DEMARCHE ON U.S. WTO TAFT GOODS NEGOTIATING TEXT

UNCLAS STATE 020817

SIPDIS

SIPDIS
GENEVA AND BRUSSELS FOR USTR

E.O. 12958: N/A
TAGS: ECON ETRD WTO
SUBJECT: DEMARCHE ON U.S. WTO TAFT GOODS NEGOTIATING TEXT


1. This is an action request, please see paragraph 3.


2. Textiles, apparel, footwear, and travel goods are
products of importance to a range of countries, both
developed and developing. On May 15, 2006, the United States
tabled a negotiating text on reducing non-tariff barriers to
trade related to labeling of textiles, apparel, footwear, and
travel goods in the WTO Negotiating Group on Market Access.
The United States has held several subsequent discussions on
text and has listened to the views of many Members. In order
to facilitate further discussion and promote understanding of
the negotiating text, the United States circulated questions
to interested Members. Both the European Communities and the
United States have submitted answers to those questions with
the hope that Members will find them helpful in preparing
their own answers and gain from an increased understanding of
various labeling requirements. Now that Doha Round
negotiations have formally resumed, the United States seeks
co-sponsorship of this proposal from action addressee host
governments.

Action Request and key points:


3. U.S. delegation will be in Geneva on February 26 through
March 2 discussing related proposal. If possible, post is
requested to approach host government and seek co-sponsorship
of this proposal prior to February 26. In discussions with
host governments, Washington suggests that post draws on the
following key points:

-- On May 15, 2006 the United States tabled a negotiating
text on reducing non-tariff barriers to trade related to
labeling of textiles, apparel, footwear, and travel goods in
the WTO Negotiating Group on Market Access, as part of the
Doha Round.

-- The U.S. negotiating text is an approach designed to
facilitate trade in textiles, apparel, footwear, and travel
goods. These are highly important sectors in global trade,
including exports from developing countries.

-- The problem arises from existence of different labeling
requirements. The U.S. proposal tries to arrive at a common
sense approach to introduce flexibility in how goods are
labeled to facilitate and simplify trade.

-- This proposal does not propose establishing new labeling
requirements. Quite the contrary, the focus is on how
importing countries can ensure that the information they
desire is provided in a manner that poses least potential for
restricting trade.

-- The United States held a number of meetings in 2006 and
2007 in Geneva, both in open informal sessions and among
potentially interested Members. The U.S. delegation senses
an interest among a number of countries, developed and
developing, to continue exploring an agreement in this area.

-- This initiative provides cost reduction to exporters of
these goods and also to consumer. Given the fact that these
products are heavily traded by developing countries, this
would help address that part of the mandate focusing on
addressing non-tariff barriers of interest to developing
countries.

-- In order to facilitate further discussion and promote
understanding of the negotiating text, the United States
circulated questions to interested Members. The European
Communities and the United States have submitted answers to
those questions with the hope that Members will find them
helpful in preparing their own answers and gain from an
increased understanding of various labeling requirements.

-- The United States is seeking co-sponsorship of its
negotiating text on reducing non-tariff barriers to trade
related to labeling of textiles, apparel, footwear, and
travel goods in the WTO Doha Round negotiations on
non-agricultural market access.

-- Given the interest your Geneva WTO delegation has
expressed in the U.S. proposal over the last year, the United
States would like to have you join as a co-sponsor.

-- (If needed, should the host government indicate they are
unable to co-sponsor.) Are there particular issues that are
preventing your government from co-sponsoring this
initiative?

-- (If asked about the EC proposal on textiles, apparel, and
footwear.) Additionally, the European Communities have a
non-tariff barrier negotiating proposal on textiles, apparel,
and footwear that focuses on labeling, registration of
labeled products before importation, and conformity
assessment. We are working closely with the EC to move
forward on our respective proposals.


4. If needed:

The full text of the United States' negotiating proposal on
Reducing Non-Tariff Barriers to Trade Related to Labeling of
Textiles, Apparel, Footwear and Travel Goods is as follows:

(Begin text)

As affirmed in Annex B, Paragraph 26, of the Hong Kong
Ministerial Text, non-tariff barriers (NTBs) are an integral
and important part of the non-agricultural market access
(NAMA) negotiations. Consistent with paragraph 22 of the
Ministerial Declaration, the United States now respectfully
submits to WTO Members this draft negotiating text on
reducing barriers to trade in textiles, apparel, footwear,
and travel goods.

The United States first indicated its interest in negotiating
NTBs affecting textiles, apparel, footwear, and travel goods
in its revised indicative list, tabled in November 2004
(TN/MA/W46/Add.8/Rev.1). On 1 December 2005, the United
States circulated a concept paper to Members advocating more
common approaches to labeling as a way to benefit exporters
and consumers of textiles, apparel, and footwear across the
globe (TN/MA/W/18/Add.12). In March of 2006, the United
States also circulated an industry-drafted non-paper
describing specific labeling problems and proposed targeted
solutions. The United States has expanded coverage to
include travel goods, based on subsequent conversations with
industry and trading partners.

Textiles, apparel, footwear, and travel goods are products of
importance to a range of countries, both developed and
developing. The United States sees this text as a positive
way for Members to reduce the diversity of labeling
approaches in these areas, in order to save manufacturers
time (i.e., to avoid delays to market) and money (i.e., to
minimize costs of varying labeling schemes). The aim is to
preserve the ability of regulators to require certain
information to be provided on such goods in order to inform
and protect consumers, while minimizing the costs of
providing this information; such savings would then be passed
on to consumers.

