PRODUCTION SHARING: USE OF U.S. 

COMPONENTS AND MATERIALS IN

FOREIGN ASSEMBLY OPERATIONS, 1993-1996

(U.S. Imports Under the Production-Sharing Provisions of

Harmonized Tariff Schedule Chapter 98)

USITC PUBLICATION 3077

DECEMBER 1997

INVESTIGATION NO. 332-237

United States International Trade Commission, Washington, DC 20436
United States International Trade Commission

Commissioners

Marcia Miller, Chairman

Lynn M. Bragg, Vice Chairman

Don E. Newquist

Carol T. Crawford

Robert A. Rogowsky

Director of Operations

Vern Simpson

Director of Industries

This report was prepared principally by the Office of Industries

John Cutchin, Project Leader

Jennifer Rorke Baum, Assistant Project Leader

Ruben Mata, Canadian Maquiladoras in Mexico

Adam Topolansky, Production Sharing in Hungary

Diane Bennett, Sharon Greenfield, and Zema Tucker

Principal country and product profiles provided by:

Jim Brandon, J. Gail Burns, Robert Carr, Christopher Johnson, 

Scott Ki, John Kitzmiller, Deborah McNay

Laura Polly, Sundar Shetty, Josephine Spalding

With assistance from the

Office of Information Services and

Office of Tariff Affairs and Trade Agreements

Design, electronic composition, and printing provided by the

Publishing Division

Under the direction of:

Larry L. Brookhart, Division Chief

Ralph J. Watkins, Branch Chief

Minerals, Metals, Machinery, and Miscellaneous

Manufactures Division

Address all communications to

Secretary to the Commission

United States International Trade Commission

Washington, DC 20436
iii

PREFACE

Pursuant to section 332(b) of the Tariff Act of 1930 (19 U.S.C. 1332(b)), the U.S.

International Trade Commission reports annually on U.S. import trends under the productionsharing provisions of the Harmonized Tariff Schedule (HTS). The annual analysis identifies

the level and nature of U.S.-origin component production that is used in foreign assembly

operations. The current report examines the 4-year period 1993-96 on a country- and productspecific basis, and presents historical data (1970-96) under these tariff provisions. In addition

to the assessment on the use of the pertinent HTS chapter 98 provisions, this year’s report

includes special chapters that focus on the operations of Canadian companies in Mexico’s

maquiladora industry and the use of assembly plants in Hungary to reduce costs of competing

in European markets.

Continuance of this investigation is subject to annual Commission reauthorization, which

depends in large measure on Administration (USTR, Commerce, Labor, State) and

Congressional interest related to production-sharing and trade agreements issues, as well as the

extent of public interest in and use of the information presented. Foreign assembly with U.S.-

made components is expanding and continues to be an important competitive strategy for many

companies and, despite certain data limitations explained in the note below, this assessment of

trade under these provisions currently is the only official source for documenting the use of U.S.

components in foreign assembly. Production-sharing data play an important role in analyzing

the effects of trade agreements and gauging the ability of U.S. industry to compete.
iv

NOTE: This report on U.S. production-sharing activity is based on official U.S. statistics

on imports under the HTS production-sharing provisions (PSP). The main productionsharing provisions provide a duty exemption for the value of U.S.-made components that

are incorporated in imported articles that have been assembled abroad. The domestic

content of U.S. imports entered under these production-sharing provisions is also exempt

from the merchandise processing fee (the so-called “user fee”—a 0.17 percent ad valorem

fee with a $400 per entry cap).

Firms that import articles free of duty, either with a most-favored-nation duty rate of free

or under trade preference programs such as NAFTA, have a greatly reduced incentive to

enter these articles under these HTS provisions. Consequently, the reported use of U.S.

components in the foreign production of such articles for the U.S. market are likely to be

understated. However, many importers of duty-free articles continue to use these provisions

because of their exemption from the user fee on the value of U.S.-origin content. The U.S.-

Canada Free-Trade Agreement (CFTA), since replaced by the North American Free-Trade

Agreement (NAFTA), has phased out the user fee applicable to U.S. imports from Canada

qualifying as originating goods as of January 1, 1994. Consequently, only a small portion

of U.S. imports from Canada that contain U.S.-origin components are currently entered

under the production-sharing tariff provisions. A comparably significant increase in

understatement of production sharing in official statistics with regard to imports from

Mexico is anticipated when the user fee applicable to imports from Mexico under the

NAFTA is eliminated on July 1, 1999. Nevertheless, an examination of imports under the

production-sharing provisions remains a valid and important tool for measuring the use of

U.S.-made components in assembly operations conducted by U.S. trading partners, such as

Mexico and certain countries in the Caribbean Basin and Southeast Asia. To the degree

information is available, this report characterizes the extent and nature of imports from

production-sharing operations that do not enter under HTS PSP. 
v

ABSTRACT

This report provides an annual summary of developments related to the use of U.S.-made

components in foreign assembly plants. Imports incorporating U.S.-made components can enter

the United States either free of duty or at reduced duties under the production-sharing provisions

(PSP) of Chapter 98 of the Harmonized Tariff Schedule (HTS). The production-sharing tariff

provisions offer a financial incentive for companies with foreign-assembly operations to use

U.S.-made components in the manufacture of goods destined for the U.S. market. U.S. firms

typically invest in production-sharing facilities to reduce labor costs and to improve

competitiveness in U.S. and third-country markets. These firms usually retain product

development and design, capital-intensive manufacturing, and marketing-related activities in the

United States, while shifting labor-intensive assembly to countries with lower labor costs. Some

firms have penetrated foreign markets by establishing local assembly operations when trade

barriers or high transportation costs inhibit direct exports of finished products from the United

States.

Imports under the production-sharing tariff provisions grew by 11 percent ($1.9 billion) in 1996

to $68 billion, and accounted for 9 percent of total U.S. imports that year. The value of U.S.-

made components or materials that were contained in these imports increased 8 percent and

totaled $24 billion, representing 35 percent of the total value of imports under the PSP of HTS

Chapter 98. The principal products assembled abroad and imported by U.S. producers under

the PSP are apparel from the Caribbean Basin countries and Mexico; motor vehicles, electrical

circuit apparatus, television receivers, and auto parts from Mexico; and semiconductors from

Southeast Asia. Mexico is the principal source of HTS PSP imports, accounting for 41 percent

of the total value of such trade in 1996 and 61 percent of the total value of U.S.-made

components. The other major suppliers, the Dominican Republic and Malaysia, accounted for

6 percent and 5 percent, respectively, of the value of U.S.-made components in HTS PSP

imports.

The U.S. apparel sector has a greater economic incentive than any other domestic industry to

use the HTS PSP. In 1996, apparel products accounted for 53 percent of the total duty savings

from use of the HTS PSP, despite comprising only 13 percent of total imports under these

provisions. The average trade-weighted rate of duty on apparel is 17-percent ad valorem,

compared with about 3 percent ad valorem for other products. Imports of apparel from Mexico

under the HTS PSP rose by $702 million (30 percent) in 1996 to $3.0 billion, while such

imports from the Caribbean Basin grew by $500 million (11 percent) to $5.0 billion. Mexico

increased its share of total U.S. imports of apparel relative to that of the Caribbean Basin due

primarily to a special production-sharing provision (HTS 9802.00.90) created by NAFTA that

allows for duty-free and quota-free entry of apparel sewn in Mexico entirely from U.S. formedand-cut fabric. Reduced labor costs in Mexico following the devaluation of the peso and

increased costs in certain Caribbean Basin supplier countries have also boosted apparel imports

from Mexico that might otherwise have been sewn in the Caribbean Basin.
vi

A significant amount of imports from production-sharing operations do not enter under the HTS

PSP because they are already eligible for duty-free treatment under other agreements or tariffpreference programs, such as motor-vehicle equipment and electronic products from Canada

(NAFTA), computer equipment and semiconductors from Southeast Asia (MFN free), a variety

of articles from Mexico (NAFTA), and certain manufactured goods from the Caribbean Basin

(CBERA). Where possible, this report characterizes the extent and type of production-sharing

trade that takes place beyond that reported under the production-sharing provisions of HTS

Chapter 98. In particular, profiles of selected Canadian maquiladora operations and U.S.

operations in Hungary provide added insights on global developments that affect competitive

capability in third markets.
vii

CONTENTS

Page

Preface ..................................................................... i

Abstract ................................................................... iii

Chapter 1. Overview and Findings ............................. 1-1

Purpose ................................................................... 1-3

Report findings ............................................................. 1-7

Aggregate trends ........................................................ 1-7

Principal countries ....................................................... 1-7

Principal products ....................................................... 1-13

Organization ............................................................... 1-18

Chapter 2. Key Country and Regional Developments 

in 1996 ............................................................... 2-1

Mexico ................................................................... 2-2

The Caribbean Basin ........................................................ 2-10

Dominican Republic ..................................................... 2-13

Honduras .............................................................. 2-14

Costa Rica ............................................................. 2-17

Other regional developments .............................................. 2-18

Southeast Asia ............................................................. 2-20

Regional trends ......................................................... 2-20

Malaysia .............................................................. 2-22

Other regional developments .............................................. 2-24

Chapter 3. Key Industry Developments in 1996 .......... 3-1

Apparel ................................................................... 3-1

Major HTS Chapter 98 sources of apparel .................................... 3-6

Growth of production sharing by product category ............................. 3-7

Motor vehicles and related equipment ........................................... 3-11

Motor vehicles .......................................................... 3-12

Ignition wiring harnesses .................................................. 3-19

Certain motor-vehicle parts ................................................ 3-23
viii

CONTENTS—Continued

Page

Internal combustion engines ............................................... 3-27

Electronic products, medical equipment, and precision manufactures .................. 3-30

Semiconductor devices ................................................... 3-31

Television receivers ...................................................... 3-36

Computer hardware ...................................................... 3-40

Measuring, testing, controlling, and analyzing instruments ....................... 3-44

Medical goods .......................................................... 3-48

Chapter 4. Canadian Involvement in Mexico’s 

Maquiladora Industry ......................................... 4-1

Canadian maquiladoras before and after NAFTA .................................. 4-1

Profile of selected Canadian maquiladoras and outlook for the maquiladora sector ....... 4-5

Northern Telecom (Nortel de Mexico) ....................................... 4-5

Nygard International, Tan Jay Division (Nygard S. A.) .......................... 4-7

Noma Appliance and Electronics (Noma Appliances) ........................... 4-7

Beck Electric Co., subsidiary of Noma Industries (Sistemas y Conexiones) .......... 4-8

Outlook ............................................................... 4-8

Chapter 5. The Assembly Industry in Hungary:

Implications of the Use of Production Sharing 

in Central Europe for U.S. Industries ................... 5-1

The role of Hungary in EU trade ............................................... 5-4

The assembly industry in Hungary ............................................. 5-6

Company profiles and outlook ................................................. 5-8

Ford Motor Company’s Alba Plant ......................................... 5-8

Loranger Ipari Kft. ...................................................... 5-9

GM-Opel/General Motors Hungary ......................................... 5-10

Audi Hungaria Motor Kft./Volkswagen-Audi ................................. 5-10

IBM Storage Products Kft. ................................................ 5-11

IR3 Video International Kft. .............................................. 5-11

Outlook ............................................................... 5-12
ix

CONTENTS—Continued

Page

Appendixes

A. The customs treatment of certain American goods returned

(HTS 9802.00.5010, 9802.00.60, 9802.00.80, and 9802.00.90) .................. A-1

B. Statistical tables ............................................................ B-1

C. Federal Register notice requesting comments ..................................... C-1

Figures

1-1. Comparison of the composition of U.S. imports under the production-sharing provisions 

(PSP) of HTS Chapter 98 from major supplying countries/regions in 1996 .......... 1-9

1-2. U.S. imports under the production-sharing provisions (PSP) of HTS Chapter 98; 

shares of total value and duty savings, by selected industry, 1996 ................. 1-17

2-1. U.S. imports for consumption under the production-sharing provisions (PSP) of 

HTS Chapter 98: U.S. content, major supplying countries/regions, 1993 

and 1996 .............................................................. 2-1

3-1. The U.S. content of U.S. imports for consumption under the production-sharing 

provisions (PSP) of HTS Chapter 98; by selected product sectors, 1993 and 1996 .... 3-2

3-2. Apparel: Share of U.S. content provided by major suppliers of imports under the 

production-sharing provisions (PSP) of HTS Chapter 98, 1993 and 1996 ........... 3-8

3-3. Motor vehicles: Total U.S. imports under the production-sharing provisions (PSP) 

of HTS Chapter 98, and U.S. content under HTS PSP, 1993-96 ................... 3-14

3-4. Motor vehicles: U.S. content of imports under the production-sharing 

provisions (PSP) of HTS Chapter 98, 1996 ................................... 3-15

3-5. Leading motor vehicle products, total imports under HTS heading 9802.00.80

and U.S. content of imports under HTS 9802.00.80, 1996 ....................... 3-18

4-1. Distribution of Canadian companies involved in Mexico’s maquiladora industry 

by sector, 1997 ......................................................... 4-6

5-1. Accumulated investment in Hungary 1989-96, by source country ..................... 5-3

5-2. Hungary’s exports from production-sharing operations (contract work) by leading 

markets, 1996 .......................................................... 5-5
x

CONTENTS—Continued

Page

Tables

1-1. U.S. imports under HTS 9802.00.60, 9802.00.80, and 9802.00.90 and total imports, 

1995 and 1996 .......................................................... 1-4

1-2. U.S. imports for consumption, total and under the production-sharing provisions (PSP) of

HTS Chapter 98, by principal suppliers (based on the value of U.S. components in

the assembled imports in 1996), 1993-96 .................................... 1-8

1-3. Average hourly compensation costs for production workers in manufacturing, by selected

regions and countries, 1993-96 ............................................. 1-12

1-4. Summary of U.S. production-sharing trade shifts under the production-sharing provisions 

(PSP) of HTS Chapter 98 in 1996, value of U.S. content, by selected countries and

products, annual value and percentage change, and reasons ...................... 1-14

1-5. U.S. imports for consumption under the production-sharing provisions (PSP) of HTS

Chapter 98, total and duty-free, by major industry group, 1995 and 1996 ........... 1-15

2-1A. Mexico: U.S. imports for consumption, total, under the production-sharing 

provisions (PSP) of HTS Chapter 98, U.S. content, and percentage shares, 1993-96 ... 2-2

2-1B. Mexico: Exports to the United States, total and from the maquiladora industry; 

and imports of components, materials, and machinery into Mexico from the 

United States for use in the maquiladora industry, 1993-96 ...................... 2-3

2-2. Mexico: U.S. imports from Mexico under NAFTA and under the production-sharing

provisions (PSP) of HTS Chapter 98, 1996 ................................... 2-6

2-3. Mexico: U.S. content of imports to the United States under the production-sharing 

provisions (PSP) of HTS Chapter 98, by principal products, 1993-96 .............. 2-7

