Denial of Short Supply Request under the North American Free Trade Agreement (NAFTA)

AGENCY:

Committee for the Implementation of Textile Agreements (CITA)

ACTION:

Denial of the petition for modification of the NAFTA rules of origin for products made from yarn of cashmere and yarn of camel hair.

FOR FURTHER INFORMATION CONTACT:

Martin Walsh, International Trade Specialist, Office of Textiles and Apparel, U.S. Department of Commerce, (202) 482-3400.

SUPPLEMENTARY INFORMATION:

Authority: Section 204 of the Agricultural Act of 1956, as amended (7 U.S.C. 1854); Section 202(q) of the North American Free Trade Agreement Implementation Act (19 U.S.C. 3332(q)); Executive Order 11651 of March 3, 1972, as amended.

SUMMARY:

On February 28, 2001 the Chairman of CITA received a petition from Amicale Industries, Inc. alleging that yarn of cashmere and yarn of camel hair, classified in heading 5108.10.60 of the Harmonized Tariff Schedule of the United States (HTSUS), cannot be supplied by the domestic industry in commercial quantities in a timely manner and requesting that the President proclaim a modification of the NAFTA rules of origin. Such a proclamation may be made only after reaching agreement with the other NAFTA countries on the modification. As a result, CITA published a Federal Register Notice on March 12, 2001 (66 FR 14358)) requesting public comments on the petition. These comments were due April 11, 2001. Based on current available information, CITA has determined that these products can be supplied by the domestic industry in commercial quantities in a timely manner and therefore denies the petition.

BACKGROUND: Under the North American Free Trade Agreement (NAFTA), NAFTA countries are required to eliminate customs duties on textile and apparel goods that qualify as originating goods under the NAFTA rules of origin, which are set out in Annex 401 to the NAFTA. The NAFTA provides that the rules of origin for textile and apparel products may be amended through a subsequent agreement by the NAFTA countries. In consultations regarding such a change, the NAFTA countries are to consider issues of availability of supply of fibers, yarns, or fabrics in the free trade area and whether domestic producers are capable of supplying commercial quantities of the good in a timely manner. The Statement of Administrative Action (SAA) that accompanied the NAFTA Implementation Act stated that any interested person may submit to CITA a request for a modification to a particular rule of origin based on a change in the availability in North America of a particular fiber, yarn or fabric and that the requesting party would bear the burden of demonstrating that a change is warranted. The SAA provides that CITA may make a recommendation to the President regarding a change to a rule of origin for a textile or apparel good. The NAFTA Implementation Act provides the President with the authority to proclaim modifications to the NAFTA rules of origin as are necessary to implement an agreement with one or more NAFTA country on such a modification.

On February 28, 2001 the Chairman of CITA received a petition from Amicale Industries, Inc. alleging that yarn of cashmere and yarn of camel hair, classified in HTSUS heading 5108.10.60, cannot be supplied by the domestic industry in commercial quantities in a timely manner and requesting that the President proclaim a modification of the NAFTA rules of origin. Amicale Industries requests that the NAFTA rules of origin for fabrics of HTSUS heading 5111 and for woven apparel of Chapter 62 be modified to permit the use of non-North American yarns of cashmere or yarns of camel hair classified in HTS heading 5108.10.60.

CITA solicited public comments regarding this request (66 FR 14358, published on March 12, 2001) particularly with respect to whether yarn of cashmere and yarn of camel hair, classified in HTSUS heading 5108.10.60, can be supplied by the domestic industry in commercial quantities in a timely manner.

On the basis of currently available information, CITA has determined that yarn of cashmere and yarn of camel hair is spun in the United States and is available from U.S. producers in commercial quantities in a timely manner. Two companies in their submissions claim that they currently spin the yarns in question. Two other companies in their submissions claim to have the spinning capacity to produce these yarns. One company in its submission claims it supplies cashmere and camel hair fibers to companies that spin it into yarn and claims that three additional companies are capable of supplying cashmere and camel hair yarn to the petitioner.

Based on currently available information, CITA has determined that Amicale's petition should be denied. Amicale has not established that these yarns cannot be supplied by the domestic industry in commercial quantities in a timely manner. Currently available information indicates that the domestic industry is able to supply these yarns in commercial quantities in a timely manner.