the TPL would not change, but Canada would be 
prohibited from using it in a damaging way. This language is necessary 
because NAFTA eliminated the safeguard for U.S. industries to prevent 
injurious imports from flooding the U.S. market. Due to NAFTA, the 
domestic apparel industry has no recourse in stemming the damage caused 
by Canada while all other industries have this protection. Therefore, 
legislation is needed to correct this inequity.
  Mr. President, I hope this measure can be expeditiously considered to 
bring relief to the domestic textile and apparel industry.
                                 ______