2-4. U.S. content of imports under production-sharing provisions (PSP) 

of HTS Chapter 98 from the Caribbean Basin region for apparel, all other, 

and total by principal countries, 1993-1996 ................................... 2-11

2-5. Comparison of factors of competition between the Dominican Republic, 

Honduras, Costa Rica, El Salvador, Jamaica, and Mexico ........................ 2-15

2-6. Selected Caribbean Basin Countries: U.S. imports under the production-sharing 

provisions (PSP) of HTS Chapter 98, and the Caribbean Basin Economic

Recovery Act, 1993-96 ................................................... 2-16

2-7. Southeast Asia: U.S. content in imports of semiconductors and all other products 

under the production-sharing provisions (PS) of HTS Chapter 98, by principal 

countries, 1993-96 ...................................................... 2-21

3-1. Apparel: U.S. imports for consumption, total and under the production-sharing 

provisions (PSP) of HTS Chapter 98, by principal suppliers (based on the value 

of U.S. components contained in the HTS PSP imports in 1996), 1993-96 .......... 3-3
xi

CONTENTS—Continued

Page

Tables—Continued

3-2. Apparel: Total U.S. imports, U.S. imports from NAFTA partners, and imports from 

Mexico under NAFTA and the production-sharing provisions (PSP) of HTS

Chapter 98, 1995 and 1996 ............................................... 3-5

3-3. Shirts: Comparative production costs, by location ................................. 3-7

3-4. Selected apparel products: U.S. producers’ shipments and imports for consumption 

under the production-sharing provisions (PSP) of HTS Chapter 98, 1993-96 ........ 3-10

3-5. Motor vehicles: U.S. imports for consumption, total, under the production-sharing 

provisions (PSP)of HTS Chapter 98, U.S. content, and percentage share, 

1993-96 ............................................................... 3-14

3-6. Motor vehicles: Total U.S. imports, from NAFTA partners, and 

imports from Mexico under NAFTA and the production-sharing provisions 

(PSP) of HTS chapter 98, 1995 and 1996 .................................... 3-15

3-7. Motor vehicles: U.S. content of imports to the United States under the productionsharing provisions (PSP) of HTS Chapter 98, by principal sources, 1993-96 ......... 3-16

3-8. Ignition wiring harnesses: U.S. imports for consumption, total, under the 

production-sharing provisions (PSP) of HTS Chapter 98, U.S. content, and 

percentage share, 1993-96 ................................................ 3-20

3-9. Ignition wiring harnesses: U.S. content in imports to the United States under the 

production-sharing provisions (PSP) of HTS Chapter 98, by principal sources, 

1993-96 ............................................................... 3-21

3-10. Ignition wiring harnesses: Total U.S. imports, U.S. imports from NAFTA partners, 

and imports from Mexico under NAFTA and the production-sharing provisions 

(PSP) of HTS Chapter 98, 1995 and 1996 .................................... 3-22

3-11. Certain motor-vehicle parts: U.S. imports for consumption, total, under the 

production-sharing provisions (PSP) of HTS Chapter 98, U.S. content, and 

percentage share, 1993-96 ................................................ 3-24

3-12. Certain motor-vehicle parts: U.S. content in imports to the United States under the 

production-sharing provisions (PSP) of HTS Chapter 98, by principal sources, 

1993-96 ............................................................... 3-25

3-13. Certain motor-vehicle parts: Total U.S. imports, U.S. imports from NAFTA partners, 

and imports from Mexico under NAFTA and the production-sharing provisions 

(PSP) of HTS Chapter 98, 1995 and 1996 .................................... 3-25

3-14. Internal combustion engines: U.S. imports for consumption, total, under the 

production-sharing provisions (PSP) of HTS Chapter 98, U.S. content, and 

percentage share, 1993-96 ................................................ 3-27

3-15. Internal combustion engines: U.S. content in imports to the United States under the 

production-sharing provisions (PSP) of HTS Chapter 98, by principal sources, 

1993-96 ............................................................... 3-28
xii

CONTENTS—Continued

Page

Tables—Continued

3-16. Internal combustion engines: Total U.S. imports, U.S. imports from NAFTA partners, 

and imports from Mexico under NAFTA and the production-sharing provisions 

(PSP) of HTS Chapter 98, 1995 and 1996 .................................... 3-28

3-17. Semiconductor devices: Total U.S. imports, U.S. imports from NAFTA partners, 

and imports from Mexico under NAFTA and the production-sharing provisions 

(PSP) of HTS Chapter 98, 1995 and 1996 ................................... 3-34

3-18. Semiconductor devices: U.S. imports for consumption, total, under the production-sharing 

provisions (PSP) of HTS Chapter 98, U.S. content, and percentage share, 

1993-96 ............................................................... 3-34

3-19. Semiconductor devices: U.S. content in imports to the United States under the productionsharing provisions (PSP) of HTS Chapter 98, by principal sources, 1993-96 ............ 3-35

3-20. Television receivers: U.S. imports for consumption, total, under the production-sharing 

provisions (PSP) of HTS Chapter 98, U.S. content, and percentage share, 1993-96 ... 3-37

3-21. Television receivers: Total U.S. imports, U.S. imports from NAFTA partners, and 

imports from Mexico under NAFTA and the production-sharing provisions 

(PSP) of HTS Chapter 98, 1995 and 1996 .................................... 3-38

3-22. Television receivers: U.S. content in imports to the United States under the productionsharing provisions (PSP) of HTS Chapter 98, by principal sources, 1993-96 ......... 3-38

3-23. Computer hardware: U.S. imports for consumption, total, under the production-sharing 

provisions (PSP) of HTS Chapter 98, U.S. content, and percentage share, 

1993-96 ............................................................... 3-41

3-24. Computer hardware: U.S. content in imports to the United States under the productionsharing provisions (PSP) of HTS Chapter 98, by principal sources, 1993-96 ......... 3-42

3-25. Computer hardware: Total U.S. imports, U.S. imports from NAFTA partners, 

and imports from Mexico under NAFTA and the production-sharing provisions 

(PSP) of HTS Chapter 98, 1995 and 1996 .................................... 3-43

3-26. Measuring, testing, controlling, and analyzing instruments: U.S. imports for 

consumption, total, under the production-sharing provisions (PSP) of HTS

Chapter 98, U.S. content, and percentage share, 1993-96 ........................ 3-45

3-27. Measuring, testing, controlling, and analyzing instruments: U.S. content in imports 

to the United States under the production-sharing provisions (PSP) of HTS

Chapter 98, by principal sources, 1993-96 .................................... 3-45

3-28. Measuring, testing, controlling, and analyzing instruments: Total U.S. imports, 

U.S. imports from NAFTA partners, and imports from Mexico under NAFTA 

and the production-sharing provisions (PSP) of HTS Chapter 98, 1995 and 1996 ..... 3-47

3-29. Medical goods: U.S. imports for consumption, total, under the production-sharing 

provisions (PSP) of HTS Chapter 98, U.S. content, and percentage share, 

1993-96 ............................................................... 3-49
xiii

CONTENTS—Continued

Page

Tables—Continued

3-30. Medical goods: U.S. content in imports to the United States under the productionsharing provisions (PSP) of HTS Chapter 98, by principal sources, 1993-96 ......... 3-50

3-31. Medical goods: Total U.S. imports, U.S. imports from NAFTA partners, and 

imports from Mexico under NAFTA and the production-sharing provisions of 

HTS Chapter 98, 1995 and 1996 ........................................... 3-51

4-1. Canadian firms with assembly plants in Mexico as of September 1997 ................ 4-2

B-1. U.S. imports for consumption under HTS headings 9802.00.60 and 9802.0080, 

1971-96 ............................................................... B-2

B-2. U.S. imports for consumption under the production-sharing provisions (PSP) of HTS

Chapter 98: Total imports; imports under HTS PSP; and U.S. content, by principal 

sources, 1993-96 ........................................................ B-3

B-3. U.S. imports for consumption under the production-sharing provisions (PSP) of HTS

Chapter 98, by commodity groups, 1993-96 .................................. B-7

B-4. U.S. imports for consumption under the production-sharing provisions (PSP) of HTS

Chapter 98, by principal sources, 1996 ...................................... B-15

B-5. U.S. imports for consumption from Mexico under NAFTA and the production-sharing 

provisions (PSP) of HTS Chapter 98, by commodity groups, 1996 ................ B-16

B-6. U.S. imports for consumption from Japan, total and under the production-sharing 

provisions (PSP) of HTS Chapter 98, by commodity groups, 1996 ................ B-20

B-7. U.S. imports for consumption from Germany, total and under the production-sharing 

provisions (PSP) of HTS Chapter 98, by commodity groups, 1996 ................ B-22

B-8. U.S. imports for consumption from Malaysia, total and under the production-sharing 

provisions (PSP) of HTS Chapter 98, by commodity groups, 1996 ................ B-24

B-9. U.S. imports for consumption from Dominican Republic, total and under the 

production-sharing provisions (PSP) of HTS Chapter 98, by commodity 

groups, 1996 ........................................................... B-26

B-10. U.S. imports for consumption from the Philippines, total and under the 

production-sharing provisions (PSP) of HTS Chapter 98, by commodity 

groups, 1996 ........................................................... B-28

B-11. U.S. imports for consumption from Korea, total and under the production-sharing 

provisions (PSP) of HTS Chapter 98, by commodity groups, 1996 ................ B-30

B-12. U.S. imports for consumption from United Kingdom, total and under the productionsharing provisions (PSP) of HTS Chapter 98, by commodity groups, 1996 .......... B-32

B-13. U.S. imports for consumption from Sweden, total and under the production-sharing 

provisions (PSP) of HTS Chapter 98, by commodity groups, 1996 ................ B-34

B-14. U.S. imports for consumption from Canada, total and under the production-sharing 

provisions (PSP) of HTS Chapter 98, by commodity groups, 1996 ................ B-36

B-15. U.S. imports for consumption under HTS 9802.00.60, by country and commodity, 

1996 .................................................................. B-38
xiv

CONTENTS—Continued

Page

Tables—Continued

B-16. U.S. imports for consumption under HTS 9802.00.90 from Mexico, by commodity, 1995 

and 1996 .............................................................. B-39

B-17. Duty savings from use of the production-sharing provisions PSP of HTS Chapter 98, by 

monitoring groups, 1996 .................................................. B-40
 The “rationalization” of production typically occurs when companies perform a process or series 1

of production processes at different locations to take advantage of the inherent efficiencies or reduced

costs of the various production inputs (e.g., labor wage rates, skilled workforces, materials, etc.)

available from each locale. Although this strategic planning often leads to increased efficiency and

economies of scale, it can also heighten interdependency between plants, thereby requiring tighter

coordination of production planning. The rationalization of production across international

boundaries has become increasingly common in recent years.

 Where high tariffs or other trade barriers restrict the direct export of finished goods, companies 2

may be able to sell into these markets by exporting parts and subassemblies and performing final

assembly operations in the consuming nation. Production sharing may also be used to gain access to

certain unique foreign production technology, labor skills, raw materials, or specialized components. 

 Finished goods imported from Mexican assembly plants often go through quality-testing 3

procedures in the United States prior to final packaging and shipping to domestic and foreign markets. 

 In addition to information obtained from various Commission studies since 1987, Commission 4

staff routinely monitor the effects of production sharing on U.S. industry and maintain regular contact

with U.S. companies that employ foreign assembly as part of their overall competitive strategy,

particularly vis-a-vis Asian producers. See ch. 3 for discussions of these operations in various

industry sectors. 

1-1

CHAPTER 1

OVERVIEW AND FINDINGS

Production sharing is the process by which companies rationalize selected portions of the

1

manufacture or assembly of products to minimize their overall costs and thereby improve their

worldwide competitiveness. Production sharing may also be employed to facilitate access to

otherwise closed foreign markets.2

The most common form that production sharing takes for U.S.-based companies involves

initiating the highly capital-intensive production of parts, subassemblies, and/or major

functional elements of a product domestically, and shifting the labor-intensive final assembly

operations to an accessible foreign location. This “foreign-assembly”-type of production

3

sharing has evolved into an important competitive strategy for many U.S. producers of low-cost,

labor-intensive articles. The domestic share, or content, of such operations can often be

sustained as a result of the improved overall competitiveness attributable to low-cost foreign

assembly. In these cases, companies are able to maintain higher U.S. production and

employment levels than might otherwise be possible. Such production sharing has become part 4

of a global effort to reduce manufacturing costs.
1-2

Customs Incentives for Entry Under the ProductionSharing Provisions of HTS Chapter 98 and NAFTA

Goods of Mexico that are entered under the provisions of HTS general note 12 (concerning the

NAFTA) are subject to a customs merchandise processing fee (user fee) of 0.17 percent ad

valorem, or $400 maximum per entry. Companies that enter merchandise under the productionsharing provisions (PSP) of HTS Chapter 98, however, receive an exemption from paying both

U.S. customs duties and the user fee on the value of the U.S.-made components incorporated in

the imported products. The user fee applicable to eligible goods of Canada was eliminated on

January 1, 1994, pursuant to the NAFTA. Thus, there is still an incentive for importers of dutyfree Mexican products to avoid the user fee by importing under HTS PSP until the fee is eliminated

on July 1, 1999. Many companies with production-sharing operations in Mexico whose products

meet the NAFTA rules of origin enter their products under both NAFTA and HTS PSP. The value

of U.S.-origin components contained in the imported article is free of both customs duties and the

user fee under HTS PSP, while the remaining value added to the assembled good in Mexico

receives a preferential NAFTA duty rate, but is subject to the user fee.

In 1996, 37 percent ($20 billion) of all imports entering under NAFTA from Mexico also entered

under HTS 9802. An estimated $14 billion of NAFTA imports from Mexican assembly operations

that likely could have qualified for entry under HTS 9802 did not because for many companies, the

expense of complying with Customs’ HTS 9802 record-keeping requirements exceeds the savings

gained from exemption from the user fee. Other companies minimize the effective user fee that

they have to pay by entering a number of shipments from Mexico into U.S. foreign trade zones and

then shipping a single entry for Customs purposes from the zone, thereby paying the $400 per

entry cap once instead of several times. See appendix A; the section on Mexico in chapter 2; and

the section on motor vehicles and related equipment in chapter 3 for more information about the

user fee and the Customs treatment of goods from Mexico.
 See app. A of this report for a discussion of the mechanics and legal framework associated with 5

the production-sharing tariff provisions. For the legal text of the provisions, see ch. 98 of the HTS

and applicable notes. For the purposes of this report (except as noted in table 1-1), imports under

HTS 9802.00.5010 and heading 9802.00.90 are combined with imports under heading 9802.00.80. 

