U.S.-Africa Trade: U.S. Textile and Apparel Importers' Reactions to Trade
Preference Options (Letter Report, 07/17/98, GAO/NSIAD-98-217).

This report provides information on the possible reactions of major U.S.
textile and apparel importers to different approaches for granting trade
preferences to sub-Saharan African countries. GAO discusses (1) the
expected reactions of major U.S. textile and apparel importers to
alternative approaches to that taken in the African Growth and
Opportunity Act and (2) the factors that would likely influence U.S.
importers' decisions on whether to begin or increase importing textiles
and apparel from sub-Saharan Africa.

--------------------------- Indexing Terms -----------------------------

 REPORTNUM:  NSIAD-98-217
     TITLE:  U.S.-Africa Trade: U.S. Textile and Apparel Importers' 
             Reactions to Trade Preference Options
      DATE:  07/17/98
   SUBJECT:  Importing
             Developing countries
             Foreign trade agreements
             Clothing industry
             Import restriction
             International economic relations
             Tariffs
             Foreign trade policies
             Proposed legislation
IDENTIFIER:  North American Free Trade Agreement
             NAFTA
             Caribbean Basin Initiative
             Generalized System of Preferences Program
             International Harmonized Tariff Schedule
             Kenya
             Lesotho
             Madagascar
             Mauritius
             South Africa
             Swaziland
             Zimbabwe
             
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Cover
================================================================ COVER


Report to the Chairman, Subcommittee on Trade, Committee on Ways and
Means, House of Representatives

July 1998

U.S.  - AFRICA TRADE - U.S. 
TEXTILE AND APPAREL IMPORTERS'
REACTIONS TO TRADE PREFERENCE
OPTIONS

GAO/NSIAD-98-217

U.S.  - Africa Trade

(711347)


Abbreviations
=============================================================== ABBREV

  CBI - Caribbean Basin Initiative
  GSP - Generalized System of Preferences
  HTS - Harmonized Tariff Schedule
  ITC - U.S.  International Trade Commission
  NAFTA - North American Free Trade Agreement

Letter
=============================================================== LETTER


B-280424

July 17, 1998

The Honorable Philip M.  Crane
Chairman, Subcommittee on Trade
Committee on Ways and Means
House of Representatives

Dear Mr.  Chairman: 

At your request, we are providing information regarding the possible
reactions of major U.S.  textile and apparel importers to different
approaches for granting trade preferences to sub-Saharan African
countries.  You asked us to report on (1) the expected reactions of
major U.S.  textile and apparel importers to alternative approaches
to that taken in the African Growth and Opportunity Act (bill number
H.R.  1432) and (2) the factors that would likely influence U.S. 
importers' decisions on whether to begin or increase importing
textiles and apparel from sub-Saharan Africa.  To obtain this
information, we completed interviews with 65 out of the 80 largest
U.S.  importers of textile and apparel (in terms of dollar value of
imports) in 1996.  These companies accounted for almost one-third of
total U.S.  textile and apparel imports at that time.  While the
results of the company interviews are representative of the largest
80 U.S.  textile and apparel importers, these results are not
projectable or generalizable to the universe of all U.S.  textile and
apparel importers. 

This report provides information on how major U.S.  importers of
textile and apparel might react to providing trade preferences to
sub-Saharan Africa but does not address whether any of the discussed
trade preference approaches would promote economic growth and
development in the region.  It also does not address the possible
impact of increased sub-Saharan African textile and apparel imports
on U.S.  consumers and producers nor whether the potential increased
trade with the region might represent diversion of trade from other
countries or regions.  Appendix IV discusses our scope and
methodology in further detail. 


   BACKGROUND
------------------------------------------------------------ Letter :1

In March 1998, the House of Representatives passed the African Growth
and Opportunity Act, which includes provisions that would offer
preferential tariffs and other benefits to textile and apparel
imports from sub-Saharan Africa to increase U.S.  trade with that
region.  (See app.  III for a listing of the 48 sub-Saharan African
countries.) The bill would authorize the President to grant duty-free
and quota-free treatment to products--including textiles and
apparel--from eligible sub-Saharan African countries under the
Generalized System of Preferences (GSP).\1 This treatment would be
provided for textile and apparel articles assembled in eligible
sub-Saharan African countries without specifying where the yarn,
fabric, or thread is made nor where the fabric is cut.\2

