HOWREY & SIMON
`
`October 18, I994
`
`Attorneys at Law
`1299 Pennsylvania Ave., N.W.
`Washington, O.C. 20004-2402
`12021 783-0800
`FAX 12021 383-6610
`
`In Los Angela
`(2131 892 1800
`
`Donna R. Koehnke
`Secretary
`U.S. International Trade Commission
`500 E Street, S.W.
`Washington, DC 20436
`Advice Concerning Possible Modifications to the US. Generalized
`System qf Prgferences h v . No. 332-369)
`
`Re:
`
`Dear Secretary Koehke:
`
`On behalf of Tile Council of America, Inc. (”TCA”), we hereby submit TCA’s
`statement in the above-referenced investigation with respect to the petition to add
`goods classified under HTS No. 6901.00.00 to the list of products eligible for the
`Generalized System of Preferences.
`
`This statement is submitted in response to the Commission’s Federal Register
`Notice dated September 17,1996 (61 Fed. Reg. 48969). In conformity with 19 C.F.R.
`§§201.8 and 201.13, an original and fourteen copies of this statement are being filed with ,
`the Commission. If you have any questions concerning this filing, please contact the
`undersigned.
`
`g 2-
`0
`=-I
`Thomas J. Trend1
`Counsel to Tile Council of Arneri&%
`
`

`
`BEFORE THE
`UNITED STATES INTERNATIONAL TRADE COMMISSION
`
`ADVICE CONCERNING POSSIBLE
`MODIFICATIONS TO THE U.S. GENERALIZED
`SYSTEM OF PREFERENCES
`
`)
`1
`)
`)
`1
`
`INV. NO. 332-369
`
`STATEMENT OF TILE COUNCIL OF AMERICA, INC.
`CONCERNING HTS NO. 6901.00.00
`
`TILE COUNCIL OF AMERICA, INC.
`100 Cllemson Research Boulevard
`Anderson, S.C. 29625
`(864) 646-8453
`
`Dated: October 18,1996
`
`John F. Bruce
`Thomas J. Trend1
`HOWREY & SIMON
`1299 Pennsylvania Ave., N.W.
`Washington, D.C. 20004
`(202) 783-0800
`
`Counsel for TILE COUNCIL
`OF AMERICA, INC.
`
`Dr. Mark Glueck
`CAPITAL ECONOMICS, INC.
`Economic Counsel for TILE
`COUNCIL OF AMERICA, INC.
`
`

`
`BEFORE THE
`UNITED STATES INTERNATIONAL TRADE COMMISSION
`
`ADVICE CONCERNING POSSIBLE
`MODIFICATIONS TO THE U.S. GENERALIZED
`SYSTEM OF PREFERENCES
`
`1
`1
`)
`1
`
`INV. NO. 332-369
`
`STATEMENT OF TILE COUNCIL OF AMERICA, INC.
`CONCERNING HTS NO. 6901.00.00
`
`I.
`
`INTRODUCTION
`
`Tile Council of America, h c . (”Tile Council”), the trade association of the
`
`American ceramic tile industry, herein submits comments concerning the possible
`
`designation of ceramic tile from Venezuela, classified under HTS Heading No. 6901, as
`
`eligible for Generalized System of Preferences (GSP) treatment. These comments are
`
`filed in response to the invitation for comments published by the International Trade
`
`Commission (“ITC”) in the Federal Register on September 17,1996 (61 Fed. Reg. 48969).
`
`Tile Council is concerned by the possible negative economic impact to the
`
`U.S. ceramic tile industry that could result from the GSP designation of HTS 6901
`
`products. Tile Council questions the need for such designation, especially when the
`
`existing tariff on products appropriately designated under this HTS category is only 2.9
`
`percent. As Tile Council reads the HTS and understands from the staff of this
`
`Commission, these products should not appropriately be considered similar to, and
`
`

