[Congressional Record Volume 143, Number 117 (Monday, September 8, 1997)]
[Extensions of Remarks]
[Page E1683]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]




              NAFTA PARITY FOR U.S. WOOL APPAREL INDUSTRY

                                 ______
                                 

                          HON. JOHN J. LaFALCE

                              of new york

                    in the house of representatives

                       Monday, September 8, 1997

  Mr. LaFALCE. Mr. Speaker, today, I am introducing legislation that 
will redress a wrong inflicted on an important segment of the U.S. 
textile and apparel industry during NAFTA negotiations. I believe it is 
important for the credibility of NAFTA to correct a serious flaw in 
this agreement that has adversely and unfairly affected U.S. textile 
and apparel producers.
  During NAFTA negotiations with Canada, changes were made in the 
original United States-Canada Free Trade Agreement [CFTA] with respect 
to imports of men's and boys' wool suits, jackets and slacks--changes 
which both injure United States manufacturers in this sector and give 
no avenue for relief from this injury. My legislation will correct this 
mistake and return to provisions that were originally in the CFTA.
  When the United States and Canada negotiated the textile and apparel 
provisions of the CFTA, special duty allowances were made for tailored 
men's and boys' wool apparel made from foreign fabric, that is, fabric 
not produced in either the United States or Canada. According to CFTA 
rules of origin, wool apparel could qualify for CFTA tariffs only if 
both the apparel and fabric originated in Canada or the United States. 
Because Canada claimed a shortage of wool fabric, a temporary Tariff 
Preference Level [TPL] was established for this category of imported 
apparel for items made from textiles that were not available in either 
the United States or Canada--hence, the special treatment for wool 
apparel made from non-United States or Canadian textiles.
  At the time, Canadian manufacturers of tailored wool apparel 
constituted only a small portion of the Canadian apparel industry, and 
the TPL was intended only to ensure that they had an adequate supply of 
wool fabric. Moreover, Canadian negotiators refused to set sublimits 
for categories of wool apparel in response to United States concerns 
about concentration of products. Canada explicitly assured the United 
States that it would never allow targeting of products, and Canada 
would continue shipping a wide range of products. The CFTA mandated 
renegotiation of the Tariff Preference Level by January 1, 1998, 
according to changing conditions and circumstances of the market.
  During NAFTA negotiations, textiles and apparel issues with Canada 
remained unresolved until the end of negotiations in August 1992, even 
though agreement with Mexico had been reached 4 months earlier. A deal 
was struck at the last minute that would have a major impact on U.S. 
industry. First, preference levels increased slightly, but a sublimit 
for wool suits was set at 99 percent of the TPL and effectively was not 
a sublimit.
  Second, the CFTA monitoring and renegotiation requirements were 
dropped that would have made adjustments to ``reflect current 
conditions in the textile and apparel industries.'' Indeed, the Office 
of the U.S. Trade Representative has said that NAFTA negotiations 
constituted a fulfillment of the CFTA mandate.
  The result of this retention of Tariff Preference Levels--and indeed 
the increase of levels rather than a lowering--has resulted in an 
unacceptable surge in imports of this product from Canada. United 
States industry believes this provision has been used by Canadian 
producers for ``wholesale circumvention of the rule of origin''--and 
the rule of origin is the foundation of a free trade agreement. The 
legislation I am introducing today would restore the mandate to monitor 
and renegotiate the schedule of Tariff Preference Levels by January 1, 
1998.

  Since 1988, the surge of tailored wool apparel imports from Canada 
has devastated the United States industry. U.S. production of men's and 
boys' wool suits has dropped more than 40 percent, and employment has 
fallen almost 50 percent. At the time of CFTA negotiations, United 
States industry voiced concern about establishing Tariff Preference 
Levels for goods made from nonoriginating fabric, but Canada assured 
United States negotiators that preexisting trade patterns would not be 
altered. Clearly, this has not happened.
  Yet, U.S. industry does not normal access to safeguard actions as 
provided in other sections of NAFTA which would allow it to petition 
the U.S. Government for temporary relief from injurious imports. 
Instead, the wool apparel industry was excluded from NAFTA safeguard 
action because CFTA provisions were retained instead that reserved the 
Parties rights under GATT--but did not address quantitative 
restrictions. This reliance on GATT--now the WTO--only for the U.S. 
textile and apparel industry in turn imposes limitations on the use of 
safeguards because of U.S. legislation recognizing the phasehout of the 
Multifiber Agreement. The effect gives the U.S. wool apparel industry 
no recourse to safeguard action--a situation that no U.S. trade 
agreement has allowed in the past.
  Even more glaring in the NAFTA is the specific omission of allowed 
consultations between the United States and Canada for surges of United 
States imports for wool products entering the United States under 
quantitative restrictions. The legislation I am introducing would allow 
the U.S. industry for tailored wool apparel to have normal access to 
safeguard provisions under the NAFTA.
  Mr. Speaker, I believe Congress must take corrective action when it 
becomes aware that a major piece of legislation unfairly excludes and 
injures a sector of U.S. industry, especially when this effect was not 
intended. We owe it to U.S. workers in the tailored wool apparel sector 
to restore legislation to its original intent and to provide for a 
normal avenue under U.S. trade law to redress injury from imports.
  The text of the bill follows:

                                H.R. --

       Be it enacted by the Senate and House of Representatives of 
     the United States of America in Congress assembled,

     SECTION 1. RENEGOTIATION OF QUANTITIES OF WOOL ARTICLES 
                   ELIGIBLE FOR TARIFF PREFERENCE LEVELS.

       By not later than January 1, 1998, the President shall take 
     the necessary steps to renegotiate with Canada the annual 
     quantity limitations of tailored wool apparel assembled in 
     Canada from fabric or yarn produced or obtained in a country 
     other than a NAFTA country, that is eligible for preferential 
     tariff treatment under Appendix 6.B.1 to Annex 300-B of the 
     NAFTA, to reflect current conditions in the wool textile and 
     apparel industry located in Canada and the United States, 
     including the ability of tailored wool apparel producers to 
     obtain supplies of wool fabric within the territories of 
     Canada and the United States.

     SEC. 2. AVAILABILITY OF SAFEGUARD PROCEDURES.

       For purposes of part 1 of subtitle A of title III of the 
     North American Free Trade Agreement Implementation Act (19 
     U.S.C. 3351) and following)--
       (1) the term ``Canadian article'' shall be deemed to 
     include tailored wool apparel assembled in Canada from fabric 
     or yarn produced or obtained in a country other than a NAFTA 
     country, that is eligible for preferential tariff treatment 
     under Appendix 6.B.1 to Annex 300-B of the NAFTA; and
       (2) subsection (d)(2) of section 302 of the North American 
     Free Trade Agreement Implementation Act (19 U.S.C. 
     3352(d)(2)) shall not apply to articles described in 
     paragraph (1).

     SEC. 3. DEFINITIONS.

       As used in this Act--
       (1) the term ``NAFTA'' means the North American Free Trade 
     Agreement approved by the Congress under section 101(a) of 
     the North American Free Trade Agreement Implementation Act 
     (19 U.S.C. 3311(a)); and
       (2) the term ``NAFTA country'' has the meaning given that 
     term in section 2(4) of the North American Free Trade 
     Agreement Implementation Act (19 U.S.C. 3301(2)).

     

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