In addition to the House bill, we asked about two alternative
approaches for extending trade preferences to sub-Saharan African
textile and apparel products.  While all three approaches would
provide duty-free, quota-free access for textile and apparel products
assembled in sub-Saharan Africa, the two alternate approaches have
more restrictive product eligibility requirements.  The most
restrictive approach would require that U.S.-formed fabric, thread,
and yarns be used and that the fabric be cut in the United States. 
The less restrictive alternative approach would require the use of
U.S.-formed fabric, thread, and yarn but permit cutting in
sub-Saharan Africa.  Unlike the House bill, both of the other
approaches would require that companies ship U.S.  fabric or cut
pieces to sub-Saharan Africa for assembly into finished textile and
apparel products. 

Sub-Saharan Africa is currently a very small exporter of textiles and
apparel to the United States, accounting for less than 1 percent of
total U.S.  general imports of these products in 1997.\3 Over 95
percent of sub-Saharan African textile and apparel exports to the
United States originated from just 7 out of the 48 sub-Saharan
African countries--Kenya, Lesotho, Madagascar, Mauritius, South
Africa, Swaziland, and Zimbabwe. 


--------------------
\1 The GSP program provides duty-free access to the United States for
some products of developing countries.  The program eliminates
tariffs on certain imports from eligible developing countries in
order to promote development through trade rather than through
traditional aid programs.  See International Trade:  Assessment of
the Generalized System of Preferences Program (GAO/GGD-95-9, Nov.  9,
1994). 

\2 Although all sub-Saharan African countries would potentially be
eligible under the House bill, their individual eligibility would be
contingent on the President's annual determination that the country
(1) does not engage in gross violations of human rights and (2) has
established, or is making progress toward establishing, a
market-based economy. 

\3 General imports measure the total physical arrivals of merchandise
from foreign countries, whether such merchandise enters consumption
channels immediately or is entered into bonded warehouses or foreign
trade zones under the custody of the U.S.  Customs Service. 


   RESULTS IN BRIEF
------------------------------------------------------------ Letter :2

Our interviews with major U.S.  importers of textile and apparel
revealed that the companies' interest in initiating or increasing
imports from sub-Saharan Africa varies widely, depending on the
various trade liberalizing approaches.  Only a limited number of the
companies we interviewed, 7 out of the 65, reported that they might
begin or increase importing these products from the region over the
next 5 years if the most restrictive product eligibility requirements
for sub-Saharan African trade benefits are implemented.  This
approach would provide duty-free, quota-free treatment only to
products assembled in sub-Saharan Africa from U.S.-made thread and
fabric that must also be cut in the United States.  Of the 65
companies, 15 reported that they might begin or increase importing
from the region if eligibility were restricted to products made from
U.S.  fabric but not requiring that the fabric be cut in the United
States.  This contrasts with 54 out of the 65 companies that reported
that they might begin or increase imports under the House bill, which
would provide eligibility for products assembled in sub-Saharan
Africa without specifying where the fabric is made or cut.\4 There
were no major distinctions or systematic patterns distinguishing the
types of companies that might import textiles and apparel from
sub-Saharan Africa under any of the three approaches. 

Most of the importers we interviewed indicated that increases in the
time and costs of shipping associated with transporting U.S.  fabric
to sub-Saharan Africa were important factors that would discourage
them from importing from the region under either of the more
restrictive approaches.  Conversely, the single most important factor
influencing companies' interest in importing from sub-Saharan Africa
under the House bill was the increased flexibility to choose the
source of the fabric (that is, the lack of a requirement for U.S.-cut
and -formed fabric). 


--------------------
\4 Under each of the alternative approaches, three companies
responded that they "didn't know" whether they would begin or
increase imports. 