`
`- 2 -
`
`should not appropriately be substituted for or confused with, traditional ceramic floor
`
`and wall tile products. Tile Council is concerned that, should HTS 6901 be designated
`
`as GSP eligible, this category will be alleged as appropriate for the entry of products
`
`which should be classified under other ceramic tile headings carrying significantly
`
`higher tariff rates. The U.S. ceramic tile industry, which is highly import-sensitive,
`
`incurred considerable economic harm over a number of year as the result of similar
`
`import category-switching practices with respect to the supposedly limited GSF eligible
`
`HTS 6988.1Q.20 "specialty" mosaic tile category. Because of the potential for similar
`
`misuse, Tile Council respectfully submits that the potential for injurious economic
`impact on the U.S. ceramic tile industry from GSP designation of HTS 6901 does not
`
`justify the removal of the 2.9 percent tariff thereunder for the approximately 130 GSP
`
`eligible countries which provide about one-fourth of all U.S. ceramic tile imports. In
`
`addition, Tile Council respectfully urges the Customs Service to monitor carefully any
`
`imports that are being entered under the already low duty HTS 6901, and particularly
`
`to do so if this category were to be declared eligible under the GSP program.
`
`II.
`
`TILE COU NCIE IS AN INTERESTED PARTY
`
`Tile Council is a trade association whose nineteen regular member
`
`companies manufacture the majority of the ceramic tile produced in the United States.'
`
`Tile Council's members are United States producers of ceramic tile articles which could
`
`be adversely impacted by imports improperly entered under HTS 6901 and, thus, have
`
`Tile Council also has associate members representing suppliers of equipment and ingredients to the
`domestic ceramic tile manufacturing industry. A profile of the industry is included in Appendix 1 and
`discussed in Section V below.
`
`

`
`a significant economic interest in this matter. Therefore, Tile Council is an interested
`
`- 3 -
`
`party to this proposed action.
`
`III.
`
`TAT1
`
`E
`
`Traditional ceramic tile is a surfacing product, usually relatively thin in
`
`relation to facial area; made from clay or a mixture of clay and other ceramic materials
`
`and fired to a temperature sufficiently high to produce specific physical properties and
`
`characteristics. Unglazed tile is a hard, dense tile of uniform composition throughout,
`
`deriving color and texture from the materials of which the body is made. Glazed tile
`
`has an impervious facial finish composed of ceramic materials fused to the body of the
`
`tile.
`
`Ceramic tile classified under HTS 6901, in contrast, is intended to be those
`
`tiles which are manufactured by the firing after shaping of principally siliceous fossil
`
`meals or similar siliceous earths such as kieselguhr, tripolite or, most commonly,
`
`diatomite, or of silica obtained by the incineration of certain vegetable products (e.g.,
`
`rice boll ash). These materials are usually mixed with binders (such as clay or
`
`magnesia) and sometimes with other substances (e.g., asbestos, hair, sawdust, coal
`
`dust). These tiles are usually very lightweight and their porous structure makes them
`
`excellent heat-insulators for use in building, and for the lagging of gas and steam
`
`piping. These tiles also are used as back-up insulating products in the construction of
`
`refractory ovens, industrial furnaces, steam generating boilers or other industrial plants,
`
`"For the purposes of headings 6905,6907 and 6908, the term 'tiles' does not include any article 3.2 cm
`or more in thickness." Harmonized Tariff Schedule of the United States (1994), Chapter 69, Additional
`U.S. Note 4. See also Additional U.S. Note 1 for a discussion of "ceramic article."
`
`

`
`- 4 -
`
`and for other applications where lightness of the material, low thermal conductivity, as
`
`well as heat resistance, are desired. Others are used as heat-insulators for working
`
`temperatures of less than 1,000 “C.3
`
`Iv.
`
`PREVIOUS CONSIDERATION OF GSP WITH RESPECT TO
`CERAMIC TILE PRODUCTS
`
`During the past two decades, the U.S. government repeatedly has
`
`confirmed its policy not to provide GSP benefits to ceramic floor and wall tiles that
`
`could compete with those products of the U.S. industry. In 1976, the USTR denied a
`
`petition to make glazed ceramic non-mosaic tile, TSUS 532.24, an eligible article. In
`
`1980, the USTR also substantially rejected petitions by Mexico, Colombia, Malaysia,
`
`Guatemala and Honduras to make HTS 6907 glazed and 6908 unglazed categories of
`
`ceramic tile eligible for GSP benefits. Instead, in Executive Order 12,204 of March 27,
`
`1980, the President renumbered the dutiable subclassification of “other” mosaic tiles
`
`(then TSUS 532.20.60) to give it a 5-digit subcategory number (TSUS 532.22) and then
`
`added what was supposed to be a very limited sub-category of ”other” tile, known as
`
`”specialty mosaic” tile, to the list of GSP eligible articles. At the request of the USTR,
`
`the US. industry did not oppose granting GSP benefits to this renumbered TSUS 532.22
`
`sub-category, because in 1979 imports of the so-called “specialty mosaic” tile from all
`
`GSP beneficiary countries amounted only to 514,000 square feet or just one percent of
`
`total mosaic tile imports. At that time, it also was clearly “understood” by all parties
`
`This description is based on the Explanatory Notes to the HTS (published by the World Customs
`Organization) and discussions with the technical staff of this Commission and with the only known US.
`producer of these products.
`
`

