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LEATHER APPAREL AND MISCELLANEOUS

BILLS

TUESDAY, AUGUST 26, 1980

HOUSE OF REPRESENTATIVES,
COMMITTEE ON WAYS AND MEANS,
SUBCOMMITTEE ON TRADE,

Washington, D.C. The subcommittee met at 10 a.m., pursuant to notice, in room 1100, Longworth House Office Building, Hon. Charles A. Vanik (chairman

of the subcommittee) presiding. [The first order of business was on House Concurrent Resolution 376 relative to United States-Japan trade, which is printed elsewhere. The subcommittee then moved to consideration of House Concurrent Resolution 383, followed by testimony on miscellaneous tariff and trade bills, which follows.]

[Press release announcing hearing follows:]

[Press release of August 19, 1980)

CHAIRMAN CHARLES A. VANIK, DEMOCRAT OF OHIO, SUBCOMMITTEE ON TRADE, COM

MITTEE ON WAYS AND MEANS, ANNOUNCES HEARING ON HOUSE CONCURRENT RESOLUTION 376 RELATIVE TO JAPAN-UNITED STATES TRADE; ON HOUSE CONCURRENT RESOLUTION 383, DISAPPROVING THE PRESIDENT'S DETERMINATION TO DENY IMPORT RELIEF ON LEATHER WEARING APPAREL; AND ON CERTAIN TARIFF AND TRADE BILLS, TUESDAY, AUGUST 26, 1980

The Honorable Charles A. Vanik (D., Ohio), Chairman, Subcommittee on Trade, U.S. House of Representatives, today announced that the Subcommittee on Trade will hold a public hearing on Tuesday, August 26th on H. Con. Res. 376, introduced by Mr. Vanik, relative to Japan-United States trade. Administration and private sector appearances on H. Con. Res. 376 will be limited to witnesses specifically invited by the Subcommittee.

In addition to the non-tariff barrier and investment issues mentioned in the Resolution the Subcommittee is especially interested in receiving information on the U.S.-Japanese negotiations relating to the MTN agreement on Government Procurement (NTT-issue), recent trends in Japanese auto exports, and ideas for long-range improvement in U.S.-Japan trade relations (such as the work of the Wise Men's Group).

Following testimony on H. Con. Res. 376, the Subcommittee will receive testimony on H. Con. Res. 383, introduced by Mr. Shannon, to disapprove the determination by the President not to provide import relief for the leather wearing apparel industry. On January 24, 1980, the U.S. International Trade Commission unanimously reported to the President that coats and jackets of leather were being imported in such increased quantities as to be a substantial cause of serious injury, or the threat thereof, to the domestic industry and recommended an increase in the rate of duty on such imports (not valued over $150 each) to 25 percent ad valorem in the first year; 20 percent ad valorem in the second year; and 15 percent ad valorem in the third year. On March 24, the President decided to deny import relief to the industry as not in the national economic interest. Passage of the Disapproval Resolution would implement the ITC's original recommendation.

Finally, testimony will be heard on the following four tariff and trade bills; H.R. 6750 (Mr. Edgar): “The Hovercraft Skirt Tariff Act.”

(1)

H.R. 7660 (Mr. Jenkins): To extend duty-free treatment to certain freight containers.

H.R. 7709 (Mr. Jones of Oklahoma; Mr. Evans of the Virgin Islands): To amend the Tariff Schedules of the U.S. to increase the quantity of cigarettes that may be accorded duty-free treatment if acquired in insular possessions and entered by returning U.S. residents.

H.R. 7802 (Mr. Downey and others): To amend the Tariff Schedules of the U.S. with respect to the rates of duty on ephedrine, racephedrine, and their salts.

The hearing will be held at 10:00 a.m. in the Main Committee on Ways and Means hearing room, 1100 Longworth House Office Building.

Officials from interested Executive branch agencies will testify first followed by testimony from the interested public. Given the limited time available and in order to maximize time for questioning and discussions, witnesses will be asked to summarize their statements. The full statement will be included in the printed record. Also, in lieu of a personal appearance, any interested person or organization may file a written statement for inclusion in the printed record.

Requests to be heard must be received by the Committee by noon Monday, August 25. The request should be addressed to John M. Martin, Jr., Chief Counsel, Committee on Ways and Means, U.S. House of Representatives, Room 1102 Longworth House Office Building, Washington, D.C. 20515; telephone (202) 225-3625. Notification to those scheduled to appear and testify will be made by telephone as soon as possible.

In this instance, it is requested that persons scheduled to appear and testify submit 30 copies of their prepared statements to the Committee office, Room 1102 Longworth House Office Building, by the close of business, Monday, August 25.

Persons submitting a written statement in lieu of a personal appearance should submit at least three (3) copies of their statement by the close of business, Friday, August 29, 1980. If those filing statements for the record of the printed hearing wish to have their statements distributed to the press and the interested public, they may submit 50 additional copies for this purpose if provided to the Committee during the course of the public hearing.