HTS 9802.00.5010 was created pursuant to the Caribbean Basin Economic Recovery Expansion Act

of 1990 (CBERA). It is similar to 9802.00.8040 in that both allow duty-free treatment for goods

imported from countries designated as beneficiaries of the CBERA if the goods are made from U.S.-

origin components and materials, except for most apparel and other textile and petroleum products;

however, 9802.00.8040 requires that the imported article be assembled entirely from U.S.-made

components, whereas 9802.00.5010 is less restrictive, requiring only that the article consist entirely

of U.S.-origin materials that have been advanced in value or improved in condition by any process of

manufacture or other means. Under both, no U.S. duty is applied to either the value of U.S.-origin

parts and materials or to the value added in the CBERA-beneficiary country. Under 9802.00.80, only

the value of the U.S.-cut fabric pieces is duty-free; under 9802.00.90, the value added in Mexico

(such as labor and overhead) is also duty-free. See the section on apparel in ch. 3 for more detail

about 9802.00.90.

1-3

U.S. imports of goods that are assembled or processed abroad from U.S.-made components or

materials are eligible for a partial exemption from duty under the provisions of subchapter II,

chapter 98 of the Harmonized Tariff Schedule of the United States (HTS). These provisions 5

provide a duty exemption on the value of U.S.-made components that are returned to the United

States as parts of articles assembled abroad (9802.00.80), or as imported articles using U.S.-

origin metal (except precious metal) that are returned to the United States for further processing

(9802.00.60). HTS heading 9802.00.80 accounts for 95 percent of the imports under the

production-sharing tariff provisions. HTS heading 9802.00.90 was created by the North

American Free-Trade Agreement (NAFTA) to allow for the duty-free treatment of textile and

apparel products assembled in Mexico from U.S.-formed and U.S.-cut fabric. Imports under

the various production-sharing provisions were valued at $67.5 billion in 1996, accounting for

9 percent of total U.S. imports (table 1-1). The value of the U.S.-made components or materials

that were contained in these imports totaled $24.0 billion in 1996, representing 35 percent of

the value of total U.S. imports entered under the HTS PSP.

Purpose

This report provides an annual summary of the developments that have occurred during 1996

in the use of U.S. production-sharing tariff provisions, concentrating on shifts in both trade and

product mix, and analyzing recent trends in imports by principal source countries and within

selected industry sectors. Even though the incentive to use these provisions for articles entering

from Mexico and Canada has been diminished to a certain extent as the result of reduced or

eliminated tariffs and Customs user fees under the NAFTA, the production-sharing tariff

provisions will likely continue to be an important element of the strategy of U.S.-based

companies. Key determinants of the future of production-sharing operations include the extent

to which U.S. manufacturers continue to rely on foreign assembly operations, how production

sharing is employed worldwide by manufacturers to their competitive advantage, and the impact

of technological and other developments on the global integration of specific industries.
1-4

Table 1-1

U.S. imports under HTS 9802.00.60, 9802.00.80, and 9802.00.90 and total imports, 1995 and 1996 1 

Provision 1995 1996 from 1995 provisions, 1996

Change, 1996 sharing

Share of total

imports under the

production-

)))) Million dollars )))) )))))))))) Percentage )))))))))

Imports under 9802.00.60:

Dutiable .............................

2

127 155 22 28

Nondutiable (U.S. origin metal) ........... 377 395 5 72

Subtotal ............................ 503 550 9 1

Imports under 9802.00.80:

Dutiable .............................

3

37,939 42,551 12 67

Nondutiable (U.S. origin components) ..... 19,955 21,409 7 33

Subtotal ............................ 57,894 63,959 10 95

Imports under 9802.00.90:

Dutiable .............................

4

705 844 20 28

Nondutiable (U.S. -formed and -cut fabric) . . 1,778 2,161 22 72

Subtotal ............................ 2,483 3,005 21 4

Imports under all production

sharing provisions of HTS Chapter 98

Dutiable ............................. 38,770 43,550 12 65

Nondutiable (U.S. made material) ......... 22,110 23,965 8 35

Subtotal ............................ 60,880 67,514 11 100

Grand total U.S. imports ..............

5

739,660 790,470 7 ( )

6

 Separate data are not reported for imports under 9802.00.5010. Data for entries under this provision are combined 1

with data for entries under 9802.00.80.

 The dutiable portion of imports under 9802.00.60 is the value added to the imported product by processing (or the 2

cost of processing) in the foreign country. The nondutiable portion is the value of the U.S.-origin metal.

 The dutiable portion of U.S. imports under 9802.00.80 is the total value of the imported product less the cost or value 3

of the U.S.- made components. The nondutiable portion is the value of U.S.-made components contained in the

imported product.

 The value added in Mexico to the U.S. formed-and-cut fabric (the “dutiable” portion) is free of duty, as agreed to in 4

NAFTA.

 For the purpose of this report, “total imports” consists of all imports entering under chapters 1-98 of the HTS.

 5

 Not applicable. 6

Note.—Because of rounding, figures may not add to the totals shown.

Source: Compiled from official statistics of the U.S. Department of Commerce.
 Production-sharing trade with Canada and Mexico continued to expand in 1996, particularly in 6

motor vehicles and parts and in electrical and electronic products. In the electronics industry, U.S.

multinationals such as IBM, Digital Equipment, and Hewlett Packard supply assembly operations in

Canada. See ch. 2 of this report for additional information on non-9802 production-sharing trade

with Mexico. Also see the Canada and Mexico country analysis sections in USITC, Shifts in U.S.

Merchandise Trade in 1996, USITC publication 3051, July 1997, pp. 3-1 to 3-10. 

 These estimates were provided by Professor Donald A. Michie, University of Texas, El Paso, 7

Texas, and were also cited by other experts at a Border Trade Alliance conference in El Paso, TX,

June 23-25, 1996. In addition, the Association of International Automobile Manufacturers, Inc. notes

that these provisions understate the use of U.S. components by many of AIAM’s members;

submission in response to May 15, 1996, Federal Register notice concerning the April 1997 report

on production sharing by the Commission covering the period 1992-95. 

 Maquiladoras are assembly plants that use foreign-made components, most of which are imported 8

from the United States. Most maquiladora plants are either subsidiaries of U.S. manufacturers or

Mexican companies performing assembly under contract for U.S. firms. The Maquiladora Program is

a Mexican Government initiative to attract foreign investment in assembly plants in towns along the

border with the United States. 

 Examples of U.S.-owned assembly plants in Mexico that do not operate within the Maquiladora 9

Program include--Motorola (computers), Hewlett Packard (semiconductors), and Chrysler Corp.

(motor vehicles). These companies did not register as maquiladoras when establishing operations in

Mexico because their primary focus was to sell their production in the Mexican market, with surplus

production being exported to the United States. Maquiladoras were not allowed to sell into the

domestic market when these companies commenced operations in Mexico. Based on USITC staff

interviews with company officials in Guadalajara and Toluca, Mexico, in 1987.

1-5

The HTS production-sharing provisions (PSP) have historically provided the principal source

of data detailing the use of U.S.-made parts in foreign assembly and other production-sharing

operations. In recent years, however, U.S. firms engaged in Canadian and Mexican assembly

operations have imported an increasing share of these products into the United States under the

duty-reducing provisions of the Canadian Free-Trade Agreement (CFTA) and NAFTA, rather

than under HTS PSP. Consequently, trade data are becoming an increasingly limited indicator

of U.S. production-sharing activity, even though foreign assembly with U.S.-made components

is expanding and continues to be an important competitive strategy for many companies (see 6

chapter 3). Consequently, where possible, this report attempts to characterize the extent and

type of production-sharing trade that takes place beyond that which is reported under HTS PSP.

Official statistics indicate that 9 percent ($68 billion) of total U.S. imports ($790 billion)

entered under HTS PSP in 1996. Sources contend, however, that the actual share of productionsharing imports may range between 10 and 15 percent ($80 to $120 billion) of total U.S.

imports. Most of the production-sharing imports that were not accounted for statistically

7

originated in Mexico and Canada in 1996. Since many products that enter under the NAFTA

without declaring eligibility under HTS PSP are known to be manufactured chiefly through the

assembly of U.S.-made parts, it is estimated that the reported 1996 data for imports from

Mexico under HTS PSP ($28 billion) understates actual production-sharing imports by

approximately $16 billion (see chapter 2). Official statistics of Mexico’s commerce department

(SECOFI) indicate that exports to the United States from the maquiladora industry amounted 8

to $36.1 billion in 1996. The SECOFI data do not account for exports to the United States that

are shipped from production-sharing operations that are not licensed under the Maquiladora

Program.9

To complement the analysis of trends in production-sharing imports entering under HTS PSP,

each commodity writeup in ch. 3 includes a table that provides data on imports from Mexico
 Chaired by the U.S. Department of the Treasury and established under the National Performance 10

Review (NPR Recommendation IT-06) to develop an International Trade Data System (ITDS), the

IT06 Task Force includes the participation of 83 agencies coordinated by an interagency board of

directors drawn from departments with a substantial involvement in the operation, analysis, policy

development, and promotion of international trade. The board is composed of officials of Treasury,

Justice, Commerce, Transportation, Agriculture, and Health and Human Services Departments, the

U.S. International Trade Commission, and the Office of the United States Trade Representative. 

1-6

that enter under NAFTA only without being simultaneously declared eligible under HTS PSP.

For many types of manufactured goods (see the tabulation on page 2-5), the bulk of U.S.

imports from Mexico are assembled from U.S.-made components. Increasingly, these imports

are entering under NAFTA instead of HTS PSP. Such imports, designated as “NAFTA only,”

provide an upper limit of the extent to which statistics on imports of manufactured goods under

HTS PSP under-report the total value of imports from production-sharing operations in Mexico.

For the purpose of comparison, each table also shows total U.S. imports of the specified

commodity from Canada and Mexico.

With U.S. production-sharing activity growing in importance in an increasingly globalized

economy and with the use of U.S. components in these operations continuing to accelerate,

alternative methods for statistical reporting are being considered by various government entities

to improve data collection. An interagency committee has proposed that production-sharing 10

information for export transactions be collected in such a way that it would specify whether a

shipment is destined for foreign processing and return, or for foreign consumption. This

proposal would provide a core data element for a new International Trade Data System (ITDS)

and coincides with the development by the U.S. Bureau of the Census of voluntary reporting

measures using a new interactive electronic mechanism for exports. This approach would

attempt to capture the value of products destined for foreign processing and return. These

efforts remain in the formative stages and, as currently proposed, would not identify the final

product incorporating U.S. components. It is uncertain whether these approaches will be

successful in improving data collection for production-sharing trade.
 All but about one-sixth ($12 billion) of U.S. imports from Mexico in 1996 entered under 11

NAFTA and/or HTS PSP. Nearly three-quarters ($55 billion) entered under NAFTA and 38 percent

($28 billion) entered under HTS PSP, with over one-quarter ($20 billion) of total imports entered as

eligible for preferential treatment under both NAFTA and HTS PSP. 

1-7

Report Findings

U.S. companies that are significant users of production sharing regard such operations as an

important tool to improve the relative price competitiveness of their product lines, to help keep

capital-intensive production in the United States, and to provide important markets for exports

of U.S. components (see chapter 3). Important findings regarding recent developments in the

use of production sharing by U.S. industry include:

Aggregate trends

• Official statistics indicate that the volume of U.S.-made components used in imported

goods continued to grow significantly in 1996. The value of U.S.-made components

contained in products entered under HTS PSP grew by $1.9 billion (8 percent) over

1995 to $24.0 billion in 1996. Total U.S. imports under HTS PSP increased in 1996

by $6.6 billion (11 percent) over the 1995 level, to $67.5 billion, with U.S.-origin

content accounting for 35 percent of the total value of imports under HTS PSP in 1996

(table B-1). Plants in Mexico and the Caribbean Basin tend to rely more heavily on

components from the United States than do factories in other regions.

• Although official statistics indicate that 9 percent ($68 billion) of total U.S. imports in

1996 were entered under HTS PSP, industry sources contend that such imports actually

range between 10 and 15 percent of total U.S. imports. Imports from Mexico under

HTS PSP ($28 billion) in 1996 are estimated to understate the value of productionsharing imports by up to $16 billion (see chapter 2 - Mexico).

Principal countries

• Mexico is the principal source of U.S. imports under HTS PSP, accounting for 41

percent of the total value of such trade in 1996 and 61 percent of the total value of U.S.

components incorporated in imported articles entering under HTS PSP (table 1-2).

Even though the use of NAFTA as an alternate mechanism for the entry of productionsharing imports from Mexico is becoming increasingly common, HTS PSP continue to

serve as an important competitive tool for companies that use low-cost foreign

assembly. The other major suppliers, the Dominican Republic and Malaysia,

11

accounted for 6 and 5 percent, respectively, of the value of U.S. content in 1996. The

principal products assembled abroad and imported by U.S. producers under 9802.00.80

are apparel from Caribbean Basin countries and Mexico; motor vehicles, electrical

circuit apparatus, television receivers, and auto parts from Mexico; and semiconductors

from Southeast Asia (figure 1-1). 
1-8

Table 1-2

U.S. imports for consumption, total and under the production-sharing provisions (PSP) of HTS

Chapter 98, by principal suppliers (based on the value of U.S. components in the assembled imports

in 1996), 1993-96

(Million dollars) 

Country 1993 1994 1995 1996

Total imports

Mexico .......................................... 38,668 48,605 61,721 74,179

Dominican Republic ................................ 2,667 3,077 3,385 3,582

Malaysia ......................................... 10,482 13,877 17,401 17,771

Philippines ....................................... 4,864 5,712 6,990 8,174

Honduras ........................................ 914 1,092 1,441 1,797

Korea ........................................... 16,986 19,547 24,026 22,532

Canada .......................................... 110,482 128,753 144,882 156,299

Costa Rica ....................................... 1,542 1,645 1,842 1,963

Thailand ......................................... 8,539 10,276 11,337 11,324

Taiwan .......................................... 24,981 26,586 28,875 29,797

All other ......................................... 354,736 398,714 437,762 463,053

Total ......................................... 574,863 657,885 739,660 790,470

Production-sharing imports under HTS Chapter 98

Mexico .......................................... 18,992 23,068 24,962 27,925

Dominican Republic ................................ 1,531 1,707 1,965 2,104

Malaysia ......................................... 1,669 1,938 2,778 2,382

Philippines ....................................... 1,049 1,378 1,749 1,805

Honduras ........................................ 337 452 676 981

Korea ........................................... 1,664 1,724 1,798 1,787

Canada .......................................... 3,035 1,663 1,539 1,579

Costa Rica ....................................... 575 623 707 694

Thailand ......................................... 397 594 786 789

Taiwan .......................................... 961 1,127 1,193 1,048

All other ......................................... 27,154 25,037 22,727 26,421

Total ......................................... 57,364 59,311 60,880 67,514

U.S. content of imports under HTS Chapter 98

Mexico .......................................... 9,887 11,608 12,833 14,649

Dominican Republic ................................ 1,041 1,109 1,278 1,365

Malaysia ......................................... 794 968 1,313 1,116

Philippines ....................................... 485 640 785 773

Honduras ........................................ 236 325 480 694

Korea ........................................... 478 480 600 653

Canada .......................................... 1,124 688 605 618

Costa Rica ....................................... 399 411 472 481

Thailand ......................................... 238 353 461 423

Taiwan .......................................... 337 371 424 375

All other ......................................... 2,540 2,562 2,859 2,817

Total ......................................... 17,560 19,517 22,110 23,965

Note.—Because of rounding, figures may not add to the totals shown.