The United States looks forward to continued discussions with
Members on this draft negotiating text and on eliminating
non-tariff barriers to trade in textiles, apparel, footwear,
and travel goods. The United States is committed to an open
and transparent process and is open to suggestions for
improvement or additions to the draft negotiating text.

Agreement on Reducing Non-Tariff Barriers to Trade Related to
Labeling of Textiles, Apparel, Footwear and Travel Goods
--------------

Members,

Recalling that pursuant to paragraph 16 of the Doha
Ministerial Declaration, Members agreed to negotiations aimed
at reducing or as appropriate eliminating tariffs and
non-tariff barriers on non-agricultural products;

Recognizing the important contribution of the textile,
apparel, footwear, and travel goods sectors to global
economic growth and development;

Noting that textiles, apparel, footwear, and travel goods
suppliers and producers in exporting Members may require
regulatory flexibility to adjust to new labeling requirements
and the subsequent commercial conditions, especially in the
event that entry into force of such requirements is sudden;

Reaffirming that under the Agreement on Technical Barriers to
Trade, Members shall ensure that technical regulations and
conformity assessment procedures are not prepared, adopted or
applied with a view to or with the effect of creating
unnecessary obstacles to international trade, and allow a
reasonable interval between the publication of technical
regulations and conformity assessment procedures and their
entry into force, among other obligations;

Desiring to promote cooperative and effective approaches to
enhance trade in textiles, apparel, footwear, and travel
goods;

Agree as follows:

1. a. Members shall not require information on permanent
labels or marking beyond:

i. country of origin, fiber content, care instructions, and
information necessary for consumer safety, with respect to
textile and apparel goods; and
ii. country of origin with respect to footwear and travel
goods.

b. Members shall ensure that, at their discretion,
manufacturers may provide additional information on permanent
labels or markings with respect to all such goods.

c. Members remain free to require that reasonable additional
information of use to consumers be provided on goods or
packaging through non-permanent means, including, for
example, information regarding (their) material content (for
footwear and travel goods).


2. Upon entry into force of technical regulations and
conformity assessment procedures, Members should afford
sympathetic consideration to requests for flexibility to
adapt to modifications of labelling requirements, allowing
for both old labels and new labels to be accepted during the
transition period.

(End Full Text)


5. The U.S. questions and answers in regards to the U.S.
proposal on textiles, apparel, footwear, and travel goods,
referred to in paragraph 2 are as follows.

(Begin Text)

-- What information do you require on permanent labels or
markings on imported and domestic textile, apparel, footwear,
and travel (TAFT) goods?

U.S. ANSWER: If the goods are imported into the USA, then
the Tariff Act (administered by U.S. Customs) requires
foreign origin marking to be permanently attached as the
nature of the article will permit to most imported products.
According to the Care Labeling Rule, administered by the
Federal Trade Commission (FTC),clothing made primarily of
textiles must have permanent care instructions. Socks and
other hosiery products, and garments that are totally
reversible without pockets, do not need permanent care
instructions.

-- Do you require importer or dealer/distributor information
on permanent labels or markings?

U.S. ANSWER: Such information (the RN number or business
name) does not have to be permanent, but it should be
attached in some "secure" manner if the goods are subject to
the Textile, Wool, or Fur Acts. (Note: The RN number
refers to Registered Identification Number.)

-- Are manufacturers allowed to provide additional
information on permanent labels or markings with respect to
imported and domestic TAFT goods?

U.S. ANSWER: The FTC and U.S. Customs permits additional
"non-required" information if it is not false, deceptive, or
misleading. U.S. Customs requires the actual foreign country
of origin to be preceded by the indicators "made in" or
"product of" if a non-origin reference may confuse the retail
purchaser.

-- What additional type of information do you require on
imported and domestic TAFT goods or packaging that may be
affixed through non-permanent means (e.g., hangtag, sticker,
or on packaging)?

U.S. ANSWER: The Textile Act and Wool Act require disclosure
of country of origin, fiber content, and RN number or
business name, but the FTC does not require that any of these
must be permanent. They may all be on secure stickers or
hang-tags. U.S. Customs requires country of origin to be
permanent, as the nature of the article will permit, such as
by using a sewn-in label. The Care Labeling Rule requires
permanent care instructions for most textile clothing. The
FTC does not require any additional information (although the
States may for products with stuffing or filling or padding).


What lead-time do you provide for the shipper or importer to
correct any labeling not in compliance or to apply for
re-export or storage in a bonded warehouse?

-- U.S. ANSWER: Generally speaking, the goods should be
properly labeled before they arrive at the U.S. port of
entry. If there is a small error with the labeling, the
company may apply for a "one-time waiver" from FTC, but this
must be done before U.S. Customs notices the problem. Even
if FTC staff is able to grant a waiver, U.S. Customs does not
have to accept it. Otherwise, any corrections to labeling
should be done within 30 days of entry, prior to the
liquidation of the entry before U.S. Customs.

-- Do you provide a "grace period" during which labels
conforming to previous requirements would still be accepted
in the market place in cases where the lead-time for
implementation of changes is not adequate for the trader to
comply with new requirements?

U.S. ANSWER: This depends on the circumstances. In some
cases, FTC staff may grant a "one-time" waiver under the
Textile Corporate Leniency Policy. Some situations may not
be suitable for such a waiver and there may be no grace
period.

-- Would you have to make any changes to your domestic
legislation or regulation to apply the disciplines in the
U.S. proposal?

(End Text)


6. Please slug responses for USTR (BNorton) and Commerce
(DMendoza and EBrzytwa). State POC for this demarche is
Aaron Scheibe in the Economic, Energy, and Business Affairs
Bureau's Office of Multilateral Trade. Mr. Scheibe may be
contacted at (202) 647-8202 or scheibeap@state.gov.
RICE