   IMPORTER INTEREST VARIES
   SUBSTANTIALLY UNDER DIFFERENT
   PRODUCT ELIGIBILITY
   REQUIREMENTS
------------------------------------------------------------ Letter :3

Far fewer of the companies we interviewed expressed an interest in
beginning or increasing sub-Saharan textile and apparel imports under
the more restrictive product eligibility approaches, in comparison to
the House bill's less restrictive approach.  Of the 65 importers
interviewed for the study, only 7 reported that they might increase
imports if eligibility were restricted to products assembled in
sub-Saharan Africa from fabric cut and formed in the United States
over the next 5 years.\5 Fifteen of the 65 companies reported that
they might begin or increase importing sub-Saharan textile and
apparel if eligibility were restricted to products made from U.S. 
fabric but not requiring that the fabric be cut in the United
States.\6 This contrasts with 54 out of the 65 companies interviewed
responding that they might increase imports over the next 5 years
under the House bill.\7 Almost three-fourths of these companies, or
39 out of 54, indicated that they might not begin or increase imports
under either of the more restrictive alternative approaches.  Also
included in this latter group of 54 companies were all 22 firms we
interviewed that currently import textiles and apparel from
sub-Saharan Africa.  (See app.  II.) More than half of these
companies, 12 out of 22, reported getting 1 percent or less of their
total textile or apparel imports from sub-Saharan Africa.  Of the
remaining companies, eight reported importing on average about 5
percent of these products from the region, while two did not know how
much they import. 

The study included a wide range of companies that engaged in
different importing activities.  Of the 65 companies we interviewed,
43 reported that they import both textiles and apparel, 20 import
apparel only, and 2 import textiles only.  The interview respondents
also included companies using diverse importing strategies.\8 While
more than half of the companies interviewed, 36 out of 65, reported
that they mainly import products that they source offshore under
their own specifications, the study also included companies that
mainly import finished products, companies that mainly import
products from their own offshore manufacturing facilities, and
companies that import equally under a combination of these
strategies.  Also, our study included 29 companies that mainly sell
textiles and/or apparel, including major national discount department
stores, retailers, and wholesalers, as well as 26 companies that
mainly manufacture these products in the United States or offshore.\9

The interview respondents also import textiles and apparel globally. 
All but one company reported importing from Asia, while the vast
majority also reported importing from the Caribbean Basin\10 and
Mexico.  Furthermore, most of the companies use existing U.S.  trade
preference programs--such as the North American Free Trade Agreement
(NAFTA)\11 and the Caribbean Basin Initiative (CBI)--to import
textiles and apparel from these countries into the United States. 

We analyzed the distribution of these characteristics for the
different groups of companies that expressed an interest in importing
sub-Saharan African textiles and apparel under each of the three
approaches.  Our analysis indicated that the various groups shared
diverse characteristics and that there were no major distinctions or
systematic patterns in the types of companies that might import
textiles and apparel from sub-Saharan Africa.  For example, we found
that a company's participation in existing U.S trade preference
programs was not an indicator of how it might react to extending
preferences to sub-Saharan textiles and apparel.  The proportion of
companies that currently import these products under NAFTA trade
regulations, Harmonized Tariff Schedule (HTS) 807A, or HTS 9802
(807)\12 that expressed an interest in importing from sub-Saharan
Africa was similar under the various approaches we considered. 
Similarly, a company's experience with importing from sub-Saharan
Africa also was not a major indicator of how it might react to trade
preferences for sub-Saharan textiles and apparel.  Companies
indicating that they might begin or increase importing under the
different approaches included both those that do and do not currently
import from sub-Saharan Africa.  See appendix I for additional
information on company characteristics. 


--------------------
\5 One of these companies reported that it was currently importing
sub-Saharan textile or apparel products. 

\6 Five of these companies reported that they were currently
importing sub-Saharan textiles or apparel. 

\7 Seven companies reported that they would not import from
sub-Saharan Africa under any of the three alternative approaches. 

\8 According to the Department of Commerce, U.S.  importers of
apparel generally (1) import finished products, (2) source or
contract offshore production under exact specifications, and/or (3)
engage in production sharing with contractors in other countries or
own offshore production facilities. 

\9 We relied on Dun & Bradstreet's Dun's Market Identifiers database
to identify each company's business activity. 

\10 Caribbean Basin countries include Antigua and Barbuda, Aruba, the
Bahamas, Barbados, Belize, Costa Rica, Dominica, the Dominican
Republic, El Salvador, Grenada, Guatemala, Guyana, Haiti, Honduras,
Jamaica, Montserrat, the Netherlands Antilles, Nicaragua, Panama, St. 
Kitts and Nevis, St.  Lucia, St.  Vincent and the Grenadines,
Trinidad and Tobago, and the British Virgin Islands. 