Source: Compiled from official statistics of the U.S. Department of Commerce.
Motor vehicles

Apparel

Televisions

Computers

All other

Apparel

 Mexico

Total $27.9 billion Caribbean Basin1

 Total $5.6 billion

Electrical circuit

apparatus

All other

Footwear

Capacitors

Medical

equipment

Auto parts2

11

9

4

17

16

89

3

1

2

5

37

6

1-9

Figure 1-1

Comparison of the composition of U.S. imports under the production-sharing provisions

(PSP) of HTS Chapter 98 from major supplying countries/regions in 1996

 

 Incudes those countries that are eligible for preferential duty treatment under the Caribbean Basin Economic Recovery 1

Act. See Ch. 2 for a complete list of CBERA-eligible countries.

 Includes wiring harnesses and engines. 2 

 For the purpose of this report, Southeast Asia includes Brunei, Burma, Cambodia, Indonesia, Hong Kong, Korea, Laos, 3

Malaysia, the Philippines, Singapore, Taiwan, Thailand, and Vietnam.

Source: Compiled by the U.S. International Trade Commission from official statistics of the U.S. Department of Commerce.
 Ch. 4 of last year’s Commission report, Production Sharing: Use of U.S. Components and 12

Materials in Foreign Assembly Operations, 1992-95, USITC publication 3032, Apr. 1997, provides

an assessment of the factors influencing changes in the maquiladora industry since the implementation

of NAFTA.

 Ch. 3 provides more detailed illustrations of how production sharing helps retain U.S. production 13

that otherwise might be lost to foreign producers competing in U.S. or global markets. 

1-10

• NAFTA’s rules of origin regulations have increased demand for supplies of U.S.

products to the maquiladora industry in order to meet U.S.-content requirements. The

$1.8 billion (14-percent) increase in total recorded U.S. content from Mexico under

HTS PSP in 1996 was concentrated in the following sectors: transportation equipment,

up by $511 million (17 percent) to $3.6 billion; apparel, up by $483 million (30

percent) to $2.1 billion; machinery and equipment, up by $395 million (12 percent) to

$3.8 billion; and electronic products, up by $310 million (8 percent) to $4.0 billion.

• U.S. imports from Mexico under HTS PSP rose by $3.0 billion (12 percent) in 1996

to $27.9 billion (table 1-2), reflecting the increased investment in maquiladora plants

because of (1) the continued relatively low cost of Mexican labor; (2) reduced U.S.

duties on apparel from Mexico under HTS 9802.00.90; (3) the substitution of assembly

in Mexico (using U.S.-origin components) for importing from Asia as companies

position themselves to take advantage of the preferential tariff treatment under NAFTA

and HTS PSP; (4) the recovery of the economy in Mexico and the prospect of servicing

both the U.S. and Mexican markets directly from maquiladora operations; and (5) the

continued strength of consumer demand in the United States.12

• Eight percent of U.S. imports under HTS PSP in 1996 and 15 percent of the U.S.

content came from the CBERA countries, which compete primarily with Mexico for

assembly work from U.S. apparel firms. Mexico and the countries of the Caribbean

Basin offer companies the benefit of both low-cost labor and close proximity to U.S.

markets. The latter provides U.S. firms with greater control over production and

delivery lead times than those associated with operations in Asian or other locations.

The competitive position of U.S. apparel producers is increasingly dependent on the

ability to react quickly to changing customer requirements. Reduced duties and other

trade liberalization measures associated with recent trade agreements, as well as

unilateral market reforms in Mexico and certain Caribbean countries, also have enabled

numerous U.S. producers of apparel and other products to compete more effectively

against low-cost imports from Asia.13

• Production sharing accounts for a significant share of U.S. trade with Mexico and the

countries of the Caribbean, reflecting the importance of U.S. investment in these

countries, which in turn, enables their manufacturing industries to compete in the global

market. HTS PSP imports accounted for 38 percent of total U.S. imports from Mexico

in 1996; 59 percent from the Dominican Republic; and 55 percent from Honduras

(table 1-2).

• The U.S. content (duty-free portion) of HTS PSP imports from Southeast Asia

(including Korea) declined by 6 percent in 1996 to $3.9 billion. All but a small portion

of these imports from the region consisted of semiconductors. HTS PSP shipments

from export-processing locations in Malaysia, Taiwan, Hong Kong, the Philippines,
 For added detail, see USITC publication 3051, Shifts in U.S. Merchandise Trade in 1996, July 14

1997, pp. 3-6 - 3-10.

 European production sharing is commonly called “outward processing trade.” Firms in France, 15

Germany, and Northern Italy generally make use of low-labor-cost plants to sew apparel and

assemble various electronic products in Portugal, Southern Italy, Slovenia, Croatia, Hungary, Poland,

the Czech Republic, Slovakia, and North Africa. See ch. 5 of this report for a discussion of the uses

of assembly plants in Hungary to reduce the costs of competing in European markets. 

1-11

and Thailand, declined during 1996, while growth occurred in such shipments from

Korea, Singapore, and Indonesia. For the most part, the reduced value of imports from

certain supplying countries reflects falling world prices for semiconductors rather than

an actual decline in production-sharing activity. 

• Official trade statistics indicate a recent decline in the use of HTS PSP in connection

with imports from Canada. This decline reflects the staged elimination of duties and the

Customs user fee under the CFTA, thereby reducing the incentive to use this tariff

provision (appendix A). HTS PSP imports from Canada amounted to $1.6 billion in

1996 compared with a peak of $25.7 billion in 1989. Canada is believed to be the

largest production-sharing partner with the United States, based on the growth in U.S.

imports from and exports to Canadian assembly plants, although this is not reflected 14

in official statistics.

• The number of Canadian firms making use of Mexico’s maquiladora program has

increased from 9 to 29 since the implementation of NAFTA (through September 1997).

These are primarily labor-intensive, low-technology firms that produce a wide variety

of products ranging from automotive components to apparel. Like U.S.-based

companies involved in the maquiladora industry, Canadian companies have established

assembly plants in Mexico to take advantage of low-cost labor and/or to maintain their

relationships as suppliers to important U.S. customers that also have assembly

operations in Mexico. Unlike their U.S. counterparts, the majority of Canadian

production-sharing operations are located in Mexico’s interior rather than along the

U.S.-Mexico border, where the bulk of the maquiladora industry is situated. Although

few of the Canadian maquiladoras sold any of their production into the Mexican market

during 1997, all of the companies interviewed aspire to initiate sales into the domestic

market in the near future. 

• Production-sharing operations in Europe and Japan are motivated by the same

15

economic incentives and considerations as those in North America. To maintain

viability in the international marketplace and remain competitive with low-labor-cost

manufacturers in newly industrialized or developing nations, manufacturers in the

European Union (EU) and Japan also have transferred a portion of their more laborintensive production and assembly operations principally to countries within their

respective regions that provide significantly lower labor-cost structures (table 1-3).

Table 1-3

Average hourly compensation costs for production workers in manufacturing, by selected regions and

countries, 1993-96

Region/country 1993 1994 1995 1996 from 1993 1995

Change in 1996 1996 from

Change in

))))))))))))) U.S. dollars ))))))))))) ))))))) Percentage )))))))

North America

United States .................. 16.51 16.87 17.19 17.74 7 3
1-12

Canada ....................... 16.44 15.85 16.04 16.66 1 4

Mexico ....................... 2.40 2.47 1.51 1.50 -38 -1 1 1 1 1

Europe

Germany ...................... 25.36 26.90 31.85 31.87 26 ( )

2

Belgium ...................... 21.62 23.25 26.88 26.07 21 -3

Austria ....................... 20.16 21.51 25.38 24.95 24 -2

Sweden ...................... 17.70 18.86 21.64 24.56 39 13

Finland ....................... 16.63 19.06 24.83 24.45 47 -2

Denmark ...................... 19.11 20.40 24.26 24.38 28 ( )

3

Netherlands ................... 20.05 20.92 24.18 23.33 16 -4

France ....................... 16.23 17.04 19.34 19.34 19 0

Italy .......................... 16.00 16.10 16.52 18.08 13 9

United Kingdom ................ 12.47 12.86 13.73 14.19 14 3

Ireland ........................ 12.12 12.63 13.83 14.12 17 2

Spain ........................ 11.50 11.39 12.70 13.29 16 5

Greece ....................... 7.02 7.51 8.30 ( ) ( ) ( )

3 3 3

Portugal ...................... 4.50 4.60 5.37 ( ) ( ) ( )

3 3 3

Poland ....................... 1.10 1.37 2.09 ( ) ( ) ( )

3 3 3

Hungary ...................... 1.48 1.65 1.8 ( ) ( ) ( )

3 3 3

Czech Republic ................ 1.25 1.45 1.7 ( ) ( ) ( )

3 3 3

Asia

Japan ........................ 19.01 21.07 23.66 21.04 11 -11

Singapore ..................... 5.25 6.29 7.33 8.32 58 14

Korea ........................ 5.64 6.40 7.40 8.23 46 11

Taiwan ....................... 5.19 5.49 5.82 5.86 13 1

Hong Kong .................... 4.29 4.61 4.82 5.14 20 7

Malaysia ...................... 1.50 1.68 1.88 ( ) ( ) ( )

3 3 3

Philippines .................... 1.00 1.15 1.32 ( ) ( ) ( )

3 3 3

Sri Lanka ..................... 0.42 0.45 0.48 ( ) ( ) ( )

3 3 3

The drop in Mexican wage rates in 1995 was due primarily to the peso devaluation in December 1994. 1 

Less than 0.5 percent. 2 

 Not available. 3

 

Source: Compiled by the U.S. International Trade Commission from U.S. Department of Labor and U.S. Department of

Commerce international wage-rate comparison statistics.
1-13

• Many companies have established assembly plants in Hungary to take advantage of the

combination of low labor costs and proximity to markets throughout Europe. The top

investors are from Germany, the United States, and Austria. Labor costs in Germany

are higher than other countries in Europe providing German industries a greater

incentive to explore the advantages of production sharing in Hungary. U.S. companies

seeking a low-cost manufacturing base in Europe have been able to use well-developed

rail and highway links not only to distribute finished goods to Western European

markets, but also to obtain components and other manufacturing inputs to supplement

parts and machinery imported from the United States. U.S. companies that meet local

content or transformation requirements are eligible for duty-free entry to the EU market

from their Hungarian assembly plants. Leading products assembled in Hungary for

European distribution include auto parts, apparel, telecommunications equipment,

television and radio equipment, and printed circuit boards.

Principal products

• The growth in the U.S. content of HTS PSP imports in 1996 was principally

attributable to increased shipments of apparel from the Caribbean Basin and Mexico;

motor vehicles and wiring harnesses for motor vehicles from Mexico; medical goods

from Mexico; and television receivers from Mexico (table 1-4). The upward trend in

HTS PSP imports of apparel, motor vehicles, television receivers, wiring harnesses, and

medical and scientific instruments was partially the result of strong demand for these

products in the U.S. market in 1996 (table 1-5).

• The 5-percent decline in HTS PSP imports of semiconductors and other microelectronic

devices in 1996 paralleled the 6-percent downturn in total U.S. semiconductor imports

and the 9-percent contraction of the global market. HTS PSP imports of

semiconductors fell by $449 million to $8.2 billion in 1996, while accounting for 22

percent of the annual U.S. semiconductor import total ($36.8 billion) (table B-3). Each

of these declines in value reflects the global reduction in semiconductor prices in 1996;

the quantity of semiconductors imported, both total and under the HTS PSP, actually

increased in 1996. Because imports of most semiconductors are currently free of duty,

they account for virtually no annual U.S. duty savings, even though they comprised 12

percent of total imports under HTS PSP in 1996.

• Apparel and microelectronic components (chiefly semiconductors) were the leading

products imported under the HTS PSP, accounting for 23 and 22 percent, respectively,

of the value of U.S. components contained in total imports under HTS PSP in 1996

(table 1-5). Motor vehicles accounted for an additional 11 percent and wiring

harnesses for motor vehicles, for 9 percent of the total value of U.S. components under

HTS PSP in 1996. Each of these product groupings requires significant laborintensive, final-assembly operations that encourage production sharing to minimize

production costs, given the intense global competition in these industries. This strategy

often enables U.S. producers to retain jobs related to product development and design,

capital-intensive manufacturing, and marketing in the United States.
1-14

Table 1-4

Summary of U.S. production-sharing trade shifts under the production-sharing provisions (PSP) of

HTS Chapter 98 in 1996, value of U.S. content, by selected countries and products, annual value

and percentage change, and reasons

Country Product Annual change Reasons for change 1

Mexico Motor vehicles Up $634 million U.S. “Big Three” expanded vehicle

(38 percent) assembly in Mexico for U.S. and local

markets; low labor costs

Mexico Apparel Up $483 million HTS 9802.00.90. This provision (agreed to

(30 percent) in NAFTA) allows duty-free treatment for

apparel sewn from U.S. formed and cut

fabric.

Mexico Wiring harnesses Up $211 million Strong U.S. demand for motor vehicles,

(12 percent) increased average value of wiring sets

Honduras Apparel Up $209 million) Political stability, good port facilities, low

(43 percent) labor costs

Mexico Television receivers Up $201 million NAFTA rules of origin; shift from Asian to

(25 percent) U.S. sources; Asian investment

Mexico Certain auto-parts Up $76 million Integration of North American motor vehicle

(9 percent) industry; low labor costs

Mexico Medical goods Up $75 million Supply base for Mexican and Latin

(30 percent) American markets; low labor costs; strong

U.S. demand

El Salvador Apparel Up $72 million Continued re-investment following end of

(28 percent) Civil War, availability of skilled workers

Mexico Measuring Up $64 million Strong U.S. demand; low labor costs;

instruments (24 percent) production in Mexico for both U.S. and local

markets

Japan Computer hardware Down $100 million Duty-free entry for most computer

(-98 percent) equipment reduces incentive to use HTS

PSP

Mexico Internal combustion Down $198 million Shift to entry under NAFTA instead of HTS

engines (-78 percent) 9802; maquila production shipped for auto

assembly plants in Mexico

Malaysia Semiconductors Down $199 million Price reduction shrinks import value

(-15 percent)

 Further explanation is contained in ch. 2 and ch. 3. 1

Source: Compiled by staff of the U.S. International Trade Commission from official statistics of the U.S. Department of

Commerce, various industry publications, and industry officials.
1-15

Table 1-5

U.S. imports for consumption under the production-sharing provisions (PSP) of HTS Chapter 98, total and duty-free, by major industry

group, 1995 and 1996 

Ratio of

U.S.