`
`- 5 -
`
`concerned that granting of GSP status to TSUS 532.22 was only intended to permit
`
`duty-free importation of very small hobby-craft or "tesserae" tiles, which were not
`
`manufactured in this country. Upon implementation of the HTS in 1989, the TSUS
`
`"specialty mosaic" category 532.22 was renumbered 6908.10.20. As discussed below,
`
`this understanding of the limited intended scope of "specialty mosaic" tile was
`
`dishonored by immediate and massive abuses of this new GSP category. As a result, as
`
`recently as 1994, the GSP Subcommittee was still dealing with the correction of these
`
`abuses by denying GSP redesignation for Thailand on "specialty mosaic" tile.
`
`V.
`
`TCA'S CONCERNS WITH RESPECT TO HTS 6901 PRODUCTS
`
`Tile Council's concern with respect to the GSP designation of HTS 6901
`
`arises from the import-sensitive nature of the U.S. ceramic tile industry, the history of
`
`unfair trade practices encountered by the industry, and the potential for similar
`
`unintended and improper imports under this category by a number of GSP eligible
`
`countries (which together are the source of about 25 percent of U.S. ceramic tile
`
`imports). If the intention of Venezuela is only to export to the U.S. market ceramic tile
`
`that presently is understood to be properly described under HTS 6901, then the minimal
`
`volume of those imports from Venezuela, the relatively low 2.9 percent tariff, and the
`
`already low pricing of that product from Venezuela, make it seem not competitively
`
`compelling that this product be granted GSP status. If, however, other ceramic tile
`
`products, almost all of which contain some "siliceous materials," were to be declared
`
`for import under HTS 6901, the result would be to abrogate totally the carefully crafted
`
`protocols for ceramic tile tariff under both NAFTA and the GATT Trade Agreement!
`
`

`
`- 6 -
`
`and would be devastating to the U.S. ceramic tile industry. In this regard, Venezuela
`
`states in its petition that, if GSP is granted for HTS 6901, it intends to use this category
`
`to compete with the large world producers, presumably Italy, Spain and Mexico. These
`
`countries dominate the U.S. traditional ceramic tile market. One conclusion to be
`
`drawn from Venezuela’s statement is that the company intends to compete in the
`
`traditional ceramic tile market under this HTS category. Tile Council addresses these
`
`issues below, in order to alert this Commission regarding these concerns, and to avoid
`
`unnecessary economic injury to the domestic industry.
`
`A.
`
`The Domestic Ceramic Tile Industrv Is ”Import-Sensitive”
`
`Imports have dominated the U.S. ceramic tile market for at least the past
`
`ten years. Import penetration for 1995, for all tile, was 57.5 percent, its highest level
`
`ever. Import share of the U.S. market increased again during the first quarter 1996,
`
`accounting for more than 60 percent of total consumption. See, Appendix 2. Since 1991,
`
`the import quantities have increased by approximately 75 percent, while domestic
`
`shipments have increased by less than nineteen percent. During this period, the
`
`average unit value of imports has declined consistently. See, Appendix 3. Consistent
`
`with previous cyclical construction market recoveries, imports have accounted for the
`
`majority of growth in overall demand, while domestic products have achieved only
`
`modest year-over-year increases.
`
`With this background of high import penetration, the domestic ceramic
`
`tile industry has suffered and continues to suffer as the result of a number of unfair
`
`trade practices including: countervailable subsidies, dumping, customs fraud, the
`
`