\11 NAFTA generally eliminates quotas and phases out tariffs on
apparel originating in Mexico or Canada that is made from fabric
produced in a NAFTA country. 

\12 HTS 807A provides for virtually quota-free access to the U.S. 
market for CBI apparel assembled from U.S.-formed and -cut fabric. 
Under 807A, duties are only paid on the value added in the CBI
countries.  HTS 9802 refers to any products imported under the
product-sharing provisions of item 807 of the U.S.  Harmonized Tariff
Schedule, which is now heading 9802 of the HTS.  Although products
imported under this provision are exempted from duties on the value
of their U.S-made components, apparel imports are subject to quotas. 


   SHIPPING TIME AND COSTS, AND
   SOURCING FLEXIBILITY ARE KEY
   FACTORS IN COMPANY IMPORT
   DECISIONS
------------------------------------------------------------ Letter :4

Increased time and costs of shipping associated with transporting
U.S.  fabric to sub-Saharan Africa would discourage most of the
importers we interviewed from importing textiles and apparel from the
region under either of the more restrictive trade preference
approaches.  Increased shipping time was cited as an influential
factor by three-quarters of the importers that indicated they might
not import sub-Saharan textiles and apparel under the more
restrictive approaches.  Increased shipping costs were cited as an
influential factor by more than half of this group of companies.\13
Furthermore, higher U.S.  fabric costs were also cited as an
influential factor by about one-third of the companies. 

On the other hand, we found that increased flexibility to choose the
fabrics' source was the single most important factor influencing
companies' interest in importing.  Increased sourcing flexibility was
cited as an influential factor by 52 out of the 54 companies that
said that they might import textiles and apparel from sub-Saharan
Africa under the House bill.  Furthermore, this was a major factor
cited by 27 of the 39 importers that indicated that they might import
sub-Saharan textiles and apparel under the House bill but might not
under either of the more restrictive trade preference approaches. 

Duty-free, quota-free benefits were also cited as influential factors
in the decision to import textiles and apparel from sub-Saharan
Africa by over two-thirds of the companies that might increase
imports under the House bill and by most of the limited number of
companies that might do so under the more restrictive alternatives
that we asked about.  However, the fact that 39 out of 54 companies
that might import sub-Saharan textiles and apparel under the House
bill might not do so under the more restrictive alternative
approaches suggests that duty-free, quota-free benefits alone were
generally not sufficient to substantially encourage increased textile
and apparel imports from the region.  Some companies stated that in
light of the uncertainty related to doing business in sub-Saharan
Africa, preferential tariffs would influence their decision-making if
the companies were given the flexibility to buy fabric from anywhere
in the world.  See appendix II for additional information on factors
influencing companies' decisions on whether to import from
sub-Saharan Africa. 

In addition to the business-related factors that could influence
companies' interest in importing from sub-Saharan Africa, the
provisions of other trade preference programs could be relevant. 
Given that many of the companies are already participating in
preference programs such as NAFTA and CBI, their interest in
importing from sub-Saharan Africa might be influenced by possible
revisions to these programs.  For example, although CBI granted
Caribbean Basin countries preferential access to the U.S.  apparel
market in 1986, this region does not have parity with the greater
trade preferences provided to Mexico in 1994 under NAFTA.  If
NAFTA-like treatment were granted to CBI textiles and apparel, about
half of the 65 companies (32 to 34) we interviewed reported that
their decision on whether to import from sub-Saharan Africa under the
three approaches would not be affected.  However, about one-third of
the companies (20 to 24) indicated that they would be less likely to
import from sub-Saharan Africa if NAFTA-like treatment were extended
to CBI.  This pattern generally held for the 7, 15, and 54 companies,
respectively, that expressed an interest in importing from
sub-Saharan Africa under the three approaches. 


--------------------
\13 The U.S.  International Trade Commission (ITC) recently reported
that shipping times and transportation costs between sub-Saharan
Africa and the United States are already generally higher than other
regions in the world, including Asia and the Caribbean Basin.  See
Likely Impact of Providing Quota-Free and Duty-Free Entry to Textiles
and Apparel From Sub-Saharan Africa, U.S.  ITC, Publication 3056,
Energy, Chemicals and Textiles Division (Washington, DC.:  Sept. 
1997) and U.S.-Africa Trade Flows and Effects of the Uruguay Round
Agreements and U.S.  Trade and Development Policy, U.S.  ITC,
Publication 3067 (Washington, DC.:  Oct.  1997). 