U.S. content (duty free) content Total HTS PSP

Change Share value to Change Share

1996 of total 1996 of

Industry from total value from total

group 1995 1996 1995 1996 1996 1995 1996 1995 1996

))))))) Million dollars )))))))) ))) Percentage ))) ))))))) Million dollars )))))) Percentage

Apparel ................................... 4,765 5,526 761 23 62 7,758 8,845 1,086 13

Other textile articles ......................... 356 348 -8 1 68 560 515 -45 1

Footwear ................................. 158 192 34 1 11 1,398 1,679 281 2

Electrical motors ............................ 475 522 47 2 61 780 859 79 1

Wiring harnesses for motor vehicles ............ 1,843 2,038 195 9 61 3,080 3,332 252 5

Autos, trucks, and buses ..................... 2,046 2,657 611 11 11 18,659 23,322 4,664 35

Certain auto parts including engines and 

other electrical ........................... 1,288 1,223 -65 5 44 3,081 2,756 -325 4

Motor vehicle seats and other furniture .......... 113 115 3 0 16 604 734 130 1

Other transportation equipment ................ 401 333 -67 1 27 1,336 1,215 -122 2

Household appliances and heating 

ventilation and air condition ................. 347 397 50 2 46 727 870 143 1

Filtering and controlling equipment ............. 473 449 -24 2 67 714 667 -46 1

Transformers .............................. 234 288 55 1 48 591 603 12 1

Other machinery ............................ 306 343 37 1 34 960 1,023 63 2

Television receivers ......................... 835 1,031 196 4 39 2,511 2,625 114 4

Radio-TV and telephone equipment 

except television receivers .................. 626 620 -6 3 26 2,062 2,356 294 3

Computer hardware ......................... 405 318 -87 1 25 1,372 1,297 -76 2

Microelectronic components .................. 5,587 5,332 -255 22 52 10,702 10,220 -482 15

Medical and scientific instruments .............. 740 940 200 4 46 1,724 2,027 302 3

All other manufactured articles ................ 1,113 1,291 178 5 50 2,261 2,568 308 4

Special provisions .......................... 0 0 0 0 0 0 0 0 0

Total ................................. 22,110 23,965 1,855 100 35 60,880 67,514 6,634 100

Source: Compiled from official statistics of the U.S. Department of Commerce.
1-16

• U.S. imports of apparel under HTS PSP come almost entirely from Mexico and

CBERA countries. HTS 9802.00.90 (created pursuant to NAFTA) eliminated the

tariffs and quotas on garments and other textile products from Mexico that are

assembled entirely from fabric formed and cut in the United States. Consequently,

imports of apparel from Mexico under HTS PSP rose by $702 million (30 percent) in

1996 to $3.0 billion, while the value of U.S. fabric used in the assembly of this apparel

reached $2.1 billion. HTS PSP imports of apparel from the Caribbean Basin grew by

$500 million (11 percent) to $5.0 billion, with the U.S.-cut fabric used in the assembly

process rising by $327 million to $3.2 billion in 1996.

• The U.S. apparel sector has perhaps a greater economic incentive than any other

domestic industry to use the HTS PSP. In 1996, apparel products accounted for 53

percent of the total duty savings from the use of HTS PSP, despite comprising only 13

percent of total U.S. imports under these provisions (figure 1-2). The average tradeweighted rate of duty on apparel is 17 percent ad valorem, compared with about 3

percent ad valorem for other products. In addition, the duty-free U.S. content accounts

for two-thirds of the total value of apparel imported under HTS PSP, compared with

one-third for imports of all other products under the production-sharing provisions.

• U.S. imports of motor vehicles under HTS PSP rose by 35 percent to $23.3 billion in

1996. This increase was largely attributable to a continued expansion of vehicle

assembly in Mexico to supply both the U.S. and Mexican markets. Lower labor costs

following the devaluation of the peso encouraged greater use of assembly in Mexico

(table B-5). 

• The use of U.S. components in motor vehicles imported from Mexico far exceeds that

in vehicles imported from Japan and Germany, which together with Canada accounted

for 83 percent (by value) of total U.S. imports of motor vehicles in 1996. U.S.-made

parts constituted 52 percent ($2.3 billion) of the value of finished vehicles imported

from Mexico under 9802.00.80 in 1996, while they comprised just 2 percent of the

value of vehicles imported from Japan and Germany ($109 million and $106 million,

respectively) (tables B-6 and B-7). It is estimated that U.S.-made parts account for

between one-quarter and one-third of the value of vehicles imported from Canada, but

most of these vehicles enter free of duty under NAFTA rather than under HTS PSP.
Motor vehicles

Apparel

Semiconductors

Auto parts All other

Apparel

Motor vehicles

Auto parts

All other

Total HTS PSP import value

 $67.5 billion

Total duty savings

 $2.1 billion

1

35

13

12

8

32 22

6

19

53

(Percentage)

1

1-17

Figure 1-2

U.S. imports under the production-sharing provisions (PSP) of HTS Chapter 98, shares of total value

and duty savings, by selected industries, 1996

 

 

 

 1

A

uto parts include engines and wiring harnesses.

Source: Based on official statistics of the U.S. Department of Commerce.
1-18

Organization

The remainder of this report consists of four chapters and three appendixes. Chapter 2

identifies the principal countries and regions that are engaged in U.S. production-sharing trade

and examines key trends affecting these assembly locations. Chapter 3 details the most

significant developments that have occurred in the industries and products that have accounted

for the largest growth or volume of trade under the HTS PSP in 1996. This analysis profiles the

competitive strategies and level of U.S.-origin component production that are employed in

foreign assembly operations. Chapter 4 focuses on the involvement of Canadian-based

companies in Mexico’s maquiladora industry. Chapter 5 explores the assembly industry in

Hungary and examines the implications for U.S. industries of production sharing in Central and

Eastern Europe. Appendix A of this report details the preferential tariff treatment for qualifying

goods applicable to the Caribbean Basin, the trade agreement status of HTS PSP, and the

relationship of the production-sharing provisions to preferential tariff and special access

programs. Appendix B contains an extensive collection of statistical tables on U.S. imports

under HTS PSP for the principal supplying countries, and by product category. Appendix C

provides a copy of the Commission’s Federal Register notice requesting comments with respect

to this investigation. 

John Cutchin

(202) 205-3396

cutchin@usitc.gov
2-1

CHAPTER 2

KEY COUNTRY AND REGIONAL

DEVELOPMENTS IN 1996

This chapter focuses on the principal sources of U.S. imports under the production-sharing

provisions (PSP) of HTS Chapter 98, namely Mexico, the Caribbean Basin, and Southeast Asia.

These regions accounted for 93 percent ($22.2 billion) of the U.S. content in HTS PSP imports

in 1996 (figure 2-1). The U.S. content in HTS PSP imports from these sources rose by $2.0

billion (10 percent) in 1996, whereas those from all other sources declined by $122 million (7

percent). This chapter highlights the factors influencing HTS PSP imports from these sources,

and examines the composition of U.S. production-sharing trade with principal sources, which

differs significantly by region. Apparel continues to account for nearly all of the productionsharing trade with the Caribbean Basin countries that is reported under HTS PSP, whereas

semiconductors dominate the trade with Southeast Asian countries. By contrast, U.S.

production-sharing trade with Mexico is more diversified. Mexico continued to be the dominant

source of production-sharing provision imports in 1996, accounting for 61 percent of the total

U.S. content value, followed by the Dominican Republic with 6 percent, and Malaysia with 5

percent. 

Figure 2-1

U.S. imports for consumption under the production-sharing provisions (PSP) of HTS Chapter 98: U.S.

content, major supplying countries/regions, 1993 and 1996

(Percentage)

 1993 1996

 Total $17.6 billion Total $24.0 billion

Source :

Compiled by

the U.S. International Trade Commission from official statistics of the U.S. Department of Commerce.
 By contrast, U.S. imports under HTS PSP from Japan and Germany, the second- and third- 1

leading suppliers of HTS 9802 imports totaled only $7.8 billion and $7.4 billion, respectively, in

1996. In terms of U.S. content in imports under HTS PSP, however, the Dominican Republic and

Malaysia were more significant than Japan and Germany. Production-sharing trade with Canada may

rival that with Mexico, particularly in the automotive sector, but little of such trade enters under these

HTS PSP because most imports from Canada already enter the United States free of duty under

NAFTA. 

 The maquiladora industry has been profoundly affected by NAFTA’s elimination of import 2

duties, rules of origin, and increasing level of permitted sales into the Mexican domestic market. See

Carlos Angulo Parra, Edmundo Elias Fernandez, and Carol S. Osmond, “Maquiladoras in the New

Environment,” Baker & McKenzie: Juarez, MX, June 1996.

 For a detailed discussion of the Mexican peso crisis, see Edwin M. Truman, “The Mexican Peso 3

Crisis: Implications for International Finance,” Federal Reserve Bulletin, vol. 82, No. 3 (Mar. 1996),

pp. 199-209.

2-2

Mexico

Mexico remained the overwhelming leader in production-sharing operations with the United

States, as total U.S. imports under the production-sharing provisions of HTS Chapter 98

increased by $3.0 billion (12 percent) to $27.9 billion in 1996 (column b, table 2-1A). Imports 1

entered under the HTS PSP as a share of total imports from Mexico continued to decline, as

more of these products became eligible for duty-free entry under NAFTA. The share of total 2

imports that entered under the HTS PSP declined from a high of 49 percent in 1993 to 38

percent in 1996, while the share of such imports accounted for by U.S.-made components

remained steady at just over 50 percent. Following the implementation of the North American

Free Trade Agreement (NAFTA) in 1994 and the 50-percent devaluation of the Mexican peso

during December 1994 and January 1995, firms expanded investment in

3

Table 2-1A

Mexico: U.S. imports for consumption, total, under the production-sharing provisions (PSP) of HTS

Chapter 98, U.S. content, and percentage shares, 1993-961

Year imports imports HTS PSP total imports HTS PSP

(a) (b) (c) (d) U.S. content

Total HTS PSP under share of total under

U.S. content HTS PSP share of

)))))))))))) Million dollars ))))))))))) )))))))) Percentage )))))))

1993 ......................... 38,668 18,992 9,887 49 52

1994 ......................... 48,605 23,068 11,608 47 50

1995 ......................... 61,721 24,962 12,833 40 51

1996 ......................... 74,179 27,925 14,649 38 52

Data in columns designated (a) through (d) are comparable to data shown in the respectively indicated columns in 1

table 2-1B, which provide official Mexican statistics on maquiladora trade with the United States.

Source: Compiled from official statistics of the U.S. Department of Commerce.
 "Maquiladora” denotes a type of company in Mexico that performs some aspect of the 4

manufacturing process for a product, such as assembly. Mexican plants that import components and

machinery free of duty (but in bond) for processing goods for export can operate under either the

Maquiladora Program or under the Program of Temporary Imports to Produce Export Articles

(PITEX).

 The SECOFI trade statistics used in this report have been generated from the following CD- 5

ROM: Global Trade Information Services, World Trade Atlas: Mexico Edition, 1993-96,

Preliminary (Columbia, SC), 1997.

2-3

maquiladora plants, contributing to the near doubling of total U.S. imports from Mexico during 4

1993-96 (column a, table 2-1A). 

Further insights regarding the extent to which production sharing is occurring in Mexico beyond

that reported under HTS PSP can be drawn from official Mexican statistics on maquiladora

trade. According to Mexico’s Commerce and Industrial Development Secretariat (SECOFI),5

the maquiladora industry’s exports to the United States grew by 18 percent in 1996 (from $30.7

billion to $36.1 billion) and were 67 percent higher in 1996 than in 1993, the year preceding the

implementation of NAFTA (column b, table 2-1B). The SECOFI data also indicate that 91

percent of all imported inputs into the maquiladora industry came from the United States in

1996. The maquiladora’s imports of components, materials, and machinery from the United

States totaled $27.6 billion in 1996, 18 percent ($4.2 billion) higher than in the previous year,

and 81 percent greater than in 1993 (column c, table 2-1B). Increased duty-free imports under

NAFTA are most likely responsible for the $8.2 billion difference between U.S. imports under

HTS PSP and Mexico’s exports to the United States from the maquiladora industry in 1996

(column b, tables 2-1A and 2-1B). A resulting $13.0 billion difference between the value of

U.S. content in HTS PSP imports from Mexico and the value of the maquiladora industry’s

imports from the United States also is attributable to the Mexican import data that include (1)

U.S. materials that are not eligible for duty-free

Table 2-1B

Mexico: Exports to the United States, total and from the maquiladora industry; and imports of

components, materials, and machinery into Mexico from the United States for use in the

maquiladora industry, 1993-961

Year Total exports Total imports States States United States States

(a) (b) (c) (d) Maquiladora

Maquiladora Maquiladora Maquiladora share of total

exports to imports from share of total imports from

the United the United exports to the the United

))))))))))))))))))) Million dollars )))))))))))))))))))) ))))))))) Percentage )))))))

1993 ....... 42,851 45,293 21,697 15,270 51 34

1994 ....... 51,645 54,837 26,112 18,328 51 33

1995 ....... 66,273 53,902 30,733 23,458 46 44

1996 ....... 80,344 67,535 36,146 27,630 45 41

Data in columns designated (a) through (d) are comparable to data shown in the respectively indicated columns in table 1

2-1A, which provides official U.S. statistics on HTS PSP trade with Mexico.

Source: Compiled from official statistics of SECOFI.
 “Maquila Scoreboard,” Twin Plant News, Sept. 1997. 6

 In a number of locations, state and local governments in Mexico are working with private 7

companies and industrial park operators to improve infrastructure and housing for maquiladora

workers. Although the pace of infrastructure improvements has quickened since the implementation

of NAFTA, providing adequate primary and secondary school education in border cities remains a

significant challenge. USITC staff interview with Mike Allen, President and CEO, McAllen

Economic Development Corp. and Foreign Trade Zone, McAllen, Texas, and Reynosa, Mexico, June

16, 1997.

 Mary Beth Sheridan, “Riding the Ripples of a Border Boom,” Los Angeles Times, June 9, 1997.

8

2-4

treatment under the production-sharing provisions, such as paints, lubricants, and plastics; (2)

U.S. machinery imported for temporary use in the maquiladora industry; and (3) U.S.-made

components that are imported for assembly into products that the maquiladora industry then

sells to customers in Mexico or other Latin American countries, instead of exporting to the

United States (column c, tables 2-1A and 2-1B).

Mexico has historically been the preferred production-sharing location for U.S. firms because

of its highly competitive wage rates; developing infrastructure; proximity to U.S. markets,

transportation and communications networks; and complementary manufacturing operations.