`
`- 7 -
`
`above-noted abuses of GSP on ”specialty mosaic” tile, and virtual import bans by
`
`various foreign countries. As a result this unfortunate and documented history,
`
`coupled with high import penetration levels, the domestic industry repeatedly has been
`
`recognized as import-sensitive. The most recent legislative declarations of this fact
`
`came during debate on renewal of the GSP program, where several Senators and
`
`Representatives explicitly discussed this point. Excerpts from some of these statements
`
`are provided below, with full texts attached as Appendix 4.
`
`A clear example of an import sensitive article which should not be
`subject to GSP . . . is ceramic tile.
`*
`*
`*
`
`[I]t is my strong belief that a proven import sensitive and already
`import-dominated product, such as ceramic tile, should not
`continually be subjected to defending against repeated duty-free
`petitions, but should be exempted from the GSP program.
`
`Statement of Sen. Charles Grassley, 142 Cong. Rec. S9540-41 (daily ed. Aug. 2,1996).
`
`Ceramic tile is a clear example of an import-sensitive product and
`is exactly the type of product which should not be subject to lower
`tariffs under the GSP Program.
`*
`*
`*
`
`I am in support of the reauthorization of the GSP Program [but]
`trust that import-sensitive products such as tile will not be subject
`to GSP.
`
`Statement of Rep. Robert Ney, 142 Cong. Rec. E1479 (daily ed. Aug. 2,1996).
`
`[A] clear example of an import sensitive article which should not be
`subject to GSP is ceramic tile.
`*
`*
`*
`
`[A]m import sensitive and already import-dominated product such
`as ceramic tile should not have to continually defined itself against
`repeated duty-free Petitions but should be exempted from this
`program in some manner.
`Statement of Sen. David Pryor, 141 Cong. Rec. S19013 (daily ed. Dec. 20,1995).
`
`

`
`- 8 -
`
`This unambiguous legislative commentary, coupled with significant
`
`existing import penetration, establishes that the domestic ceramic tile industry is
`
`import-sensitive and highly import impacted, and should be treated as such when this
`
`Commission is considering the GSP-eligibility of an HTS category of ceramic tile
`
`products that possibly could be alleged to include regular ceramic tile.
`
`B,
`
`GSP %tatus With Respect to Ceramic Tile Has Been
`Abused in the Past
`
`Granting GSP benefits for HTS 6901 products may have unintended
`
`effects in the form of customs misuse by beneficiary countries. This is not simply a
`
`theoretical threat inherent in any GSP situation. Rather, as noted, significant misuse of
`
`GSP eligible categories frequently has occurred with respect to ceramic tile and this
`
`misuse remains a problem. While Tile Council certainly assumes Venezuelan exporters
`
`and their U.S. importers will abide by the current ITC and Customs Service
`
`understandings, laws and regulations, history has taught that not all of our trading
`
`partners act in this manner.
`
`For example, as soon as the "specialty mosaic" tile category was
`
`renumbered and made eligible for GSP benefits in 1980, the quantity and types of tile
`
`imported under that TSUS 532.22 classification increased dramatically. The dominant
`
`manufacturers of regular glazed mosaic tile in several GSP beneficiary countries
`
`immediately began to modify the shapes of regular glazed mosaic tiles (which had just
`
`been specifically denied GSP benefits) by either slightly rounding corners or making the
`
`edges slightly wavy, and then asserting that, because of these superficial changes,
`
`otherwise standard mosaic tile could be entered as duty-free "other" or specialty mosaic
`
`

`
`- 9 -
`
`tile. Imports of these mosaic products began to flood the United States market duty-
`
`free. Other producers simply changed the declared tariff category of their mosaic and
`
`even some non-mosaic tile sizes, and entered them as duty-free "specialty" tile.
`
`That elimination of tariffs on the "other" mosaic category, contrary to the
`
`understanding and intention of the USTR, provided a windfall to well-established
`
`foreign manufacturers that already were competing effectively in the U.S. market.
`
`These producers simply shifted the customs designation of their glazed mosaic output
`
`to the new "other" category and stopped paying duties. For example, when TSUS
`
`532.22 tile became eligible under GSP on March 27,1980, there was an immediate
`
`dramatic increase in imports from Korea using that classification, and a corresponding
`
`decrease in tile imported from Korea in the dutiable standard mosaic categories.
`
`Conversely, when Korea was graduated from its GSP eligibility in 1982, imports of
`
`Korean mosaic tile designated under TSUS 532.22 dropped sharply and imports under
`
`the standard mosaic classifications resumed. Thailand and Taiwan quickly replaced
`
`Korea as dominant designators of what they alleged to be duty-free "other" specialty
`mosaic tiles, Taiwan exports to the U.S. market of "other" mosaic tile increased from
`
`25,000 sq, ft. in 1981 to 9,947,000 sq. ft. in 1985. Thailand increased its exports
`
`designated under this GSP subcategory from zero in 1981 to 6,103,000 sq. ft. in 1985, to a
`
`high of 11,684,000 sq. ft. in 1989 and 6,825,000 sq. ft. in 1992.
`
`The domestic ceramic tile industry was economically impacted as the
`
`result of these abuses, Posing market share and sales which have never been regained.
`
`While Tile Council would hope that all GSP beneficiary countries play by the rules, this
`
`unfortunately, has not been the case. This Commission should be wary about creating
`
`

