Mr. GUARINI. That is another issue.

Mr. MORGAN. It is done by another group of people. They have some things in common. They seem to plot strategy together. On the cable problem, we think we need help above and beyond. On the video cassette area, we filed the lawsuits. We posted the bonds. It is a long and dirty battle. We think we are going to win it.

Mr. GUARINI. Is scrambling going to ameliorate this situation? Is it going to cure this situation with the use of modern technology? Mr. MORGAN. Signal by signal, we hope that scrambling does it. The movie channels that are used in Panama, however, are not yet scrambled. Showtime, the movie channel, is talking about this summer. The two super stations that are retransmitted and the Disney channel and all the rest of it, they all have dates in mind for scrambling. To be frank about it, we are not even that confident that scrambling will be an end to the problem, when you realize that these people have a degree of economic resources that would permit them to put together their own descrambler.

Mr. GUARINI. As soon as you have one type of technology on the line, has there been a countereffort to unscramble and no matter what you do, while you are a step ahead of them now, they will be there soon, I guess.

Mr. MORGAN. We are hopeful about the technological alternative but it is hard to be sanguine on it.

Mr. GUARINI. Mr. Anthony.

Mr. ANTHONY. Thank you, Mr. Guarini.

I would like to make a followup question. I understand the problem and the cost. As I understand your recommendation to this committee, it is to say to Panama, "since you are violating this particular provision, therefore you should not receive the benefits of the CBI."

As I go through the table of those countries that are benefiting from the CBI, you find Panama down at the bottom. It is almost like you are asking us to crack a very small whip over Panama. I was just wondering if you have any response to that.

Mr. MORGAN. I don't know. I suppose one could speculate that perhaps the size of the whip has something to do with the repudiation of the obligation. Maybe whoever is running Panama decided that we are not getting enough of CBI to make us honor our written commitment to take REXSA cable off the air.

Mr. ANTHONY. I think that is probably one of the problems. It does not appear that Panama is utilizing the provisions of CBI. Therefore, if we took it away, they have not lost much. I guess we will be forced to work with you in trying to find some other solution.

In Mr. Burke's case, it appears that all the parties have been cooperative in identifying the problem, outlining the solution to the problem, but then just not solving the problem.

Mr. BURKE. That is correct. That is our frustration. They have agreed and we have worked very hard over a long period of time to put a solution in place that they agreed to put through and then no action has taken place after their commitments.

Mr. ANTHONY. It would appear that through the Subcommittee on Oversight, that we could certainly encourage the proper admin

istration officials in the United States to continue to work on a diplomatic basis.

I know from my own viewpoint, I would hate to vote to punish somebody by taking away something within the legislation. I would much rather try to bind a diplomatic solution rather than to come in and just absolutely deny the CBI benefits, at least until I knew we had gone the extra mile.

I understand your plight. I will work with you. I was supportive when those provisions came up initially, when those amendments came up initially to try to solve the copyright infringement problem. I know when we made our first tour to the Caribbean to take a look at it, we asked many questions about both the books and the satellites. We were given some very forthright answers down there. Yes, counterfeiting was occurring and it was a problem. I know we talked to many officials down there that would agree with you and would like to see it corrected.

I think there is a better way for CBI countries to benefit from trade than through illegal activities. We should do everything we can to stop illegal activities.

Mr. Chairman, I have one final comment, to Mr. Alexander. I have had an occasion to help some of my constituents in the State of Arkansas, in going to Jamaica and work with your various business organizations. I can tell you that although it was a long and hard battle, harder than maybe they had wanted, they are in Jamaica. They are farming. I have talked to them on several occasions. They are satisfied. They tell me they think there are great opportunities in Jamaica. I think a large part of the problem is getting over the reluctance of going to the Caribbean. Also I think we have to continue to work very hard to make sure that the political stability is there so people will be encouraged to come down there. As all witnesses have said, the CBI's success is going to take longer than the original time table which we set out.

Jamaica has a grand opportunity of exporting in many, many agricultural products. I would hope we could work better with you. If I am successful in my efforts to get the chairman to conduct additional hearings with Customs, I think we can bring in USDA as well. We can look at sections 408 and 801 and see if we can't identify and solve some of the problems of exporting agricultural products to the United States. This would benefit you and still not hurt any domestic industry.

Mr. ALEXANDER. Thank you very much, Mr. Anthony. We are working in many aspects with USDA, and in many areas we are anxious to see USDA establish a closer relationship in Jamaica. We are very happy, sir, that your friends from Arkansas are finding their ventures in Jamaica successful. My company benefits from the operation, in that we get products from the operation to sell. We are looking forward to their expansion and feel certain they will continue to do well.

One last thing that I would like to take the opportunity of saying is we in the private sector are fully committed to really make it work. There is a spirit in Jamaica in the private sector to have things move and happen. We have identified the 807. We have identified the electronic assembly. We have identified data entry. We are very anxious to get along with the job. We are very appre

ciative as a private sector in the country for all the assistance we are getting from your country.

Mr. MORGAN. May I make one more comment. I want you to understand what we are doing here. No one is trying to upset the applecart because we didn't get what was promised to us, or at least that is not the end we see. There is nothing short of termination in the CBI. There are no half measures. That is part of the problem. It is either a nuclear bomb or nothing. I suppose if someone would set about redrafting, it might be a good idea to have measures short of a nuclear bomb that might castigate people that don't live up to their representations and obligations.

All we are trying to do is to get the Panamanians to sit down and talk about this. We have tried through the State Department. The Ambassador to Panama has visited repeatedly with the Executive. I visited myself. We just don't seem to be making any progress. We hope that by seeking to raise the issue of whether the CBI benefits ought to be continued on, to get things on a more serious, negotiating plan.