Additionally, the implementation of NAFTA persuaded companies to increase investment in

Mexico because U.S. duties and quotas were dropped on imports of apparel and other textile

products assembled in Mexico from U.S.-formed and cut fabric; duties were substantially

reduced or eliminated on many other goods; and rules of origin were adopted that encouraged

greater use of U.S.-made parts. The sharp devaluation of the peso further enhanced the

competitive position of Mexican production-sharing operations by effectively reducing labor

costs in dollar terms, making maquiladora goods less expensive in the United States. These

developments also persuaded U.S.-based and other foreign-based companies, particularly

Japanese and Korean firms, to invest in maquiladoras in Mexico. As of March 1997, a record

2,624 maquiladoras (1,691 of which were located on the border), employing 861,143 workers,

were operating in Mexico.6

Although there has been a sharp increase in the number of foreign companies investing in

assembly plants in cities in the interior of Mexico, most maquiladoras remain clustered in

industrial parks in cities along the border with the United States. Despite violence associated

with local drug cartels in border cities such as Tijuana and Ciudad Juarez, as well as high worker

turnover rates and an over-burdened infrastructure, most maquiladoras in the border zone have 7

elected to remain in their present locations and many have expanded their production capacity.8

 Proximity to the United States offers Mexican assembly plants many advantages: (1) access

to communication and transportation infrastructure in the United States, (2) close association

with U.S. component manufacturers and suppliers of services to the maquiladora industry, (3)

shorter delivery times to customers in the United States, and (4) easier access to the plants by

personnel from U.S. headquarters, as well as the ability of managers to work in Mexico and live

with their families in the United States.
 Some companies have established maquiladora operations in Monterrey, Mexico, to take 9

advantage of the availability of graduates from the managerial and engineering programs at Monterrey

Institute of Technology, many of whom are bilingual. USITC staff interview with Bill Waltensperger,

general manager; Automotive Vision Systems/OMG, Donnelly Corp., Guadalupe, Mexico, June 19,

1997.

 The Government of Mexico has offered tax cuts, sponsored trade shows, and implemented 10

financing and customs benefits to increase the amount of Mexican-origin goods destined for the

maquiladoras. For more information, see ch. 4, “Changes in the Maquiladora Industry Since the

Implementation of NAFTA,” USITC, “Production Sharing: Use of U.S. Components and Materials

in Foreign Assembly Operations, 1992-95, USITC publication 3032, Apr. 1997.

 For example, in order to be eligible for NAFTA entry, U.S. imports of television receivers are 11

required to contain North American-made picture tubes.

 See table B-5. 12

2-5

Proximity to U.S. parts suppliers combined with the distance from potential Mexican sources

in the interior of Mexico to maquiladora plants along the border has discouraged the

development of Mexican suppliers. In general, companies investing in assembly operations

closer to the interior of Mexico tend to be operations new to Mexico, and companies seldom

move operations from the border to the interior. However, several multinational companies

have established maquiladoras in the interior and persuaded their U.S. or Asian suppliers to

invest in facilities near the assembly plants. Other companies have installed plants in the

interior in order to be close to Mexican producers of critical materials for the plant, such as steel

or glass. Companies investing in the interior often establish such plants with a view towards 9

taking advantage of NAFTA’s changes to the Maquiladora Program and selling a significant

portion of their assembled products to customers in the Central Valley of Mexico. These plants

have the greatest incentive to develop local suppliers, working with companies in the interior

to improve production methods and quality and to reduce costs. 

10

However, NAFTA’s rules of origin requirements have increased demand for supplies of U.S.

products to the maquiladora industry, in order to meet U.S. content requirements. The $1.8 11

billion (14-percent) increase in total recorded U.S. content from Mexico under HTS PSP in 1996

was concentrated in the following sectors: transportation equipment, up by $511 million (17

percent) to $3.6 billion; apparel, up by $483 million (30 percent) to $2.1 billion; machinery and

equipment, up by $395 million (12 percent) to $3.8 billion; and electronic products, up by $310

million (8 percent) to $4.0 billion (see table B-5 in appendix B). 

According to official U.S. statistics, nearly three-quarters of U.S. imports from Mexico entered

under NAFTA (both “NAFTA only” and “NAFTA and HTS PSP") in 1996, with over one-third

of all imports under NAFTA also entering under the HTS PSP (table 2-2). Of the $34.7 billion

entered under NAFTA alone, Commission staff estimates that at least $15.6 billion consisted

of products that are known to be chiefly manufactured through the assembly of U.S.-made parts.

The value of the leading products entered under “NAFTA only” are shown in the following 12

tabulation:
 A researcher familiar with SECOFI data has suggested that official Mexican statistics also may 13

understate the value of total maquiladora exports to the United States; maquiladora operators

reporting exports to SECOFI may claim a lower amount of Mexican value added in the assembly

process than is reported by U.S. importers of goods from the maquiladora industry in their documents

filed with the U.S. Customs Service. Isaac Mankita, University of California at Berkeley, telephone

interview with USITC staff, Aug. 22, 1997.

2-6

Commodity group Value

(Million dollars)

Motor vehicles ......................................... $6,883

Internal combustion engines ............................... 1,275

Computer hardware ...................................... 1,101

Certain motor-vehicle parts ................................ 909 

Television receivers ....................................... 859

Motor-vehicle seats and other furniture ........................ 791

Telephone and telegraph apparatus .......................... 635

Wiring harnesses for motor vehicles .......................... 591

Television apparatus, except receivers ........................ 573

Radio transmission and reception apparatus ................... 545

Electrical transformers ..................................... 462

Air-conditioning equipment ................................. 368

Household appliances ..................................... 367

Measuring, testing, controlling, and analyzing instruments ......... 262

 Total .............................................. 15,621

It is likely that a high proportion of these goods imported under “NAFTA only” were

manufactured through the use of U.S.-origin content, yet they are not reflected in data on

imports from Mexico under HTS PSP. From the tabulation, it can be concluded that reported

1996 data indicating imports from Mexico under the HTS PSP ($27.9 billion) possibly

understate production-sharing imports by more than $16 billion. The fact that the HTS PSP

understate production sharing is supported by SECOFI data, which shows Mexican maquiladora

imports from the United States (a rough indicator of U.S. content) to be $27.6 billion in 1996-

-$13.0 billion more than recorded U.S. data, as stated earlier.13

Table 2-2

Mexico: U.S. imports from Mexico under NAFTA and under the production-sharing provisions

(PSP) of HTS Chapter 98, 1996

Type of entry Value Share

(Million dollars) (Percentage)

NAFTA only ..................................................... 34,687 47

NAFTA and HTS PSP ............................................. 20,389 27

HTS PSP only ................................................... 7,536 10

Other (MFN) ..................................................... 11,567 16

Total ........................................................ 74,179 100

Total NAFTA .................................................... 55,076 47

Total HTS PSP .................................................. 27,925 38

Source: Compiled from official statistics of the U.S. Department of Commerce. See Appendix table B-5 for product

detail.
 This integration is stimulated by merging resources such as capital, labor, and technology in an 14

effort to better compete globally. See, “North American Auto Industry Grows Under NAFTA,”

NAFTA Works, vol. 2:5 (May 1997), pp. 2 and 5. For more information on production sharing of

motor vehicles in Mexico, see ch. 3 of this report. Despite minimal imports under the productionsharing provisions of HTS Chapter 98 from Canada in 1996, Canada is probably still the leading

production-sharing partner for the United States in the motor vehicles and parts sector given the

extensive cross-border integration of the industry in the two countries. The rationalization of U.S.

automotive production vis-a-vis Canada, spurred decades ago by the Automotive Trade Act of 1965

(APTA), resulted in significant intraindustry trade and trade in intermediate goods. See appendix

table B-14. 

2-7

The increasingly integrated North American motor-vehicle industry experienced record-high

levels of imports and exports in 1996, mainly because of NAFTA preferential rules of origin,

reduced quantitative restrictions and export performance specifications, and liberalized

investment rules in Mexico.14 The transportation sector, more than any other, has shifted from

importing under the production-sharing provisions of HTS Chapter 98 to NAFTA to take

advantage of the duty-free treatment. Because many of the components used in the assembly

of motor vehicles, certain motor-vehicle parts, and ignition starting equipment are made in the

United States, the value of the U.S. content in imports under HTS PSP has continued to expand

for the transportation sector, up by $511 million (17 percent) to $3.6 billion in 1996 (tables 2-3

and B-5). 

Table 2-3

Mexico: U.S. content in imports to the United States under the production-sharing provisions (PSP) of

HTS Chapter 98, by principal products, 1993-96

(Million dollars)

Product 1993 1994 1995 1996

Motor vehicles .................................... 1,758 1,768 1,676 2,310

Wiring harnesses for motor vehicles ................... 1,055 1,554 1,758 1,970

Electrical circuit apparatus ........................... 811 1,092 1,164 1,119

Television receivers, video monitors, cathode

ray tubes, and other special purpose tubes ............. 676 839 814 1,015

Certain motor-vehicle parts .......................... 1,164 977 811 887

Shirts and blouses ................................. 149 289 464 614

Mens' and boy's trousers ............................ 209 268 412 515

Electric motors, generators, and related

equipment ....................................... 311 408 457 506

Women's and girls' trousers ......................... 116 174 291 422

Semiconductor devices ............................. 224 257 326 352

All other ......................................... 3,413 3,982 4,660 4,941

Total ......................................... 9,887 11,608 12,833 14,649

Note.—Because of rounding, figures may not add to the totals shown.

Source: Compiled from official statistics of the U.S. Department of Commerce.
 “When Neighbors Embrace,” The Economist, July 5, 1997, pp. 5-7. 15

 “Maquila Housing: GM and INFONAVIT Join Forces,” Twin Plant News, Aug. 1996, 16

pp. 27-29.

 Mexico competes directly with the Caribbean Basin for garment assembly contracts with U.S. 17

firms. Countries such as the Dominican Republic, Honduras, Guatemala, Costa Rica, and El

Salvador, use Economic Processing Zones (EPZs) to attract investment, chiefly in highly specialized

areas like nightwear and undergarments. See, Gary Gereffi, “Restructuring the North American

Apparel Commodity Chain: Winners and Losers,” paper presented at the XX International Congress

of the Latin American Studies Association, Mexico, Apr. 17- 19, 1997. Asian suppliers of apparel

have seen their quotas reduced in the past few years, fueling the growth of the apparel industry in both

Mexico and the Caribbean to varying degrees. James Canute, “Caribbean, Top Source of U.S.

Imports of Apparel, Wary of Mexican Threat,” The Journal of Commerce, Sept. 26, 1996.

 For more information on production sharing and apparel, see ch. 3 of this report. 18

 The education and skill level of the Mexican labor force, combined with a relatively developed 19

infrastructure, typically resemble those of several Southeast Asian countries. Mexican firms also

benefit from preferential access and geographic proximity to the United States. See Joel Millman,

“Asian Investment Floods Into Mexican Border Region: Access to U.S. Market Draws Makers of

Televisions, Toys; and Shabu-Shabu,” The Wall Street Journal, Sept. 6, 1996; and Tim Coone, “The

(continued...)

2-8

Mexican producers of auto parts and other components have been trying to improve the quality

of their products to meet standards set by potential customers in the maquiladora industry by

focusing on education and worker training. U.S. companies, meanwhile, are working with

15

current and potential Mexican suppliers in terms of production and management technology and

loans for capital equipment in an effort to improve product quality and price. At the same time,

U.S.-based automotive firms, as well as those in other industries, have tried to improve worker

satisfaction and reduce chronic absenteeism through programs that assist maquiladora workers

in buying their own homes.16

Preferential tariff treatment under NAFTA and low labor costs continued to aid Mexico in its

competition with Caribbean locations for new investment in apparel-sewing operations. U.S. 17

companies seeking to reduce production costs by having garments sewn in Mexico continued

to benefit from HTS heading 9802.00.90 (created as a result of NAFTA), which permits

garments assembled in Mexico from fabric wholly formed and cut in the United States to enter

free of duty and quota. Meanwhile, imports from sewing operations in the Caribbean Basin

enter under the heading HTS 9802.00.80, and continue to be subject to duty on the value added

offshore. The peso devaluation in December 1994 also brought Mexican labor costs closer to

parity with those in the Caribbean Basin, further increasing the competitive advantages of

Mexican-based firms. U.S. imports of apparel accounted for $2.1 billion (14 percent) of the

total U.S. content in HTS PSP imports from Mexico in 1996, an increase of $483 million (30

percent) over 1995.18

Many electronics firms took advantage of the implementation of NAFTA, the peso devaluation,

and easy access to U.S. markets by investing in Mexican maquiladoras. U.S. imports of such

products entering under NAFTA increased by $2.2 billion (24 percent) in 1996 to $11.4 billion,

far outpacing those which entered under the production-sharing provisions of HTS Chapter 98,

which increased by $693 million (8 percent) to $9.3 billion (table B-5). NAFTA-mandated

changes in the rules of origin requirements encouraged many of these companies to source

components from the United States for further assembly and processing in Mexico. Asian

firms, in particular, increased their investment in Baja California, Mexico, in large part because

of the proximity to the electronics and computer industries in California. For the electronics 19
 (...continued) 19

Aztec- Asian Connection,” Latin Trade, Sept., 1996, p. 17.

 Electrical circuit apparatus was the only major electronic product to experience a decline in 20

terms of the value of U.S. content, which fell by $45 million (4 percent) to $1.1 billion.

 Damon Darlin, “Maquiladora-ville,” Forbes, May 6, 1996, pp. 111-112. The principal 21

assembly plants for RCA and Magnavox (Philips) brand televisions are located in Juarez, Mexico,

while Zenith’s main assembly plant is in Reynosa.

 Includes companies registered under the PITEX Program. 22

2-9

products sector, the level of U.S. content incorporated in imports under HTS PSP increased by

$310 million (8 percent) in 1996 to $4.0 billion. In terms of U.S. content, electrical circuit

apparatus, television receivers, measuring instruments, and medical goods remained the most 20

important electronic products imported from Mexico. Tijuana has become known as the “TVset capital of the world,” as companies like Samsung, Hyundai, Sony, Daewoo, Hitachi, and

Matsushita have increased investment in the region.21

Although U.S. imports of machinery and equipment from Mexico that were entered under HTS

PSP increased modestly, by $530 million (9 percent) to $6.1 billion, such imports recorded

under NAFTA jumped by $1.7 billion (28 percent) to $7.9 billion in 1996, reflecting the overall

trend toward entering production-sharing imports under NAFTA instead of the provisions of

HTS Chapter 98 (table B-5). The most significant imports in this category, wiring harnesses

for motor vehicles, electric motors and generators, electrical transformers, and household

appliances, continued to have relatively high levels of U.S. content.