`
`-10-
`
`an opportunity for future abuses where any benefit to the petitioning country under
`
`proper usage of the subject HTS category seems minimal.
`
`*
`
`c
`
`Unfairly Traded
`
`_ W ldb
`
`Venezuela is the fifth largest exporter of ceramic tile to the U.S. market
`
`with over 25 million sq. ft. exported in 1995, behind only Italy, Mexico, Spain and
`
`Brazil. Over the period 1990 through first quarter 1996, the growth in total imports
`
`from Venezuela has exceeded that of overall imports. See, Appendix 5. Through 1995,
`
`Venezuela’s total imports have more than doubled since 1990, without measurable
`
`imports of the only GSP eligible category of tile. See, Appendix 6. This is evidence of
`
`Venezuela’s ability to compete with other U.S. imports without the additional assistance
`
`of a preferential tariff status. Venezuela’s competitive status in the U.S. ceramic tile
`
`market is not predicated on the duty-free assistance it would receive should GSP
`
`benefits be granted for ceramic tile classified under HTS 6901. As the duty rate on HTS
`
`6901 currently is an already low 2.9 percent, further reduction seems unwarranted and
`
`unnecessary, while creating very real, and difficult to monitor and control, risks of
`
`misuse by various GSP eligible tile producing countries.
`
`Moreover, the average value of ceramic tile exported by Venezuela during
`
`1993 (the only year for which data was provided) as stated in the public version of the
`
`June 12,1995 GSP petition submitted by the Instituto de Comercio Exterior, is
`
`far lower than other importers and
`approximately $100 per metric ton? This figure is
`
`For convenience, this petition is attached as Appendix 7.
`The value per ton information is derived
`from the response to question 8 of the petition.
`
`

`
`- 11 -
`
`far lower than any U.S. produced product. In fact, the cost to produce this tile in
`
`Venezuela, as stated in the petition, is approximately $376 per metric ton.5 As suchl
`
`Venezuela has been selling their ceramic tile at prices below their own cost of
`
`production. Even this reported cost of production is extremely low, apparently due in
`
`part to the low wages paid to workers at the Venezuelan tile plant. These workers earn
`
`approximately $6115 per year, far lower than that earned by U.S. tile workers.6
`
`The conclusion which can be drawn from this information is that imports
`
`from Venezuela likely will be dumped into the United States and will be priced much
`
`lower compared to the products offered by other foreign producers and certainly by
`
`US. manufactures. Providing an additional competitive advantage to Venezuelan
`
`producers through duty-free access under GSP would only encourage further unfairly
`
`traded imports.
`
`VI.
`
`CONCLUSION
`
`Tile Council is seriously concerned that, should HTS 6901 be designated as
`
`GSP eligible, significant economic harm could ensue if HTS 6901 is misused to import
`
`traditional ceramic tile products. Tile Council also observes that removal of the 2.9
`
`percent tariff on this category is not necessary to make the Venezuelan petitioner a
`
`This figure is derived from the bolivares per metric ton rates provided in response to question 9 of
`the petition, divided by the 1993 (the year for which data was provided) average exchange rate as
`published by the International Monetary Fund (90.826 Bs=l USD). See ”International Financial Statistics,”
`Sept. 1994 at 578,
`The Venezuelan figure is derived from the respond to question 5 in the petition, divided by the
`average exchange rate for 1993, as published by the IMF. The average salary for a Venezuelan ceramic
`tile “worker” was $6115 per year, while an ”employee” earned $9355 per year. ”he weighted average
`salary for all ceramic tile personnel was $6992 per year.
`
`

