By  on May 18, 1994

WASHINGTON -- While the debate mounts over the broader issues of the GATT Uruguay Round treaty, the nation's textile and apparel manufacturers, importers and retailers will be busy trying to shape the implementing legislation to their advantage.

Perhaps most important to all sectors is what federal agency will be responsible for managing implementation of the Uruguay Round, which calls for the dismantling of the Multi-Fiber Arrangement over 10 years.

All agree the body chosen for this task will ultimately have great power over what fibers, textiles and apparel are made in the U.S., which are imported and what prices they will carry at retail -- especially apparel.

Here are some specifics: GATT provides that beginning Jan. 1, 1995, quotas are to be eliminated on 16 percent of textiles and apparel in world trade -- most of which are covered by the MFA. On Jan. 1, 1998, another 17 percent of the MFA products must move quota-free in world trade, and another 18 percent on Jan. 1, 2002. Then, on Jan. 1, 2005, protective quotas will be eliminated completely.

In roughly the same 10-year staging sequence, the growth rate for quotas that remain will increase by 16 percent, then 25 percent and finally 27 percent. For example, say the quota growth rate is 10 percent now; at the beginning of the MFA phaseout, the growth rate will increase to 11.6 percent. In the second stage, the 11.6 percent growth rate will increase by 25 percent, which means the growth rate will become 14.5 percent.

Critically, though, the Uruguay Round agreement leaves it up to each country to decide what textile and apparel products are assigned to each stage for quota elimination. Domestic textile and apparel interests assert that the inter-agency Committee for the Implementation of Textile Agreements should be empowered to make such decisions for the U.S., given its 25 years as a textile regulatory agency.

U.S. retailers and importers argue the International Trade Commission should get the nod, asserting that CITA operates in secret and is captive of domestic producers.

"Historically, retailers and importers find out about decisions after the fact, and we hope a new system can be set up so we can petition [the U.S.] and it is required to publish its decisions and give reasons for them," said Robert Hall, a National Retail Federation vice president and lobbyist.Carlos Moore, the American Textile Manufacturers Institute's executive vice president, countered, "CITA has 25 years experience in examining and analyzing the textile market, while the ITC has no background in textiles."

Both camps reportedly continue to lobby Congress and the Clinton administration, each hoping its position will prevail in the GATT-implementing legislation.

For importers -- including retailers -- decisions on how quotas for textile and apparel products will be phased out is a vital concern, said Julia K. Hughes, the Associated Merchandising Corp.'s Washington division vice president and chairperson of the U.S. Association of Importers of Textiles and Apparel.

"We feel that decisions on integration into the GATT should be made now for the entire 10-year period because it is important for us -- and for domestic producers, too -- to know what products will receive protection and for how long," Hughes said.

"It's also important to note that just 51 percent of textiles and apparel will come under the GATT by the end of 10 years and on the next day, the other 49 percent will be integrated," she added.

At the American Apparel Manufacturers Association, Larry Martin, government relations director, said apparel makers, like the textile producers, want CITA to govern the nation's textile program, given its experience and the fact that it would be more likely to protect those products that are import-sensitive than would the ITC.

For example, Martin noted that there are so many textile and apparel products to be integrated into the GATT -- and for which the U.S. has no quotas now under the MFA -- "that we could go through the first two stages of market integration without touching apparel we now have under quota."

Another key aspect of the GATT pact, also to be administered by some U.S. trade agency, is the "safeguard mechanism" which permits a nation to impose new import quotas for a three-year maximum to halt market disruptions.

"Under this system, the U.S. could make a global market finding, in which all suppliers would be restricted by quotas," said Hughes, "and our concern is that this will make it much more difficult to source, raising prices. This is why we want the ITC to make these determinations."The NRF's Hall added that retailers are working to have precise procedures for imposing such new quotas written into the GATT-implementing legislation, including a prohibition on making such decisions in secret, as CITA now does under a foreign policy exemption.

As quotas fade away, tariffs will be declining under GATT. The U.S. agreed to reduce its textile and apparel tariffs by an average of 11.6 percent over a 10-year period. These reductions will be made in equal parts over a decade.

Specifically, the U.S. agreed to cut its apparel import tariffs by 9.2 percent over 10 years and those for fabrics by 27.5 percent. Tariff cuts for yarns were set at 19.1 percent, those for staple man-made fibers at 17.8 percent and those for home furnishings textiles at 21.6 percent. Making up for these lost tariffs on textiles, apparel and other products is a big budget problem facing Congress as it considers GATT.

However, when it comes to the flow of imports into the U.S., quota is considered more important than tariffs, unless the duties are prohibitively high.

Meanwhile, textile and apparel manufacturers, as well as importers and retailers, have other key items to press for in the GATT legislation. For example, domestic firms want foreign nations, such as India and Pakistan, to be barred from receiving MFA phaseout benefits unless they open their markets to textile and apparel products.

The ATMI's Moore said this not only would allow U.S. firms to offset some of the losses expected from opening the domestic market to more imports, but it would actually limit countries' ability to subsidize textile and apparel export costs, "since these goods could be bought overseas and shipped back to those countries."

Groups such as the International Mass Retail Association are pushing for the GATT legislation to unequivocally eliminate the MFA after 10 years. Said the IRMA's Robin Lanier, an international trade vice president, "We have to make sure to put a stake through the heart of the MFA" to insure it is not resurrected by legislation in subsequent years.

In addition, the retailers will focus on ensuring the GATT bill contains provisions protecting trade in services, which Lanier said "means that a country cannot treat a foreign retailer any differently than a domestic one," a vital consideration for U.S. retailers who are moving into foreign markets.Eugene Milosh, president of the American Association of Exporters and Importers, said there is great concern the GATT bill "could contain sections that would make it much easier to file dumping petitions against foreign companies that would be skewed toward benefiting the domestic industry."

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