Mr. GUARINI. I can appreciate how frustrated our Government is when we try to have a tax information agreement negotiated with Panama.

I want to thank each of you gentlemen for your contribution and for your testimony. We really appreciate the trouble you have taken coming to be here.

We will recess until 1:30. At that time, we will call the panel on textiles and other exempt products.

Thank you very much, gentlemen.

[Brief recess.]

Mr. GUARINI. Good afternoon.

I would like to call the panel on textiles and other export products: Mr. Carlos Moore, chairman of the American Fiber, Textile, Apparel Coalition; Mr. Gordon Davis, vice president, Uniforms To You & Co.; Mr. Cameron Clark, president, Production Sharing International Ltd., former chairman of the Committee for Production Sharing; Boris Masters, director, import/export, Coleco Industries, Inc.; Mr. Stanley Nehmer, president of the Economic Consulting Services, Inc., representing Leather Products Coalition, accompanied by Fawn K. Evenson, vice president of national affairs, Footwear Industries of America.

I want to welcome you, ladies and gentlemen, and ask you if you will have your statement made part of the record.

Mr. Carlos Moore, we welcome you here, sir, if you wish to begin your testimony.

STATEMENT OF CARLOS MOORE, CHAIRMAN, AMERICAN FIBER, TEXTILE, APPAREL COALITION, AND EXECUTIVE VICE PRESIDENT, AMERICAN TEXTILE MANUFACTURERS INSTITUTE, ACCOMPANIED BY PAUL O'DAY, PRESIDENT, MAN-MADE FIBER PRODUCERS ASSOCIATION, AND HERMAN STAROBIN, DIRECTOR OF RESEARCH, INTERNATIONAL ASSOCIATION OF LADIES' GARMENT WORKERS UNION

Mr. MOORE. Thank you.

My name is Carlos Moore and I am executive vice president of the American Textile Manufacturers Institute. I am appearing on behalf of the American Fiber, Textile, Apparel Coalition, which I serve as chairman. Also present with me today are several mem

bers representing the executive committee of our coalition. They are Paul O'Day, president of the Man-Made Fiber Producers Association, and Dr. Herman Starobin, director of research of the International Ladies' Garment Workers' Union

AFTAC is a national coalition of 21 industry associations and labor unions representing the entire spectrum of fiber, textile and apparel-producing firms in the United States. AFTAC's voice is the voice of 2 million workers employed in our industry complex in every State of the Union.

Mr. Chairman, I would like today to just summarize the key points in our written statement and submit that for the record, as you have requested.

You will recall that when the Caribbean Basin Initiative was authorized, Congress decided to exclude textile and apparel products from the duty-free provisions of the CBI. At that time, this move was criticized by some, and it was, in fact, argued that this would impede the economic progress envisioned under the CBI.

We believe that that criticism has proven to be unfounded because in the 2 years that the CBI has been in effect, textile and apparel imports from these countries have increased by over 70 percent.

Without the duties and a system of quotas, we believe that imports would have increased much more significantly and would have done considerably more damage to an industry and its workers that has already been besieged by tremendous import growth. It is possible to endorse this kind of development in the Caribbean if global imports were not swamping our market and if burdens were shared more equally by those countries which already claim a huge share of our import market.

If the shares of suppliers such as Japan or Hong Kong or Korea or Taiwan were reduced, that is, if their imports were rolled back, we would not be objecting to a reasonable increase or liberalization in the Caribbean.

We have noticed and are very concerned about the recent announcements and intentions by the administration to further liberalize Caribbean Basin access to our market, and the administration appears to be doing so without the consent of Congress. In President Reagan's remarks in Grenada, which received widespread press coverage, we believe those intentions of liberalization are quite clear, and we believe that those intentions are ill conceived, and we are opposed to it for reasons which I will very briefly touch

on.

First, we believe that it runs counter to an effective textile import control program, the type of which was recently ratified by both Houses of Congress when they approved passage of the Textile and Apparel Trade Enforcement Act.

We believe that such an effective program is needed because imports of textile and apparel have grown by over 122 percent into this market since 1980. The President's Caribbean proposals can only lead to a further increase in imports and add to the damage that has already been sustained by the domestic industry and its workers.

We are concerned also that this initiative is going to have a very adverse impact on textile and apparel operations now currently in Puerto Rico. We believe that investment will certainly be discouraged there in this industry and because the U.S. minimum wage is

paid, CBI nations, who pay much lower wages, will take over much of that trade.

Furthermore, we are concerned about Mexico. Mexico is facing, as you know, some very serious problems because of its declining oil revenues. Will this administration be able to resist including Mexico in some kind of a liberalization scheme? We think not. We also think that the liberalization will be encouraged by U.S. banks which hold what we believe to be imprudently made loans to Mexico.

Most critically, we think that there is a very serious matter about proper control and authentication of the trade that will be coming from the Caribbean into the United States. We note today, and we are working with Customs, that there is a tremendous amount of fraud in the current 807 Program, and we are submitting some data which would indicate that that is occurring, as part of our statement.

We think that to further encourage imports from the Caribbean is only going to risk more transshipment and quota fraud.

Finally, we know that there is obviously cheering in the Caribbean because of these new developments, but we think there will also be cheering and rejoicing in the Far East as Far East suppliers who were impacted by quotas will move to the Caribbean, set up operations, use their own fabric, and ship to us in essentially a quotafree condition, which was indicated in the President's plan.

One final point. By permitting essentially unrestrained access of shipments from these countries, we wonder whether the Caribbean area as a whole will really benefit. It seems to us that the more populous Caribbean beneficiaries will take most of the development of that trade and that the smaller countries will not share in any of that development.

Thank you, Mr. Chairman, for this opportunity. [The prepared statement follows:]