`
`-12-
`
`price-competitive supplier of the ceramic tile products that are appropriately
`
`designated under this HTS category. The U.S. ceramic tile industry consistently has
`
`been recognized as import-sensitive and has witnessed serious abuses of the GSP
`
`program in the past. In filing these comments, Tile Council seeks to avoid similar
`
`abuses and their resulting injury.
`
`In addition, the proven ability of Venezuela to export ceramic tile to the
`
`U.S. without GSP benefits and the high likelihood of dumping by the Venezuelan
`
`producer suggest that duty-free importation under GSP of ceramic tile classified under
`
`HTS 6901 is not appropriate. Nevertheless, should GSP benefits be granted to HTS 6901
`
`products, Tile Council respectfully requests that the U.S. Customs Service carefully
`
`monitor such imports to ensure their proper classification.
`
`Respectfully submitted,
`,
`/
`I n
`
`A '
`
`
`
`n n
`
`hnF.Bruce
`Thomas j. Trend1
`HQWREY & SIMON
`1299 Pennsylvania Ave., N.W.
`Washington, D.C. 20004
`(202) 783-0800
`
`Counsel for TILE COUNCIL
`OF AMERICA, INC.
`
`H>r,-~ark Glueck
`CAPITAL ECONOMICS, INC.
`
`Economic Counsel for TILE
`COUNCIL OF AMERICA, INC.
`
`

`
`APPENDIX 1
`
`

`
`APPENDIX 1
`
`APPENDIX 1
`
`TILE COUNCIL OF AMERICA, INC.
`TILE COUNCIL OF AMERICA, INC.
`1996 REGULAR MEMBER COMPANIES
`1996 REGULAR MEMBER COMPANIES
`
`g.~o9°.\1s=~.01:>.<»:~>:—
`
`1.
`2.
`3.
`4.
`5.
`6.
`7.
`8.
`9.
`
`CROSSVILLE CERAMICS
`CROSSVILLE CERAMICS
`ENDICOTT TILE, LTD.
`ENDICOTT TILE, LTD.
`FIREBIRD, INC.
`FIREBIRD, INC.
`FLORIDA BRICK & CLAY CO., INC.
`FLORIDA BRICK 8: CLAY CO., INC.
`FLORIDA TILE INDUSTRIES, INC.
`FLORIDA TILE INDUSTRIES, INC.
`GILMER POTTERIES, INC.
`GILMER POTTERIES, INC.
`HUNTINGTON PACIFIC
`HUNTINGTON PACIFIC
`KPT, INCORPORATED
`KPT, INCORPORATED
`LAUFEN INTERNATIONAL, INC.
`LAUFEN INTERNATIONAL, INC.
`LONE STAR CERAMICS COMPANY
`10.
`LONE STAR CERAMICS COMPANY
`11.
`M.E. TILE CO., INC.
`r—I 1“
`M.E. TILE CO., INC.
`METROPOLITAN CERAMICS
`12.
`r—a N
`METROPOLITAN CERAMICS
`MONARCH TILE, INC.
`13.
`n—\ 9°
`MONARCH TILE, INC.
`QUARRY TILE COMPANY
`14.
`n—\3‘
`QUARRY TILE COMPANY
`SENECA TILES, INC.
`15.
`n-\ 9"
`SENECA TILES, INC.
`SONOMA TILEMAKERS
`16.
`SONOMA TILEMAKERS
`16.
`SUMMITVILLE TILES, INC.
`17.
`SUMMITVILLE TILES, INC.
`17.
`UNITED STATES CERAMIC TILE CO.
`18.
`UNITED STATES CERAMIC TILE CO.
`18.
`WINBURN TILE MANUFACTURING CQ.
`19.
`19. WINBURN TILE MANUFACTURING CO.
`
`

`
`APPENDIX 2
`
`

`
`Source: U.S. Department of Commerce, Series M 32D, IM 145X, IM 145, EM 546, EM 522, and FT-410
`
`QTR
`1996
`
`