---------------------------------------------------------- Letter :4.1

We are sending copies of this report to appropriate congressional
committees and other interested parties--including companies that
participated in the study.  We will also make copies available to
others upon request. 

Please contact me at (202) 512-8984 if you or your staff have any
questions concerning this report.  The major contributors to this
report are listed in appendix V. 

Sincerely yours,

JayEtta Z.  Hecker, Associate Director
International Relations and Trade Issues


CHARACTERISTICS OF RESPONDING
COMPANIES BY THEIR REACTIONS TO
ALTERNATIVE TRADE PREFERENCE
APPROACHES
=========================================================== Appendix I

                                   Yes, if       Yes, if  Yes, if no
                               required to   required to  restrictio   No, under
                         All     use U.S.-     use U.S.-       ns on  any of the
                    companie  formed and -   formed (not   fabric or       three
Characteristics            s    cut fabric   cut) fabric     cutting  approaches
------------------  --------  ------------  ------------  ----------  ----------
Number of                 65             7            15          54           7
 responding
 companies\a
Type of imports
Apparel                   20             2             5          15           3
Textiles                   2             1             1           1           0
Apparel and               43             4             9          38           4
 textiles
Type of business
Seller                    29             5             6          28           1
Manufacturer              26             1             4          20           2
Both seller and            7             0             3           4           3
 manufacturer
Other                      3             1             2           2           1
Main import
 activity\b
Source offshore           36             4             7          28           6
Import finished           14             2             4          13           0
 products
Own offshore               8             1             3           6           1
 facilities
Combination                6             0             1           6           0
Rank by import
 value
 of responding
 companies
Top 1/3 of                22             1             5          20           0
 companies
Middle 1/3 of             21             2             5          18           3
 companies
Bottom 1/3 of             22             4             5          16           4
 companies
Participation in
 U.S. trade
 preference
 programs
NAFTA
Yes                       49             5            12          40           5
No                        16             2             3          14           2
HTS 807A\c
Yes                       35             5             9          30           3
No                        29             2             6          23           4
HTS 9802 (807)
Yes                       29             3             7          24           3
No                        31             3             6          25           4
Don't know                 5             1             2           5           0
Current importing
 sources
Sub-Saharan Africa
Yes                       22             1             5          22           0
No                        43             6            10          32           7
Mexico
Yes                       52             5            12          43           5
No                        13             2             3          11           2
CBI countries
Yes                       56             5            13          49           4
No                         9             2             2           5           3
Asia
Yes                       64             7            15          54           6
No                         1             0             0           0           1
Other countries
Yes                       49             5            11          40           6
No                        15             2             4          13           1
Don't Know                 1             0             0           1           0
--------------------------------------------------------------------------------
Legend:

CBI = Caribbean Basin Initiative
NAFTA = North American Free Trade Agreement
HTS = Harmonized Tariff Schedule

\a Under each of the alternative approaches, three companies
responded that they "didn't know" whether they would begin or
increase textile or apparel imports from sub-Saharan Africa. 

\b Main import activity was not determined for one company. 

\c Participation status was not determined for one company. 


FACTORS INFLUENCING COMPANIES'
REACTIONS TO TRADE LIBERALIZATION
APPROACHES
========================================================== Appendix II



                               Table II.1
                
                     Reasons Companies Might Import

                                            If          If
                                      required    required
                                            to          to       If no
                                     use U.S.-   use U.S.-  restrictio
                                        formed      formed       ns on
                                      and -cut   (not cut)   fabric or
Factors                                 fabric      fabric     cutting
----------------------------------  ----------  ----------  ----------
Total number of companies that               7          15          54
 might import under each of the
 approaches\a
Increased sourcing flexibility               1           4          52
Quota-free benefits                          7          10          38
Duty-free benefits                           7          10          36
Lower labor costs in sub-Saharan             6          10          20
 Africa
Lower unit cost of production in             1           3          11
 sub-Saharan Africa
Lower fabric costs in sub-Saharan            0           0          11
 Africa
Lower cutting costs in sub-                  1           9           7
 Saharan Africa
Support sub-Saharan African                  0           0           4
 development
----------------------------------------------------------------------
\a Under each of the alternative approaches, three companies
responded that they "didn't know" whether they would begin or
increase textile or apparel imports from sub-Saharan Africa. 