The maquiladora industry has been a key element in Mexico’s passage toward becoming a

modern, industrialized nation, and a leading source of foreign exchange for Mexico. According

to SECOFI, the maquiladora industry accounted for 72 percent ($69.0 billion) of Mexico’s 22

total exports to the world in 1996. The maquiladora industry has also served as a training

ground for managers who have gone on to work for domestic producers or service industries in

Mexico, taking with them experience in the latest manufacturing and management technology,

all of which underscore the importance of production sharing in Mexico. 

Jennifer Rorke

(202) 205-3489

rorke@usitc.gov

 
 Caribbean Basin countries include those that are eligible for preferential U.S. duty treatment 23

under the Caribbean Basin Economic Recovery Act (CBERA) and designated by the President (see

HTS general note 7 (a)). CBERA countries are Antigua and Barbuda, Aruba, The Bahamas,

Barbados, Belize, British Virgin Islands, Costa Rica, Dominica, the Dominican Republic, El

Salvador, Grenada, Guatemala, Guyana, Haiti, Honduras, Jamaica, Montserrat, Netherlands Antilles,

Nicaragua, Panama, St. Kitts and Nevis, St. Lucia, St. Vincent and the Grenadines, and Trinidad and

Tobago.

 In contrast to U.S.-owned contracting operations that have the resources to finance the 24

purchasing, cutting, and shipping of U.S.-made apparel kits, Caribbean-owned operations generally

serve as contractors for only the sewing of apparel. Because contract operations provide

manufacturing services and sell no products under their own name, their use entails little risk of

pirating even if they manufacture for competitors. See Sturgeon and Cohen, The New U.S. Model of

Global Production in Electronics: The Turnkey Network, Competitiveness Policy Council, BRIE

Globalization Conference, Session II briefing paper, Dec.17, 1996.

 Only three nonapparel products imported from the Caribbean Basin under the HTS PSP had 25

U.S. content levels that exceeded $15 million in 1996: (1) medical goods, $194 million; (2)

electrical circuit apparatus, $87 million; and (3) jewelry, $26 million. Most of these products were

assembled in the Dominican Republic.

 USITC staff telephone interview, Tom Chubb, Oxford Industries, Aug. 11, 1997. 26

 See table 5-5 in USITC, Production Sharing: Use of U.S. Foreign Assembly Operations, 1991- 27

1994, USITC publication 2966, for a comparison of wage rates, f.o.b. prices, transportation costs, and

duty rates between Mexico, the Dominican Republic, Korea, and Pakistan.

2-10

The Caribbean Basin23

The Caribbean Basin region is the second-leading supplier of production-sharing provision

(PSP) imports under HTS Chapter 98, accounting for 8 percent of total imports under the

provision in 1996 and 15 percent of the U.S.-origin content. The U.S. content in imports from

the Caribbean Basin under the HTS PSP rose by $402 million (12 percent) in 1996, to $3.6

billion (table 2-4). The growth in imports from the Caribbean Basin under these productionsharing provisions in 1996 was chiefly attributable to the expansion of U.S. apparel productionsharing operations in Honduras and El Salvador, and to increased imports of medical goods 24

and electronic circuit apparatus from assembly plants in the Dominican Republic. 

25

The sewing of apparel involves low levels of technology, modest labor skills, and nominal

capital investment. As a result, global apparel assembly has migrated to regions with

transitional economies that have an ample supply of low-cost labor (Asia, Mexico, the

Caribbean Basin, and Eastern Europe). Imports under HTS PSP accounted for 83 percent of 26

total apparel imports from the Caribbean Basin in 1996 (see chapter 3, table 3-1). In contrast,

production sharing does not account for a significant amount of U.S. apparel imports from East

Asia because, unlike Mexico and the Caribbean Basin, East Asian apparel manufacturers do not

use U.S.-made fabrics. Although a number of East Asian-owned firms 27
 Lower labor and transportation costs, quicker delivery, and the availability of unfilled quotas 28

encourage East Asia owned apparel assembly operations in the Caribbean. However, some U.S.

companies reportedly have been hesitant to invest in new assembly plants in El Salvador and

Guatemala because of allegations regarding the denial of workers’ rights and violations of labor laws

by Korean and Taiwan-owned apparel sewing operations. U.S. companies have canceled or scaled

back orders to firms in El Salvador. U.S. Department of State Cable, “Salvadoran Maquila Sector

Report,” R 112152Z, Aug. 1997, prepared by U.S. embassy, San Salvado, El Salvador. Further,

total U.S. imports of apparel from Guatemala rose much more quickly than imports under HTS PSP

in 1996 (ch. 3, table 3-1). Most of the U.S. imports of apparel from the Caribbean Basin region that

do not enter under the HTS PSP are believed to be accounted for by East Asian apparel assembly

operations that use Asian made fabric.

2-11

Table 2-4

U.S. content of imports under production-sharing provisions (PSP) of HTS Chapter 98 from the

Caribbean Basin region for apparel, all other, and total by principal countries, 1993-1996 

Change 1995/1996

Country 1993 1994 1995 1996 Absolute Percentage

))))))))))))))))))))))) Million dollars )))))))))))))))))) Percentage

Dominican Republic:

Apparel ................ 810 878 989 1,009 20 2

All other ............... 231 231 289 356 67 23

Subtotal .............. 1,041 1,109 1,278 1,365 87 7

Honduras:

Apparel ................ 233 325 479 688 209 44

All other ............... 3 0 1 6 5 500

Subtotal .............. 236 325 480 694 214 45

Costa Rica:

Apparel ................ 375 387 443 444 1 0

All other ............... 24 24 29 37 8 28

Subtotal .............. 399 411 472 481 9 2

Jamaica:

Apparel ................ 249 299 363 350 -13 -4

All other ............... 5 7 6 5 -1 -17

Subtotal .............. 254 306 369 355 -14 -4

El Salvador:

Apparel ................ 103 160 260 332 72 28

All other ............... 15 15 16 12 -4 -25

Subtotal .............. 118 175 276 344 68 25

All other:

Apparel ................ 320 279 354 392 38 11

All other ............... 164 35 17 17 0 0

Subtotal .............. 484 314 321 409 38 10

Total Caribbean

Apparel ................ 2,090 2,328 2,888 3,215 327 11

Other .................. 442 312 358 433 75 21

Total .............. 2,532 2,640 3,246 3,648 402 12

Source: Compiled from official statistics of the U.S. Department of Commerce.

have set up apparel assembly operations in the Caribbean, it is believed that most of these firms

assemble apparel articles from fabric produced in their home country.28
 See the section in ch. 3 on apparel and the app. A of this report for a discussion of Guaranteed 29

Access Levels (GALS) for U.S. imports of apparel from certain Caribbean Basin countries.

 Foreign trade zones (FTZs) generally--(1) allow manufacturers to import free of duty and excise 30

taxes all machinery, equipment, spare parts, construction materials, and other resources necessary for

the construction and operation of a facility; (2) exempt exports from any duties, taxes, or tributes; (3)

have customs offices on-site allowing firms to reduce inventories and decrease custom clearing costs; 

(4) have no restrictions on foreign exchange operations; and (5) provide recruiting and training

facilities. For more background information on foreign trade zones, see the following publications:

U.S. International Trade Commission, “Free Trade Zones: Global Overview and Future Prospects,”

prepared by Gail Burns, Industry Trade and Technology Review (ITTR), Washington, DC, Sept.

1995; and Kevin P. Power, Caribbean Basin Trade and Investment Guide, Washington International

Press, Washington, DC.

 Originally, section 936 of the U.S. Internal Revenue Code granted a complete tax exemption on 31

the income of qualifying U.S. corporations in Puerto Rico as long as the funds remained in Puerto

Rico. In addition, Puerto Rico granted local and commonwealth tax credits to section 936 for

Qualified Possession Source Investment Income (QPSII) funds deposited in Puerto Rican financial

institutions. The tax credits, along with wage rates that were only 50 to 60 percent of those in the

United States, were an incentive for U.S. companies to establish apparel operations in Puerto Rico. 

See Impact of the Caribbean Basin Economic Recovery Act on U.S. Industries and Consumers,

Ninth Report 1993, USITC publication, 2674, Sept. 1994, p. 38.

 According to George Shobha, Director of Financial Services, Caribbean Latin American Action, 32

the following is the status of Section 936 (currently Section 30A): (1) all local and commonwealth

tax credits, as of July 1, 1997, on the QPSII funds have been terminated; (2) the complete tax credit

offered by Section 936 was reduced to 60 percent in 1994, and 5-percent yearly reductions were taken

thereafter until a floor of 40 percent is reached in 1998; (3) 936 firms with an income credit will be

allowed to switch to a wage credit formula (as opposed to the income credit, the wage credit is linked

to a project’s labor and capital intensity); (4) a 40-percent wage credit will be allowed for existing

936 firms after 2005; and (5) 936 firms will be allowed to receive additional wage credits for

expansion. 

 After the repeal of section 936, Crescent Industries closed its lingerie factory in Puerto Rico, 33

which had employed 987 people. Crescent was subsequently bought by Maidenform, which decided

to transfer the operations to the Dominican Republic. Another apparel firm, Warnaco, laid off 500

workers in Puerto Rico and expanded its operations in Mexico, Honduras, and Costa Rica. “Section

936: Can Puerto Rico’s Apparel Industry Prosper Without It?”Special Report: Sourcing the

(continued...)

2-12

The Caribbean Basin also has been a successful site for apparel assembly operations because

of (1) close proximity to the eastern half of the United States; (2) U.S. quota preferences that

provide certain Caribbean countries with a significant competitive advantage over other lowcost apparel suppliers in terms of access to the U.S. market; (3) infrastructures that adequately 29

support the efficient transportation and assembly of apparel; and (4) a sophisticated network

of private sector or government-owned free trade zones (FTZs) that offer a variety of incentives

to foreign companies with export-oriented production. 

30

Trends in U.S. imports during 1993-96 from the Caribbean under HTS PSP were affected by

both the NAFTA and the phasing out of section 936 tax credits for U.S.-owned businesses

operating in Puerto Rico after December 31, 1993. The loss of a significant portion of the tax 31

credit further raised operating costs for assembly operations in Puerto Rico which, because of

labor costs, were already high compared with other Caribbean locations. As a result, a number 32

of U.S. apparel firms with production-sharing operations in Puerto Rico (considered part of the

Customs territory of the United States) have shifted their operations to other Caribbean

countries during 1993 to 1996 and now take advantage of HTS PSP. Concurrently, however, 33
 (...continued) 33

Caribbean and Latin America, Bobbin, Nov. 1996, p. 40.

 The Uruguay Round Agreement is expected to reduce the competitive advantage that Mexico 34

has under NAFTA and that CBERA countries have under the GAL program. See USITC publication,

Production Sharing: Use of U.S. Foreign Assembly Operations, 1991-1994, USITC 2966, May

1996, p. 5-7, for a more detailed discussion of the World Trade Organization Agreement on textiles

and clothing.

 See the section on apparel in ch. 3 of this report for more information about attempts to achieve 35

NAFTA parity for U.S. imports from the Caribbean Basin.

 See U.S. International Trade Commission, Caribbean Basin Economic Recovery Act/Andean 36

Trade Preference Act: Impact of the United States - 1996, USITC publication No. 3058, Sept. 1997,

p. 7ff.

 The U.S. content in imports of medical goods from the Dominican Republic under HTS PSP 37

almost doubled during 1993-96 to $185 million, while the U.S. content in electrical circuit apparatus

rose by $11 million (21 percent) to $60 million.

 WEPZA International Directory of Exporting Processing Zones, May 1997, The Flagstaff 38

Institute, Flagstaff, AZ.

2-13

the Caribbean has lost a certain amount of its competitiveness relative to Mexico as a result of

NAFTA, which provides unique quota and tariff benefits for U.S. imports of apparel from

Mexico; the devaluation of the peso, which has pushed down Mexico’s labor costs measured 34

on a dollar basis; and rising labor costs in certain Caribbean economies. 35 36

Dominican Republic

The Dominican Republic remained the principal Caribbean Basin source of U.S. imports under

HTS PSP in 1996, accounting for over one-third of the U.S. content contained in such imports

from the region. Although apparel accounted for the bulk of the HTS PSP operations in the

Dominican Republic (74 percent), most of the growth in imports in 1996 under these provisions

($67 million out of $87 million) was accounted for by products other than apparel, such as

disposable medical goods, surgical supplies, meters, and electrical capacitors.37

The prominence of the Dominican Republic as a site for U.S. apparel assembly operations is

partly the result of its early support of an assembly industry with tax incentives and an FTZ

program. The Dominican Republic continues to account for the highest number of U.S.-

affiliated apparel assembly operations in a single Caribbean Basin country. In addition, the 38

Dominican Republic has the most direct shipping routes to Miami and other Atlantic seaboard

ports, allowing the country to offer lower transportation costs than competing assembly

locations in the region (table 2-5). While U.S. apparel firms and Dominican-owned contractors

account for the bulk of assembly plants in the Dominican Republic, companies
 An increasing number of apparel assembly operations in the Dominican Republic are neither 39

U.S. nor locally owned. The following is a list provided by the Secretariat de Estado de Industria y

Comercia, Consejo Nacional de Zonas Francas de Exportacion, Santo Domingo, Distrito Nacional, of

the firms operating in its FTZs by country of ownership as follows: (1-5 locations) Argentina,

Bahamas, Belgium/Luxemburg, Virgin Islands, Canada, Cayman Islands, Japan, Spain, France,

Germany, Haiti, Hong Kong, Israel, Italy, Holland, St. Kitts and Nevis, Peru, Singapore, Switzerland,

and the United Kingdom, (6-25) Panama, Taiwan, and Puerto Rico; (27) Korea; (125) Dominican

Republic; (215) United States.

 Esteban R. Brenes, Vince Ruddy, and Rene Castro, “Free Zones in El Salvador,” Journal of 40

Business Research 38, 57-65 (1997), p. 61.

 Telephone interview with Donald McNally, Commercial Attache, U.S. Embassy in Tegucigalpa, 41

Honduras, Aug. 28, 1997.

 USITC staff telephone interview with Tom Chubb, Oxford Industries, Aug. 11, 1997. 42

2-14

from Korea, Taiwan, and the EU have also made significant investments in the Dominican

apparel sector.39

Rising labor costs relative to Honduras, El Salvador, and Mexico have caused the Dominican

Republic to become a relatively more expensive assembly location for products, such as apparel,

that contain little value added. As a result, the Dominican Republic has sought to diversify its

production-sharing operations into higher value-added products and has demonstrated the ability

to adapt to more complicated production systems. The total value of U.S. imports under the 40

HTS PSP rose by 7 percent ($139 million) in 1996, while such imports under CBERA rose by

10 percent ($87 million) (table 2-6). The increasing use of the CBERA, which does not

provide duty preference for articles of apparel, reflects the Dominican Republic’s efforts to

move its export oriented production into other sectors.