`
`APPENDIX 3
`
`

`
`UNIT VALUE OF ALL US. CERAMIC TILE IMPORTS AND IMPORTS FROM VENEZUELA
`HTS Codes: 6908.1 0.1 0.00, 6907.1 0.00.00, 6908.1 0.20.00, 6908.10.50.00, 6908.90.00.1 0, 6908.90.00.50, 6907.90.00.1 0, 6907.90.00.50
`
`$1.15
`
`$1.05
`
`$0.95
`
`$0.85
`
`$0.75
`
`$0.65
`
`$0.55
`
`1990
`
`1991
`
`1992
`
`1993
`BAll Imports
`
`Venezuela
`
`1994
`
`1995
`
`Source: U.S. Department of Commerce, IM 145.
`
`YTD
`2ND
`QTR
`1996
`
`

`
`APPENDIX 4
`
`

`
`WASIIINCTON, FRIDAY, AUGUST 2, 1996
`
`No. 117
`
`1'01. 142
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`Eongremional Record
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`United Stales
`of America
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`United States
`Government
`Printing Office
`SUPERINTENOEIIT
`OF DOCUMENTS
`Waslimglon. DC 20402
`
`OFFICIAI. BUSINESS
`Penalty lor private use. 5300
`
`I
`
`PERIODICALS
`
`Postage mid Fees Paid
`U.S. Governmeill Piiriliiig Olllce
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`I
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`I
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`59640
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`CONGRESSIONAL RECORD - SENATE
`
`August 2. 1996
`
`ican smsll buslnesees iniport raw mate-
`rials or other products. The expiration
`of the GSP ha9 forced these companies
`to pay a duty, or a tax. on some of
`these products. That's what a duty in:
`an additional Lnx
`By extendtnp the GSP retroactively.
`these companies rvlll not be rcqulreu to
`pay this tax. Thls tax is significarit and
`can cost U.S. bustnesses hundred8 of
`millions of dollars. In fact in 1995.
`American businesses saved s6W mlllion
`due to the CSP. I wonder how many
`good. high-paying jobs will be created
`by cuttlne taxes by $650 million? So.
`Mr. President, it is very Important
`thnt the GSP be extended and i t la very
`apprcipriate t h a t the Senate conslder it
`as part of this bill.
`It is esaential to remember, however.
`that since its inception in the Trade
`Act of 1974, the GSP program h a s pro-
`vlded for the exemption of "srt.lrlrs
`which thn Presidnnt determlnes to ha
`Import-sensit.ive." This is a very im-
`portant dlrective and critfcal to our
`most. Import-impacted prodiicina
`in-
`dwtrles. A clear exwiple of ail Import
`sensitive article which should not h~
`subject to GSP and. thus. not subject
`to the annual petitions of foreign yro-
`ducera t h a t can be flled under thls pro-
`gram, is ceramic tlle.
`TL is well documented that the U.S
`ceramic tile market repeatedly han
`been recognlxed as extremely iinpott-
`seasitive. Durina the oast Bo vear8. this
`industry h a d i o tleknd
`V.S.
`itarlf
`auainst a vartety of unIair and illegal
`import practices carried out by Rome of
`our closest trading partners. Imports
`already dominate the U.S. ceramic tile
`mRrket and have done so for the last
`decade. They currently provide a g
`proximately 60 percent of the largest
`and most Important glazed tile sector
`according to 1995 year-end Covernnient
`figures.
`Moreover, one of the guiding prin-
`clples of the GSP program has been re-
`ciprocal market access. Currently, GSP
`eligible beneficiary countrlea supply
`almost one-fourth of the U.S. ceramic
`tile Imp@rts. and they are rnpidly in-
`creasing their sales and market shares.
`U.S. ceramic tile manufacturers. how-
`ever, are R t i l l deiiied trccesa LCI many of
`them foreign markets.
`Also. previous abuseR of the GSP eli-
`gible status with reqard to Rome cc-
`ramic tile product lines have been well
`documented. In 1979, the US'IR rejected
`varlous petltlons for duty-free treat+-
`ment of ceramic tile from certain GYP
`beneficiary counLries. With the acqui-
`escence of the U.S. industry. however.
`the USTR at that time created a duty-
`free exception for the then mlnuscule
`category of irregular edged specialty
`mosaic tile. Imnrediately thereafter, 1
`am told that foreign manufacturen
`from major GSP beneficiary countries
`either shifted their production to spe-
`cialty mosaic tile or simply identified
`their exiatlng products 88 specialty
`mosaic tile on cuOtoni ltivoicetl and
`stopped paying duties on theso procl-
`ucts. Those actionri flooded the U.S
`
`Mr. GRASSLEY. Mr. President, ss
`Chairman of the International Trade
`Subcommittee of the Senate Finance
`Committee, I want to point out a pro-
`viaiod in the Small Business Job Pro-
`tection A c t relating to trade that I
`strongly support. That Is the extension