                               Table II.2
                
                   Reasons Companies Might Not Import

Total number of companies that might not import
under each of the approaches\a                          55    47     8
----------------------------------------------------  ----  ----  ----
Increased shipping time                                 42    35     3
Increased shipping cost                                 34    26     2
Less sourcing flexibility                               23    17     0
Higher cost of U.S. fabric                              18    16     0
Sub-Saharan Africa not in company plans                  6     6     4
Concerns over lack of infrastructure                     6     6     1
Higher U.S. labor costs                                  6     2     0
Concerns regarding the quality of sub-Saharan            5     5     3
 African finished goods
Concerns regarding the quality of sub-Saharan            5     5     3
 workmanship
Concerns regarding the reliability of deliveries         3     4     1
 from sub-Saharan Africa
Concerns regarding the quality of sub-Saharan            2     3     4
 African fabric
Concerns about political instability                     2     2     0
----------------------------------------------------------------------
\a One company indicated that while it might begin or increase
importing sub-Saharan textiles and apparel under either of the more
restrictive approaches, it might not do so under the House bill. 


SUB-SAHARAN AFRICAN COUNTRIES
========================================================= Appendix III

Republic of Angola
Republic of Benin
Republic of Botswana
Burkina Faso
Republic of Burundi
Republic of Cameroon
Republic of Cape Verde
Central African Republic
Republic of Chad
Federal Islamic Republic of Comoros
Republic of Cï¿½te d'Ivoire
Democratic Republic of the Congo
Republic of the Congo
Republic of Djibouti
Republic of Equatorial Guinea
State of Eritrea
Ethiopia
Gabonese Republic
Republic of the Gambia
Republic of Ghana
Republic of Guinea
Republic of Guinea-Bissau
Republic of Kenya
Kingdom of Lesotho
Republic of Liberia
Republic of Madagascar
Republic of Malawi
Republic of Mali
Islamic Republic of Mauritania
Republic of Mauritius
Republic of Mozambique
Republic of Namibia
Republic of Niger
Federal Republic of Nigeria
Republic of Rwanda
Democratic Republic of Sao Tomï¿½ and Principe
Republic of Seychelles
Republic of Senegal
Republic of Sierra Leone
Somalia
Republic of South Africa
Republic of Sudan
Kingdom of Swaziland
United Republic of Tanzania
Republic of Togo
Republic of Uganda
Republic of Zambia
Republic of Zimbabwe


OBJECTIVES, SCOPE, AND METHODOLOGY
========================================================== Appendix IV

As requested, this report provides information on (1) the expected
reactions of major U.S.  textile and apparel importers to alternative
approaches to that taken in the 1997 African Growth and Opportunity
Act (bill number H.R.  1432) and (2) the factors that would likely
influence U.S.  importers' decisions on whether to begin or increase
importing textiles and apparel from sub-Saharan Africa. 

In preparing this report, we reviewed the African Growth and
Opportunity Act, as well as two alternative trade preference
approaches.  In addition, we met with representatives from key U.S. 
trade associations, including the American Apparel Manufacturers
Association, the U.S.  Association of Importers of Textiles and
Apparel, and the American Textile Manufacturers Institute, and
federal agencies to discuss issues related to the alternative trade
preference approaches for sub-Saharan Africa and to obtain their
review of our interview instrument and our study design.  We met with
officials from the U.S.  Customs Service, the Commerce Department,
and the U.S.  International Trade Commission (ITC).  Although we did
not obtain any written comments on our report, the ITC reviewed a
draft of the report and provided technical comments.  We incorporated
its comments in the text where appropriate. 

For background, we compiled trade data on sub-Saharan Africa's
textile and apparel exports to the United States from the Department
of Commerce, the U.S.  Treasury, and the ITC.  In addition, we
reviewed a September 1997 ITC report assessing the competitiveness of
the region's textile and apparel sector, as well as an October 1997
ITC report regarding trade flows between the United States and
sub-Saharan Africa. 

