Trade Pact Concerns Textile Industry

WASHINGTON - Some Southern lawmakers, anxious to protect their states' struggling clothing and textile industries, fear they may have bartered away their best leverage when they reluctantly voted to broaden President Bush (news - web sites)'s power to negotiate trade pacts.

The United States announced this month a trade proposal that would eliminate tariffs over the next 13 years on manufactured goods, including textiles and apparel.

The proposal shocked textile businesses and their congressional defenders, including several who agreed to grant Bush trade promotion authority last summer in exchange for renewed protections for textiles, an industry fighting to compete with foreign imports.

"It's a recipe for disaster for us," said Cass Johnson, associate vice president of international trade for the American Textile Manufacturers Institute. "We got all these assurances over the last year that the administration is going to look out for the textile industry, that they understood we're in great economic difficulty. But the impact of that proposal is, `You're out of business.'"

The institute, a Washington-based lobby, estimates 40 percent of duties collected on foreign imports are from textiles and apparel. Unleashing these products on the market duty-free could cripple an American industry where sinking profits have swallowed 600,000 jobs in the past decade, the institute contends.

Textile lobbyists are telling lawmakers about the harms of the proposal, introduced five days after Thanksgiving, when Congress had recessed for winter. Their first calls were to Southerners, particularly House Republicans, who gave Bush the 215-212 victory he needed to win a freer hand over trade deals.

Reps. Cass Ballenger and Sue Myrick, North Carolina Republicans who swapped their trade promotion authority votes for textile promises, immediately fired off critical letters to Commerce Secretary Donald Evans.

"I am concerned that the textile industry I represent will be severely disadvantaged unless other countries reduce their textile tariffs to U.S. levels before further reductions in our tariff rates are sought," Ballenger wrote.

By 2010, all tariffs that are currently below 5 percent would be eliminated, and all tariffs currently higher than 5 percent would have to be capped at no higher than 8 percent. Then, over the next three years, these remaining tariffs would be progressively lowered until they are eliminated in 2015.

U.S. Trade Representative Robert Zoellick explained the effort was to turn America into a "duty-free shop" where both exporters and consumers would benefit. At least one congressman from a major textile district is defending the proposal. Rep. Mac Collins, R-Ga., said the administration deserves the benefit of the doubt.

"I really get perturbed at textile manufacturers when they stand up and say, `No, no, no,' rather than try to come up with real solutions to the problems we face," Collins said. "I just think you have to give them the flexibility and leeway to perform, then judge after the performance, not prior to the performance."

Collins' voice of optimism seems to be one of few coming from textile districts, most prevalent in Alabama, Georgia and the Carolinas.

Sen.-elect Lindsey Graham, R-S.C., said he always believed trade promotion authority was the last piece of direct leverage Congress had over Bush on textiles. The measure, which he opposed as a member of the House, strips away the congressional ability to amend trade agreements.

Graham hinted Southern lawmakers might now be forced to hold up some of Bush's projects if he moves ahead with the tariff proposal, presented Dec. 2 at a negotiating session of the World Trade Organization (news - web sites).

"There's other things we can do," Graham said. "We have the power of the purse. We have the ability to get the administration's attention."

Sen. Zell Miller (news, bio, voting record), a Georgia Democrat closely aligned with Bush, said he heard the arguments from fellow Southerners such as Graham but supported trade promotion anyway, confident the administration would defend textiles. Now, he's having second thoughts.

"I listened to them talk about that and could not argue with the point they were making," said Miller, explaining he cast the vote because he is philosophically a free-trader. "And now, having seen this, it hits home a little clearer."

Specialty Steel Industry Urges U.S. Rejection of WTO Decision Against U.S. Countervailing Duty Law

WASHINGTON, Dec. 12 /PRNewswire/ -- The Specialty Steel Industry of North America (SSINA) today denounced a recent World Trade Organization (WTO) decision, charging that it is an intrusion on U.S. sovereignty and lacks support in the international agreements. SSINA urged the U.S. to reject the decision, which faults Commerce Department subsidy findings in twelve cases.

A December 9 ruling issued by the WTO Appellate Body stated that the United States breached its international obligations by imposing countervailing duties based on subsidies given to various European steel producers that were later privatized. SSINA contends that the WTO analysis is fundamentally flawed and portends substantial, negative ramifications for both present and future investigations of subsidized steel companies. SSINA is urging the U.S. to announce that it will refuse to implement the decision.

Expressing sharp disappointment with the decision, SSINA counsel David A. Hartquist said, "A finding that the privatization of a steel company eliminates all past subsidies is simply an invitation for foreign governments to subsidize companies prior to sale."

Hartquist added, "This is another example of the WTO wrongly creating rights and obligations that were never considered -- much less approved -- by negotiators, and constraining the rights of Members to act against injurious unfair trade practices." SSINA member companies were petitioners in many subsidy cases involved.

The core disputed issue is whether the sale of the outstanding stock of a steel producer eliminates all past subsidies provided to that steel producer. The WTO Subsidies Agreement is silent on this question, leaving it to Members to conclude such a sale does not eliminate all past subsidies.

The U.S. reasons that as long as the company subject to a CVD investigation is the "same person" that received the subsidies (in terms of general business operations, production facilities, assets and liabilities, and personnel), then the original subsidies remain countervailable until fully amortized.

A later sale of outstanding stock would not interfere with the subsidy recipient's continued enjoyment of whatever the original subsidies were spent on, such as new equipment, worker retraining, or debt retirement.