`of the Goneralized System of Pref-
`erences [CSP]. This extension is long
`overdue.
`The QSP is iinp@rtant for matiy rea-
`sons. From a foreign relations atand-
`point. i t allows the United States to
`aaaist the economy of developing coun-
`tries without the use of direct foreign
`aid. But i t also is of great benefit to
`American businesses. That is why I t is
`most appropriate that the extension of
`the GSP be Included in the Small Busl-
`ness Job Protection Act. Many Amer-
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`59541
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`CONGRESSIONAL RECORD - SENATE
`Aug,'llst 2, 1996
`market with duty-free ceramic tiles crushers and significantly distort8 free
`that apparently had been superficially
`trade. I assume this practice would be
`restyled or mislabeled.
`subject to World Trade Organization
`In light of these factors. the U.S. in- rules if the subsidy were provided 88 a
`dustry has been recognized by succes- direct export subsidy.
`sive Congresses and administrations as The consequence of this type of prac-
`tice is a draatic loss in the U.S. share
`import-sensitive dating back to the
`Dillon and Kennedy Rounds of the Qen- of world export markets for RrOCeSfted
`era1 Agreement on Tariffs and Trade 8oybean products, and artificial down-
`(GATT). Yet during this eame period, ward preeeure on world price levele for
`these m e producte. This ia not ac-
`the American ceramic tile industry has
`been forced to defend itself from over a ceptable. As you know Mr. Pretsident,
`Iowa is, in any given year, either the
`dozen petitions filed by various des-
`ignated GSP-eligible countries seeking first or second leading soybean produc-
`ing state in the nation. This is a dis-
`duty-free treatment for their ceramic
`tile sent into this market.
`tinction we ehare with our nelghbora in
`The domestfc ceramic tile industry Illinois. So this unfalr trade practice le
`has been fortunate. to date, because of great concern to Iowa farmera and
`both the USTR and the International processors, and those in other ststee 88
`Trade Commission have recognized the well.
`I understand that progrese is being
`import-sensitlvity of the U.S. market
`and have denied these repeated peti- made on resolving this issue, but more
`tione. If, however. lust one Petitioning work muat be done. In the case of
`nation ever succeeds in gaining G S P Brazil, it is my understanding that the
`benefits for ceramic tile, then all GSP Brazilian federal government strongly
`beneficiary countries will be entitled supports reform of this DET system.
`to similar treatment. This could elimi- and in fact is considering the complete
`nate many American tile lobs and dev- elimination of all taxes levied upon ex-
`aatate the domestic industry. There- ports of agricultural products, both
`fore, i t is my atrong belief that a Prov- raw and processed. In the coming
`en import sensitive and already im- weeks and months, I will be closely
`port-dominated product. such ria ce- watching how Brazil, hrgentina. and
`ramic tile. should not COntinUallY be other countries reform these praatlcq.
`subjected to defending against repeated However, I am serving notice today
`that i f these practices are allowed to
`duty-free petitions, but should be ex-
`empted from the GSP program.
`continue. I will consider pursuing a p
`Mr. President. I would like to address propriate legislative or administratfve
`one final trade isSue. I t 18 not a part of memure8 to counter them.
`Mr. President, I yield the floor.
`this bill but it does relate to GSP. be-
`cause the problem I will discuss is a re-
`sult of an inequitable tax policy put In
`place by some countries that are major
`beneficiaries of the GSP program. This
`tax policy. known as a differential ex-
`port tax scheme or DET. is used to con-
`fer an unfair competitive advantage for
`theee countries' exports of agricultural
`products. particularly soybean meal
`and 011, to the detriment of U.S. pro-
`ducers. processors, and exporters.
`hlr. President. I'll briefly describe
`how this differential export tax scheme
`operatee. Under a DET system. exports
`of a raw commodity, In t,his case soy-
`bean& are taxed a t a higher rate than
`exports of the processed derivatives of
`that commodlty, soybean meal and 011.
`Since t h i s increased tax discourages
`the export of soybeans. the oilseed
`crushers in those countries are able to
`purchase soybeans from their domestic
`growers at prices well below the world
`market prices p