To report on how major U.S.  importers of textiles and apparel might
react to the different trade preference approaches for sub-Saharan
African textiles and apparel, as well as what factors influence these
importers' decisions, we contacted 80 of the largest U.S.  textile
and apparel importers and asked (1) whether they would begin or
increase importing of textiles and apparel from the region under the
three alternative trade preference approaches over the next 5 years
and (2) what factors would influence their decisions.  The factors
listed in appendix III were provided voluntarily by the respondents
rather than by prompted responses to questions.  We completed
telephone interviews with 65 of these companies for a response rate
of 81 percent.  The other 15 contacted companies either refused to
participate (6) or could not be scheduled for an interview within the
study period (9).  To determine whether responding companies differed
systematically from those that did not, we compared the two groups in
terms of type of importer, region of the country, and value of
imports; no differences were found between respondents and
nonrespondents.  The item nonresponse rate (the rate of respondents
not answering a question that should have been answered) ranged from
0 to 2 percent.  Prior to initiating our telephone interviews, we
pretested our questions with eight companies not included in the
study. 

Our report provides information on how companies that account for
almost one-third of U.S.  worldwide textile and apparel imports might
react to different approaches for granting trade preferences to
sub-Saharan African countries.  Although the results of the company
interviews are representative of the largest 80 U.S.  textile and
apparel importers, these results are not projectable or generalizable
to the universe of U.S.  textile and apparel importers.  Because we
were requested to focus on the largest U.S.  importers of textile and
apparel, our report is not based on a probability sample.  Also, the
company response information reported is speculative because we asked
selected importers to respond to hypothetical situations.  Their
decisions in an actual situation may be different.  However, to
ensure that we obtained company-specific information from informed
sources, we interviewed company officials directly involved in
import-related decision-making. 

This report does not assess whether any of the discussed trade
preference approaches would constitute an effective trade benefit
that furthers development in sub-Saharan Africa.  Also, this report
does not assess the impact of any of these trade preference
approaches on U.S.  consumers or producers of competitive textile and
apparel products.  Nor does the report consider their impact on other
countries or regions, such as the extent to which increased trade
with sub-Saharan Africa might be shifted away from another region. 

The study consisted of the largest importers of textiles and apparel,
based on 1996 total dollar value of imports.  We obtained this
data--the latest available--from the U.S.  Customs Service, which
provided a rank-order listing of the top 250 apparel importers and
the top 250 textile importers during 1996.  To select the largest 80
U.S.  importers of textiles and/or apparel, we first combined the
total dollar value of imports for those companies appearing on both
lists (30).  We then ranked the companies from 1 through 470. 
Because the value of apparel imports (about $37.2 billion) was much
greater than that of textile imports (about $12.6 billion), our study
included more companies that import apparel.  Of the 65 companies
interviewed, 43 reported importing both textiles and apparel, 20
reported importing apparel only, and 2 reported importing textiles
only.  We believe that this grouping of companies does not impair the
value of our study since, according to the ITC, preferential access
to the U.S.  market is more likely to result in investment in
sub-Saharan Africa's apparel, rather than textile, industry.\1

The combined worldwide U.S.  textile and apparel imports of the 65
companies totaled about $15.4 billion, or 31 percent, of total U.S. 
imports of these products during 1996, based on the data provided by
Customs.  The dollar value of imports for the companies ranged from
about $73 million to over $1.1 billion.  We did not independently
verify the importer information obtained from Customs. 

We conducted our work from April to July 1998 in accordance with
generally accepted government auditing standards. 


--------------------
\1 In its September 1997 report, the ITC reported that in terms of
capital and infrastructure requirements, entry barriers for apparel
production are generally lower in comparison with that for textiles. 


MAJOR CONTRIBUTORS TO THIS REPORT
=========================================================== Appendix V

NATIONAL SECURITY AND
INTERNATIONAL AFFAIRS DIVISION,
WASHINGTON, D.C. 

Elizabeth J.  Sirois
Michael J.  Courts
Emil E.  Friberg
Kathleen M.  Joyce
Nina S.  Pfeiffer

OFFICE OF GENERAL COUNSEL,
WASHINGTON, D.C. 

Ernie E.  Jackson

ATLANTA FIELD OFFICE

Carlos J.  Evora

LOS ANGELES FIELD OFFICE

Patricia Cazares-Chao
Edward J.  Laughlin
Larry S.  Thomas


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