[Congressional Record Volume 144, Number 21 (Thursday, March 5, 1998)]
[Extensions of Remarks]
[Pages E318-E319]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]


                    AMERICAN SAMOA GARMENT INDUSTRY

                                 ______
                                 

                       HON. ENI F.H. FALEOMAVAEGA

                           of american samoa

                    in the house of representatives

                        Thursday, March 5, 1998

  Mr. FALEOMAVAEGA. Mr. Speaker, I rise today to introduce legislation 
which would make effective 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. A few years ago, a garment 
manufacturing company began production in American Samoa--the first 
significant new outside industry to invest in the territory since the 
nineteen-sixties. 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 meeting scheduled 
production levels.
  Because this is a new industry for American Samoa, it requires a 
significant amount of planning and training of the local workforce. 
While our people need time to develop the sewing skills needed to be 
competitive on a world-wide 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 $5-7 million 
dollars can be generated for the mainland U.S. textile industry if the 
expansion goes forward as planned.
  Mr. Speaker, the numbers involved are very small in U.S. mainland 
terms, but they are of great significance on an island whose population 
totals 60,000 people.
  It now appears that the 1996 change in U.S. Customs regulations has 
placed in jeopardy our infant garment industry and its future

[[Page E319]]

growth. As of July 1, 1996, garments produced almost entirely in 
American Samoa lost their previous customs treatment even when 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 U.S. yarn to American Samoa, knit or weave it in American Samoa, 
dye it in American Samoa, sew as much as the factory in American Samoa 
can handle, ship 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, but under the 1996 
regulations, 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 American 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 
America 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 U.S. 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 
are being 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, 
are luring business away from the United States.
  Under my analysis, sewing in higher-wage countries will continue to 
be reduced to the extent that soon there may not be a domestic U.S. 
sewing industry. 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.

                          ____________________