The appellate body, however, invented a new rule under which it must be assumed that a sale of a company at fair market value extinguishes all of its past subsidies. While the appellate body stated that this assumption was "rebuttable," this is not true in practice. It cited no Subsidies Agreement provision mandating or even indirectly supporting its extreme view.

In the absence of a clear, negotiated commitment obligating WTO Members to refrain from countervailing pre-privatization subsidies, the only legitimate option was to rule that countervailing such subsidies is permissible.

The decision of the appellate body directly affects twelve countervailing duty orders on a variety of carbon and specialty steel products from France, Italy, Sweden, the United Kingdom, Germany and Spain.

The appellate body has also sought to give the decision even broader effect by ruling against the methodology used by the Commerce Department for addressing pre-privatization subsidies and recommending that a different methodology be applied in all future cases.

Roughly two-thirds of U.S. countervailing duty cases involve products made by companies that have undergone changes in ownership following receipt of subsidies. Adherence to this ruling could result in the termination or significant curtailment of subsidy findings in the majority of U.S. countervailing duty proceedings.

The decision can be correct only if U.S. officials signed an Agreement that curtails radically U.S. law, agreed to excuse billions of dollars of trade-distorting subsidies, and committed to change what would have been affirmative determinations in two-thirds of future CVD cases.

Congress was promised the opposite result, however, and worked with the Administration to include a provision in the Uruguay Round Agreements Act specifying that a fair market value sale does not suffice to eliminate prior subsidies.

SSINA is urging Congress and the Administration to ensure that this decision does not give rise to any change in U.S. law or practice.

SSINA is a Washington, DC-based trade association representing virtually all continental specialty steel producers. Specialty steels are high technology, high value stainless and other specialty alloy products.

While shipments of specialty steel account for only 2% of all steel shipped, annual revenues of approximately $8 billion account for 14% of the total value of all steel shipped.

David A. Hartquist is an international trade attorney with the Washington, DC law firm of Collier Shannon Scott, PLLC.

NAFTA funds to train Blue Bird workers

Laid off employees of bus maker eligible for college, training financial support. By Kiley Miller The Hawk Eye

MOUNT PLEASANT — Workers left jobless in October when Blue Bird Midwest shut down will receive education and training assistance through the North American Free Trade Agreement.

The employees heard the good news Tuesday. "I was elated," said Ron Welker.

After eight years spent riveting together school bus bodies, Welker wants to attend Southeastern Community College to learn medical equipment repair. He had been wondering how to pay for tuition.

"I was weighing my options," Welker said.

Iowa Workforce Development will host a meeting Dec. 20 at the Iowa Wesleyan College Chapel in Mount Pleasant for Blue Bird employees to explain NAFTA benefits. A letter will be sent out to all employees to remind them of the meeting.

The plant is NAFTA eligible because Blue Bird Corp. shifted some of the production to other plants in Canada.

Employees from Exxide, Keokuk Ferro Sil and other southeast Iowa industries have received NAFTA assistance in the past. Tuesday's announcement means Blue Bird workers can attend up to two years of college classes paid for by the U.S. Department of Labor while continuing to draw unemployment. Other benefits include relocation assistance and reimbursement for travel to job interviews.

There is also an on–the–job training component for individuals hoping to acquire new skills without going to college. Employers will be reimbursed 50 percent of a new employee's wages for six months of training. The reimbursements top out at $10,000.

NAFTA does not include child–care assistance money. But Diane Poisel, an employment specialist with the Workforce Development Center in Burlington, said she is still waiting for word on an application for a Department of Labor National Emergency Grant worth $998,815. The grant would help employees laid off from several area businesses with child–care and other expenses.

Poisel said excitement in her office about the NAFTA announcement was "huge."

"We've been hoping so much for this," she said. "It opens the door so much for these people."

Poisel's staff had continued to encourage Blue Bird workers to enroll in college without knowing if any money would be available.

"We're basically out of dislocated worker funding," Poisel said.

Iowa's NAFTA eligibility coordinator Carol Paulus filed the application with the Department of Labor. She will attend the meeting in Mount Pleasant.

"It's a very good program," Paulus said of NAFTA. "Especially if you have been at that place for 20 to 25 years and your skills are outdated. None of us get to have a job anymore without some education

There you go again.

U.S. exports of manufactured products in 1999 were 66 percent higher than 1992, rising to $612 billion in 1999. U.S. exports of high technology products in 1999, a subcategory of manufactured products, were 87 percent higher than 1992, rising to $200 billion in 1999.
The five largest manufacturing sectors in terms of U.S. exports were: Transportation Equipment ($124.8 billion of exports in1999), Electronic and Electric Equipment ($118.8 billion), Industrial Machinery and Computers ($118.1 billion), Chemical Products ($67.2 billion), and Scientific and Measuring Instruments ($41.8 billion). These five sectors accounted for nearly 70 percent of the United States' total goods exports in 1999.
The United States is the world's largest agricultural exporting country, shipping $48 billion in agricultural exports abroad. The largest export categories, coarse grains, soybeans, red meat, and wheat, accounted for 38 percent of the United States'agricultural exports in 1999. Total exports to NAFTA countries in 1999 were 78 percent higher than 1993 (pre-NAFTA), rising from $142 billion in 1993to $253 billion in 1999. During 1999, Canada was the United States' largest export market, while Mexico was the United States' 2nd largest export market. Exports to Canada in 1999 were 66 percent ($66 billion) higher than 1993, rising to $166 billion in 1999. U.S. exports to Mexico in 1999 were 109 percent ($45 billion) higher than 1993, rising to $87 billion in 1999.

Source: Office of the U.S. Trade Representative

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