and that imported textured yarns are being offered here at lower prices than those for textured yarns produced in this country. The domestic producers claim that the provisions of the Tariff Schedules have not been adapted to changes in the industry that have occurred since 1930; that texturing has now become an important function of the throwsters, and that that portion of their operations is without adequate tariff protection; and that Congress intended that the throwster industry should be protected and should prosper in the face of foreign competition. Importers' contentions In testimony made on behalf of importers of textured yarns, on the other hand, virtually all the foregoing claims made by the domestic producers were either disputed or denied. The importers disagreed with the premise that higher rates of duty should apply to man-made fiber products that are further advanced or processed and asserted that "scientific" rate-making in terms of "cost of production" is long outmoded. Rates are currently agreed upon, it was stated, at the tradeagreement bargaining table. It was asserted that for every example, under existing tariff law, of progressively higher rates for additional processing, numerous other rate provisions belie that approach. Attention was called to the fact that the ad valorem rates presently applicable to textured yarns under items 310.02 and 310.06 result in larger duty assessments as the value of the yarn increases. The importers claim that it does not follow that because zero-twist textured yarns of man-made fibers and those not wholly of continuous or noncontinuous fibers may be dutiable under the higher rate provision of item 310.60, that all textured yarns should therefore be dutiable at that rate. They contend that it would be strange to apply the higher rate to all imports of man-made textured yarns when the two types of yarn just mentioned account for only a minor part of imports or production of textured yarns. They suggest that, counter to the producers' claims, provision should be made in the Tariff Schedules for all textured yarns to be dutiable at the lower rates. The importers also emphasize that although textured yarns and high-twist yarns both involve further processing, the two items are not similar. That an industry should receive the same quality of protection regardless of the products they manufacture, the importers stated, was an anomaly. It is claimed that the foreign costs of production are comparable to the domestic, but that even if they were lower the additional expenses for freight, insurance, and higher import duties would make it unprofitable to export to the United States. Current imports, it is argued, consist largely of textured yarn innovations and specialties not available in the United States. The importers disagree with the producers' contention that there is over-capacity in the European plants. They characterize the domestic industry as healthy and growing rapidly. With imports equivalent at most to one or two percent of domestic production it is reasoned that the domestic industry has neither been injured nor is there a likelihood of future injury, and that domestic producers need no additional protection through higher rates of duty. Feasibility and Desirability of Separate Classification Feasibility As indicated under Description and Uses, textured yarns are identifiable by their characteristic bulk and/or elasticity. Although the trade in textured yarns is comprised for the most part of yarns wholly of continuous man-made fibers within the scope of items 310.01-.02 and 310.10-.11, it is quite possible to produce yarns with similar characteristics of bulk and/or stretch of glass filaments or fibers (items 309.98.99); wholly of noncontinuous man-made fibers (items 310.40-.50); of combinations of continuous and noncontinuous man-made fibers, or of either or both such man-made fibers blended with cotton, wool, or other textile fiber (item 310.60). Inasmuch as bulk and/or elasticity are the only distinctive physical characteristics common to all the yarns in question, the Commission believes that any separate provision would necessarily have to describe such yarns of man-made fibers in terms of these distinctive or special characteristics. Moreover, since these characteristics are manifest in the textured yarns of man-made fibers regardless of the process by which produced, or the specific filaments, fibers, or combinations thereof employed, the Commission believes that any such separate provision could be all-embracing and not limited by reference to particular processes, filaments, or fibers. It is not meant to say, however, that a description so based would be free of administrative difficulties. The terms "bulk" and "elasticity" are relative and, although the yarns wholly or in part of continuous man-made fibers presently produced can be readily distinguished on the basis of such characteristics, the distinction is less clear with respect to spun yarns. In addition technological developments could in the future introduce new problems of differentiation. Nevertheless, such problems are not uncommon in many areas of nomenclature, and the Commission is satisfied that, all things considered, it would be feasible (1.e., technically possible) to establish separate classification for such yarns. 1/ Desirability Neither the current primary superior heading or article description, "Yarns of man-made fibers", nor the subordinate description thereunder (items 309.98-310.60) present technical problems which are peculiar to textured yarns alone. 2/ The current provisions are no more complex than the legislated and 1During the course of public hearings held by the Tariff Commission in 1958 in connection with the Tariff Classification Study, the Man-Made Fibers Producers Association proposed separate classification for textured yarns at rates derived from the provisions in paragraph 1301, Tariff Act of 1930, for yarns wholly of continuous filaments with over 20 turns of twist per inch. (See pages 394, 406-9, 520-1, 534, and 571-3 of Schedule 3, Tariff Classification Study (1960). The proposals were not accepted, principally because the Commission was not satisfied at that time that textured yarns could practically be distinguished from other yarns, and because the significant rate increases proposed were not considered to be "incidental" rate changes required to carry out the purposes of the study. 2/ That is not to say that the current provisions do not have undesirable features. For example, the use of the "chief value" concept is not the most desirable classification concept. As explained in the Submitting Report of the Tariff Classification Study (p. 13), "From the point of view of practical customs administration and industry practice, it would be most desirable if descriptions based on component material of chief value with its confusion and uncertainties could be abandoned in favor of descriptions based on the relative quantities by weight of the various textile fibers used in textile products". proclaimed rate differences dictate. It is relatively simple to determine at the present time that a yarn (whether or not textured) is or is not made of glass; is or is not wholly of continuous (or noncontinuous) man-made fibers; is singles or plied; has over or not over 20 turns of twist per inch; is valued over or not over $1; or is wholly or in chief value of man-made fibers. Moreover, although the foregoing yarn distinctions do not serve in any significant degree to segregate textured yarns from untextured yarns, 1/ such distinctions are for the most part compatible with physical differences between varieties of textured yarns. In other words, the technical aspects of tariff nomenclature and schedule design offer no compelling or persuasive reasons for concluding that separate classification in the TSUS for textured yarns is desirable. It is possible, therefore, and perhaps desirable, subject to the criteria for statistical annotation of the TSUS under section 484(e), Tariff Act of 1930, to subdivide the appropriate existing rate classes for yarns of man-made fibers to obtain accurate import data for textured yarns. Such annotation, of course, would not require action either by you or the Congress, nor would it affect the rates of duty. On the other hand, if you should decide, after consideration of this report and the views of other interested agencies, that rate treatment different from that currently provided in the TSUS for textured In a negative sense, some separation of textured and untextured yarns is made in the current provisions. It is not likely, for example, that textured yarns would have over 20 turns of twist per inch (items 310.05.-.06 or 310.20-.21) or would be valued not over $1 per pound (item 310.01 or 310.10). |