Each statement to be presented to the Subcommittee or any written statement submitted for the record must contain the following information:

1. The name, full address, and capacity in which the witness will appear;

2. The list of persons or organizations the witness represents, and in the case of associations and organizations, their address or addresses, their total membership and where possible, a membership list;

3. The bill or bills on which the witness will be testifying and whether the testimony will be in support of or opposition to it; and

4. A topical outline or summary of the comments and recommendations in the full statement.

Mr. VANIK. The next bill before the subcommittee is the House Concurrent Resolution 383. This bill by Mr. Shannon would veto an action by the President which denies the ITC's recommendation of 3 years of import relief on leather coats and jackets. Passage of Mr. Shannon's resolution by a simple majority of both chambers would have the effect of imposing in law the ITC's recommendation of an increase in the tariff on these items of 25 percent, declining to 15 percent over 3 years.

Under the law, the Congress has 90 legislative days in which to consider these kinds of resolutions of disapproval. Otherwise the President's action stands. Mr. Shannon introduced this bill on July 21. The 90th day, the deadline for congressional action based on its present schedule, is September 18.

I want to say to the administration that during my 4 years as chairman of the Trade Subcommittee I have been extremely disappointed with the handling of 201 cases. First, the President has generally rejected the ITC's advice or badly watered it down, and this has contributed to a feeling among American workers and industries that the trade laws are ineffective and not worth using.

This in turn has contributed to a general lack of support for open trade policies in this country. Section 201 cases are not only escape

clause cases; they are escape valves which prevent broad protective measures from developing in this country.

Frequently failure to use these cases to provide relief is shortsighted and unwise. In this case the ITC recommended relief by a unanimous vote of four to zero. In unanimous cases such as this, I presume there is some merit for doing something, and the administration will have an uphill battle to convince me otherwise.

Second, I have been disappointed in the quality of 201 economic analyses, the calculation of the total benefit versus the cost of providing relief in 201 cases. I will want to explore some of the cost estimates during the questioning.

To the leather wearing industry, I want to say 201 cases only make sense if the industry involved is generally able to adjust to a new line of business or to become competitive in their existing line of business. Frankly it is very questionable that the American leather apparel industry can ever become competitive with lowwage foreign firms.

Technology simply does not appear to be present, or if it is, it is so costly that it becomes impractical. Therefore if you have no plans to move into other lines of work and if there is no hope of becoming competitive, 3 years of protection are a wasteful burden on consumers with no final gain for the Nation.

If this is indeed the situation, then the President would be correct in denying relief. Therefore, I hope both sides will provide specific information on what prospects they see for the adjustment or increased competitiveness in this industry over the next few years.

Finally, there is considerable evidence that in the data in the ITC report is badly outdated and that value and quantity of imports have been falling. If so, providing relief now makes no sense.

[Background data follows:]

KEY ECONOMIC DATA PROVIDED BY THE ITC

TABLE 3.-LEATHER COATS AND JACKETS: U.S. IMPORTS FOR CONSUMPTION, 1975–78, JANUARY

AUGUST 1978, AND JANUARY-AUGUST 1979

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Source: Derived from a 6-percent sample of commercial invoices of U.S. imports of leather wearing apparel, for each year 1975–79.

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TABLE 4.—LEATHER COATS AND JACKETS: 1 U.S. PRODUCERS' SHIPMENTS, 1975–78, JANUARY

AUGUST 1978, AND JANUARY-AUGUST 1979

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TABLE 5.—LEATHER WEARING APPAREL: U.S. PRODUCTION, CAPACITY, AND CAPACITY UTILIZATION,

1975–78, JANUARY-AUGUST 1978, AND JANUARY-AUGUST 1979

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Source: Compiled from data submitted by 23 major U.S. producers in response to questionnaires of the U.S. International Trade Commission.

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TABLE 6.—LEATHER WEARING APPAREL: AVERAGE NUMBER OF PRODUCTION AND RELATED

WORKERS, AND MAN-HOURS WORKED BY THEM, 1975–78, JANUARY-JUNE 1978, AND JANUARY – JUNE 1979

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1 Data for 1975, January-June 1978, and January-June 1979 represent the responses of 37 producers. Source: Compiled from data submitted by 40 producers in response to questionnaires of the U.S. International Trade Commission.

TABLE 7.-LEATHER COATS AND JACKETS: U.S. PRODUCERS' END-OF-PERIOD INVENTORIES AS OF

DECEMBER 31, 1975–78, JUNE 30, 1978, AND JUNE 30, 1979

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1 Data for January-June 1978 and January-June 1979 represent the responses of 14 producers. Source: Compiled from data submitted by 19 producers in response to questionnaires of the U.S. International Trade Commission, except as noted.

The value of U.S. exports of leather wearing apparel, compiled from official statistics of the U.S. Department of Commerce, are as follows:

U.S. exports

1975 ....... 1976 .....

Thousands $2,247 4,479

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