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