STATEMENT
OF

SOL C. CHAIKIN, PRESIDENT

INTERNATIONAL LADIES' GARMENT WORKERS' UNION, AFL-CIO

ON

THE CARIBBEAN BASIN INITIATIVE

March 5, 1986

This statement is submitted on behalf of the International Ladies' Garment Workers' Union and its more than 230,000 members employed in the production of women's and children's apparel throughout the United States and Puerto Rico. Needless to say, our union has a deep concern over the damage done by the flood of apparel imports to the domestic apparel industry and its workers.

I regret I was not able to appear in person at your hearing, although the ILGWU was represented by the testimony presented on behalf of the American Fiber, Textile and Apparel Coalition (AFTAC).

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Along with others in AFTAC, the ILGWU had serious misgivings about the Caribbean Basin Initiative when the CBERA was first enacted in 1983. We still do. However, even when judged against the program's own announced goals, it must be deemed to have been a failure thus far.

The key feature of the program was the professed expansion of U.S. imports from CBI countries. This has not happened. In 1983, before the provisions of the CBERA took effect, total U.S. imports from the 21 beneficiary countries amounted to $6.53 billion dollars. In 1984, the first year of the program, imports amounted to $6.68 billion or only 2.3 percent more than before the program started. In 1985, total imports dropped 10 percent to $6.02 billion, leaving CBI countries in a worse position than before the CBERA was enacted. The one area where imports from the CBI countries have grown significantly has been in apparel, which the bill deemed

In

so sensitive that it was excluded from duty-free treatment. 1983, U.S. imports of apparel and accesories from CBI countries amounted to $387.4 million. In 1984 they rose to $482.5, a gain of 24.5 percent. In 1985 they soared to $626.4 million, a gain of 29.8 percent. Apparel represented 5.9 percent of imports from CBI countries in 1983; in 1985 it was 10.4 percent of the total.

Whatever aid this growth in apparel shipments may have been to CBI countries, it had tragic consequences for an already burdened domestic industry. The gain of $239 million in CBI apparel shipments represents the loss of nearly 15,000 apparel jobs in the United States.

Any expectation that denial of duty-free status apparel imports from CBI countries would hold down their growth has been proven wrong beyound a shadow of doubt. Indeed, the apparel import growth has been the key sustaining segment in the entire CBI program.

A look at future plans for the CBI also causes alarm in light of recent developments. In the course of his visit to Grenada, President Reagan announced a program to implement a new three-tiered access program for CBI shipments of apparel and

made-up articles.

The maximum access (a euphemism for either no quota or a very high one) will be given goods sewn in CBI countries from U.S.-made fabric that has been cut in the U.S. A middle tier of access will be offered to goods made from U.S. fabric but cut in the foreign country. The lowest access tier will apply to goods made of foreign fabric.

The new program is being sold by the Administration as one designed to increase U.S. employment. This is not only fantasy, but very dangerous fantasy. The new program is actually designed to drain jobs out of the United States. A series of questions and answers issued by the Administration to explain the new program states that the

priority access for goods made out of American fabric wil1

increase jobs for U.S. textile and fiber workers. At best this will have a very short-term effect because the policy will undercut the prime market for U.S. textile makers the domestic apparel industry.

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The most blatant and misleading statement of the Administration explanation is the claim that the program will increase the number of apparel jobs in the United States. An unnamed firm is cited as having increased its cutting staff in the U.S. after it opened an assembly plant in a CBI country. However, cutting represents only one out of every 30 jobs in the apparel manufacturing process. Whether a single plant adds

workers, however, is immaterial.

What counts is the net effect

of the program on total apparel jobs in the U.S. Here, the evidence of further job erosion is overwhelming.

The probable impact of the new three-tiered access program can be gauged from an examination of various alternative scenarios. The first instance would be a firm that now

manufactures garments in the United States and transfers its sewing and other assembly work to a CBI plant. The cutting work

A second scenario involves a newly established

company. If it creates cutting operations in the U.S. it adds only that small fraction. None of the sewing and assembly jobs are added. But that looks only at one company. Apparel consumption in the U.S. has grown very slowly over the past decade, at a rate of around 2 percent per year. For all intents and purposes, a new firm can exist and prosper only if some older firm dies because of the competetive advantage of the newcomer and makes room for it. The net result of adding this new firm is exactly the same as in the first case a major net loss of U.S. jobs.

A third scenario involves a foreign producer of apparel which decides to open a CBI plant. If the foreign producer relocates the entire operation to the CBI country there is no net effect on U.S. jobs. If the CBI plant supplements current foreign production there will be a net loss of U.S. jobs since low-wage competition will eliminate an equivalent amount of U.S. production.

The problem will be magnified by the fact that apparel import quotas are presently in effect for very few CBI countries and for a very limited number of categories. What will actually

and it is already happening

is that a

happen, of course horde of Far Eastern producers will come to the CBI countries to expand their shipments to the U.S. free of quotas. This has begun in the case of Korean producers. It will magnify the negative impact on the U.S. apparel industry

It is absurd to think that CBI operations will increase the number of apparel jobs in the U.S. The Administration knows this well and its feeble attempts to mislead the Congress and the public on this score are to be deplored.

If the new program is intended seriously and is not merely a public relations ploy, it will have tragic consequences for our domestic apparel industry. An already decimated industry, burdened by years of an ongoing flood of imports, will have new burdens to with which to contend. Last year, more than 50 percent of the clothing sold in the U.S. was imported, mostly from countries with extremely low-wages and an utter lack of decent standards for their workers.

Since 1973, our industry has witnessed the loss of 300,000 apparel jobs, jobs that are sorely needed here at home. Most of the apparel industry workers have few alternative job

to help our neighbors to the South. We share many of these same

feelings.

Many of our members have migrated from these very

countries. Many have families in the region. But the U.S. should not seek to help the CBI economies at the expense of the U.S. garment worker.

If it is deemed of sufficient importance that additional imports of apparel be sourced in the CBI countries, than arrangements must be made for a corresponding drop in imports from other countries, notably the major shippers of the Far East. The Textile and Apparel Trade Enforcement Act of 1985 sought to accomplish just this. Unfortunately, it was vetoed by

the President. Hopefully, the veto will be overridden when the bill comes up again on August 6, 1986. To permit increased imports from CBI countries without offsetting reductions elsewhere will merely hasten the elimination of a vital domestic industry.

I cannot urge you strongly enough to use the powers of your Subcommittee to prevent the damage the President's new program will wreak. If permitted to go into effect, the new program will cause additional job erosion in the U.S. apparel industry, and especially in Puerto Rico where unemployment is endemic. Furthermore, special treatment for one trading partner will bring demands for special treatment, i.e., liberalized quotas, from all exporting nations. U.S. workers have a right to jobs and a need for them. Their fate is in the hands of the Congress.