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 request alleging that yarns of cashmere and yarns of camel hair cannot be supplied by the domestic industry in commercial quantities in a timely manner.

SUMMARY:

On June 14, 2001 the Chairman of the Committee for the Implementation of Textile Agreements (CITA) received a petition from Amicale Industries, Inc., pursuant to Section 7.2 of Annex 300-B of the North American Free Trade Agreement (NAFTA), that certain yarns of camel hair and certain yarns of cashmere, 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. The yarns are described as (1) Yarns of cashmere, singles, multiple or plied, of fiber 17.5 to 19 microns average diameter, of natural, bleached, or dyed fiber, of metric count 9.7 or finer (3 run or finer), mule spun or frame spun. (2) Yarns of camel hair, singles, multiple or plied, of fiber 18 microns average diameter or finer, of bleached or dyed fiber, of metric count 16 or finer (5 run or finer), mule spun or frame spun.

Such a proclamation may be made only after reaching agreement with other NAFTA countries on the modification. On June 27, 2001, CITA published a Federal Register notice (66 FR 34156) requesting public comments on this petition, in particular with regard to whether cashmere and camel hair yarn can be supplied by the domestic industry in commercial quantities in a timely manner.

FOR FURTHER INFORMATION CONTACT:

Martin J. 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 USC 1854); Section 202(q) of the North American Free Trade Agreement Implementation Act (19 USC 3332(q)); Executive Order 11651 of March 3, 1972, as amended.

Background

Under the 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 of 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 accompanies the NAFTA Implementation Act states 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 American 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 June 14, 2001 the Chairman of CITA received a petition from Amicale Industries, Inc. alleging that certain yarns of cashmere and of camel hair classified in heading 5108.10.60 of the 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. Amicale requested that the President proclaim that apparel articles of U.S. formed fabrics of such yarns be eligible for preferential treatment under the NAFTA.

CITA solicited public comments regarding this request (66 FR 34156) 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. The yarns are described as (1) Yarns of cashmere, singles, multiple or plied, of fiber 17.5 to 19 microns average diameter, of natural, bleached, or dyed fiber, of metric count 9.7 or finer (3 run or finer), mule spun or frame spun. (2) Yarns of camel hair, singles, multiple or plied, of fiber 18 microns average diameter or finer, of bleached or dyed fiber, of metric count 16 or finer (5 run or finer), mule spun or frame spun. The referenced yarns would produce woven fabrics for use in suits, coats and suit-type jackets classified under HTS subheadings 6201.11, 6202.11, 6203.11, 6203.31, 6204.11 and 6204.41.

On the basis of the public comments received, yarn of cashmere and yarn of camel hair appears to be spun in the United States and to be available from U.S. producers. One company in its submission claims to be currently spinning these yarns and another company claims to be currently having these yarns spun in both the United States and Mexico and is willing to supply Amicale. A third company claims it is able and willing to supply all but the 5 run camel hair yarn. Moreover, Amicale has the ability to produce these yarns. It appears that there is substantial U.S. production of these yarns and that the yarns can be supplied in commercial quantities.

Based on its review of the petition and public comments received, CITA has determined to deny Amicale’s petition. Amicale has not established that these yarns cannot be supplied by the domestic industry in commercial quantities in a timely manner. In fact, it appears that these yarns can be so supplied. As a result, consultations with Canada and Mexico will not be requested.