Honduras

Increased imports of apparel from Honduras accounted for over one-half of the growth in the

U.S. content in the production-sharing provisions of HTS PSP imports from the Caribbean

Basin in 1996 (table 2-4). Lower labor costs combined with improved roads, ports, and

aggressive marketing, have made Honduras an increasingly competitive site for U.S. apparel

assembly operations. San Pedro Sula, the city where most production-sharing operations are

located, is only 45 miles from Puerto Cortes, the best deep-water port in the Caribbean.

Apparel assembly operations in both El Salvador and Nicaragua ship their products through this

port. Further, the Honduran Government has just completed the construction of a world class

highway that links San Pedro Sula to the port. Industry sources report that the Association

41

Honduran de Maquiladores has effectively marketed Honduras as a site for apparel production

sharing. A representative of Oxford Industries (a major producer primarily of men’s apparel), 42

for example, indicated one of the principal reasons the company located its most recent apparel

assembly operation in Honduras rather than another Caribbean Basin location was that the

maquiladora association offered a plant that was ready to operate.
2-15

Table 2-5

Comparison of factors of competition between the Dominican Republic, Honduras, Costa Rica, El Salvador, Jamaica, and Mexico

Factors of competition Costa Rica Republic El Salvador Honduras Jamaica Mexico

Dominican

Hourly apparel labor costs, Spring 1996 ($US) ...........................

1

2 .38 1.62 1.38 1.31 1.80 1.08

Per capita expenditures on education ($US) .............................

2

100.90 ( ) 15.80 37.30 ( ) 76.50 2 3

Ports (number) ..................................................... 7 5 2 5 2 76

Power system losses (percent of total output) ............................ 8 25 14 28 19 14

Phone lines per 1000 population ....................................... 164 79 53 29 116 96

 Werner International Management Consultants, Hourly Labor Cost in the Apparel Industry, May 21, 1997. 1

Latin Trade, Educational Crisis, Aug. 1997, p. 35. The Dominican Republic ranked the lowest in the 1990/91 survey. 2 

Not available. 3 

 

Source: World Bank, Competitiveness Indicators (found at http://www.worldbank.org/html/fpd/psd/comp/crsrc.htm), Sept. 9, 1997, except as noted.
2-16

Table 2-6

Selected Caribbean Basin countries: U.S. imports under the production-sharing provisions (PSP) of

HTS Chapter 98, and the Caribbean Basin Economic Recovery Act, 1993-96

Change 1995/1996

Country 1993 1994 1995 1996 Absolute Percentage

)))))))))))))) Million dollars ))))))))))))))

Dominican Republic:

HTS PSP ............ 1,531 1,707 1,965 2,104 139 7

CBERA .............. 658 751 845 932 87 10

All other ............. 478 619 575 546 -29 -5

Subtotal ............. 2,667 3,077 3,385 3,582 197 6

Honduras:

HTS PSP ............ 337 452 676 981 305 45

CBERA .............. 127 140 157 207 50 32

All other ............. 450 500 608 609 1 0

Subtotal ............. 914 1,092 1,441 1,797 356 25

Costa Rica:

HTS PSP ............ 575 623 707 694 -13 -2

CBERA .............. 388 478 528 657 129 24

All other ............. 579 544 607 612 5 1

Subtotal ............. 1,542 1,645 1,842 1,963 121 7

Jamaica:

HTS PSP ............ 321 390 456 444 -12 -3

CBERA .............. 76 69 87 96 9 10

All other ............. 313 281 295 288 -7 -2

Subtotal ............. 710 740 838 828 -10 -1

El Salvador:

HTS PSP ............ 203 322 497 605 108 22

CBERA .............. 27 41 69 91 22 32

All other ............. 251 245 247 278 31 13

Subtotal ............. 481 608 813 974 161 20

Guatemala:

HTS PSP ............ 426 451 521 580 59 11

CBERA .............. 208 171 168 280 112 67

All other ............. 544 662 826 834 8 1

Subtotal ............. 1,178 1,284 1,515 1,694 179 12

All other:

HTS PSP ............ 337 128 179 214 35 20

CBERA .............

1

420 400 407 528 121 30

All other ............. 1,845 2,226 2,130 2,965 835 39

Subtotal ............. 2,602 2,754 2,716 3,707 991 36

Total Caribbean:

HTS PSP ............ 3,730 4,073 5,001 5,622 621 12

CBERA .............. 1,904 2,050 2,261 2,791 530 23

All other ............. 4,460 5,077 5,288 6,132 844 16

Total .............. 10,094 11,200 12,550 14,545 1,995 16

Chiefly petroleum and related down-stream products from Trinidad and the Netherlands Antilles. 1 

Source: Compiled from official statistics of the U.S. Department of Commerce.
 Country Commercial Guide, Costa Rica, U.S. State Department, Cable R 242129Z, June 1997. 43

 U.S. Department of State, Report No. 001593, “USITC Annual Caribbean Basin Investment 44

Survey,” prepared by U.S. Embassy, San Jose, Costa Rica, May 1997. 

 Ibid. According to Mr. Gabriela Lobo, Director of the Textile Chamber (Cateco), Costa Rican 45

exports of apparel declined by 7 percent in 1996 from the 1995 level. The closure of 50 apparel

plants has resulted in the loss of hundreds of jobs. Loveables has downsized from 3 factories in Costa

Rica to 2, and operated with 500 fewer workers in 1997. Lovables concurrently expanded its

operations in Panama. The Government of Panama has stepped up efforts to attract apparel assembly

operations to its free trade zone in Colon.

 USITC staff interview with Spencer Merchant, President, Costa Rican-American Chamber of 46

Commerce, San Jose, Costa Rica, on May 19, 1997.

 According to Ruben Mendez, Director of Hanes Corporation in Costa Rica, labor costs average 47

$2.24 an hour in Costa Rica (excluding benefits), compared with $1.05 per hour in Mexico (including

benefits). In an interview with USITC staff in San Jose, Costa Rica, on May 19, 1997, Celso Porras

and Juan Carlos Martinez Piva of the Costa Rican Ministry of Foreign Trade stated that NAFTA has

not led companies to move plants from Costa Rica to Mexico; rather, it has led to the diversion of

investment in new facilities from Costa Rica to Mexico.

 USITC staff interview with Alvaro Valverde, Costa Rican Agency for the Promotion of Foreign 48

Trade, San Jose, Costa Rica, May 19, 1997.

2-17

Costa Rica

Costa Rica’s position as a major source of apparel production-sharing imports is being eroded

by its rising labor costs, interest rates, and utility expenses, as compared with those of its

regional competitors. Cutbacks in public spending in 1996 and the delay of major infrastructure

projects have reportedly left most of Costa Rica’s highways and roads in varying degrees of

disrepair. Puntarenas, the main cargo port on the Pacific coast, is considered seriously

inadequate, as are landing and terminal facilities at San Jose’s international airport.43

There was virtually no growth in U.S. imports of apparel from Costa Rica in 1996. According

to Marco Vinicio Ruiz, President of the Chamber of Industries in Costa Rica, apparel assembly

in Costa Rica’s FTZs has declined in recent years and apparel firms now represent only 20

percent of Costa Rica’s 170 operating FTZ enterprises, compared with 70 percent a few years

ago. There were very few new investments in Costa Rica’s apparel sector and about 50

44

apparel assembly and manufacturing facilities closed their doors during the first 6 months of

1997, while several others, including Bali, Sara Lee, and Maidenform, downsized. U.S.

45 46

apparel companies, such as Hanes and Loveable Brassieres, have indicated that they are not

planning additional investment in Costa Rica because of Mexico’s competitive advantages

resulting from NAFTA and because of labor costs that average less than one-half of those of

Costa Rica (table 2-5). In addition, lower labor costs and manufacturing expenses in other

47

CBERA countries, especially Honduras and El Salvador, provide competitive advantages over

Costa Rica. 

While losing its appeal as a low-cost labor location for apparel assembly, Costa Rica has

attempted to recruit investment in the electronics sector. As a result, DSC Communications of

Plano, TX, began assembling printed circuit boards in Costa Rica in 1996. In addition, Costa 48

Rica was selected by Intel Corp. in 1996 as the site for two integrated circuit chip assembly and

test facilities. The first plant is scheduled for completion in April 1998, and the second in April

1999. Intel’s total investment in Costa Rica is expected to be close to $500 million. The Intel

plants will employ about 2,000 workers and assemble up to 1 million Pentium II chips per
 Michael Dorgan, “Costa Rica Gets on the High-Tech Map,” San Jose Mercury News, Aug. 10, 49

1997, p. 11.

 U.S. Department of Commerce, International Trade Administration, Country Commercial 50

Guides, U.S. Embassy, Costa Rica, June 1997.

 USITC staff interview with Marilyn Bruno, Economic Section, U.S. Embassy, San Jose, Costa 51

Rica, May 19, 1997.

 Conair and Motorola use CBERA instead of the HTS PSP. Conair makes hair dryers, curling 52

irons, and toothbrushes at its 2,000-employee plant in Cartago and uses components from both the

United States and Asia. Motorola produces all of the company’s quartz blanks (used in watches and

other timing devices) in Guadalupe, Costa Rica. The plant also producers ceramic substrates and

pagers. USITC staff interviews in Cartago and Guadalupe, Costa Rica, on May 20, 1997, with

Francisco Lopez Trigo, General Manager, Conair Costa Rica, S.A., and Jose M. Campos Echeverria,

General Manager, Automotive Energy and Control Group, Motorola de CentroAmerica, S.A.

 U.S. Department of State, Report No. 003271, “1997 Salvadoran Maquila Sector Report,” 53

prepared by U.S. Embassy, San Salvador, El Salvador, July 1997. 

 Most apparel sewn in El Salvador is transported by truck to Puerto Cortes in Honduras, then by 54

ship to U.S. ports in the Gulf of Mexico and on the Atlantic seaboard, giving Honduran assembly

plants in San Pedro Sula near Puerto Cortes a transportation cost advantage over plants in El

Salvador.

2-18

week. Intel has made an arrangement with the Costa Rican Technological Institute to train and 49

recruit workers. Further, eight satellite companies are expected to move to Costa Rica as

50

well. Relatively high wage rates in Cost Rica are reportedly offset by a well-educated work 51

force and high levels of productivity. Per capita expenditures on education are the highest of

any Caribbean country (table 2-5). However, increased production in the electronics sector in

Costa Rica may not be reflected in a rise in imports under the production-sharing provisions of

HTS Chapter 98. Several U.S. producers of electronic products enter their goods from Costa

Rica free of duty under CBERA instead of partially free under HTS PSP.52

Other Regional Developments

• Despite a 25-percent increase in the U.S. content in imports from El Salvador under the HTS

PSP in 1996, new foreign investment for apparel production-sharing operations stalled. The

Association of Salvadoran Apparel Industry attributed the lack of investor interest in El

Salvador to increased regional competition, limited government promotion, and most notably,

Mexico’s preferential access to U.S. markets. However, Salvadoran political and

macroeconomic stability and market-oriented policies are expected to enhance investor

confidence. According to the U.S. Embassy in San Salvador, the country’s abundant labor

supply, low inflation, and high worker productivity will likely help draw foreign investment in

the sector. The major concerns for foreign investors in El Salvador are the higher

53

transportation cost compared with its regional competitors and escalating rates of street crime. 54
 Factories operated by Korean and Taiwan companies accounted for much of the growth in U.S. 55

apparel imports from Guatemala in 1996. For the most part, the Korean and Taiwan sewing

operations used fabric produced in Asia.

 Telephone interview with Jeff Cunningham, Economic Office, U.S. Embassy, Guatemala City, 56

Sept. 2, 1997.

 Relatively high labor costs and reports of an increased rate of crime have made Jamaica 57

vulnerable to competition for apparel assembly from lower-labor-cost locations such as Mexico and

Honduras. In 1996, about 15 textile and apparel factories closed, putting 7,000 employees out of

work. An additional 8,000 employees in the garment industry were estimated to have lost their jobs in

1995. “Textile Bailout Moves Into Second Gear,” The Gleaner, Kingston, Jamaica, Aug. 12, 1997,

p. 1. 

 U.S. Department of State telegram No. 181524Z, Jamaica: Economic Wins and Woes, prepared 58

by U.S. Embassy Kingston, Aug. 1997.

2-19

• The level of growth in apparel assembly operations in Guatemala using the productionsharing provisions of HTS Chapter 98 has been below expectations because of the

55

slow progress in the Government’s efforts to modernize roads and privatize electric

utilities. Roads are of particular importance to Guatemala’s production-sharing

operations because its principal port (Puerto Barrios) is on the Caribbean Sea, while

the population and labor force are more than one hundred miles away in the cooler

mountain climates of Guatemala City. The Government of Guatemala is attempting

to make the supply of electricity to assembly plants more dependable by negotiating

the sale of power plants to both Tampa Power of Florida and Baltimore Gas and

Electric.56

• In response to declining levels of production-sharing trade with the United States, the

Jamaican Government has implemented a 2-staged, $200 million special adjustment

program for its garment industry. The first phase began January 1, 1997, with a

57

reimbursement to export-oriented companies of up to 5 percent of their operating costs

(rentals, security, and financing). The funds are distributed through the Jamaican

National Development Bank, the National Investment Bank of Jamaica, and the

Jamaican Export/ Import Bank. The second phase of the special adjustment program

provides apparel firms in Jamaica with financial assistance to purchase new materials,

initiate retooling, and upgrade methods of production. The government has also cut by

two-thirds the certification fees charged to firms operating in industrial parks. Firms

receiving the funds are expected to achieve a minimum of 10-percent improvement in

productivity, stable employment over the next 2 years, and a 5-percent increase in 1998

export values over 1997.58

Josephine Spalding

(202) 205-3498

Spalding@usitc.gov
 For the purpose of this report, Southeast Asia includes Brunei, Burma, Cambodia, Indonesia, 59

Hong Kong, Korea, Laos, Malaysia, the Philippines, Singapore, Taiwan, Thailand, and Vietnam.

 Semiconductors have a high value-to-weight ratio and can be economically shipped over long 60

distances. As a result, there is little need to locate production-sharing facilities in close proximity to

fabrication plants in the United States.

 The United States maintains no import tariff on most semiconductors and, as a result, the 61

principal incentive for entering semiconductors under the HTS PSP is to receive exemption from the

Customs user fee of 0.17 percent ad valorem on the value of the U.S. content, with a maximum fee of

$400 per shipment. According to industry representatives (telephone interviews by USITC staff, July

22-24, 1997), it is unlikely that the amount of such savings would compensate for the costs of

complying with the production-sharing provisions of HTS Chapter 98 documentation requirements,

and a significant portion of U.S. imports of semiconductors assembled from U.S. components are not

entered under HTS PSP. 

2-20

Southeast Asia

For nearly 25 years, Southeast Asia has been important to U.S. electronics companies,

59

originally as a location for low-cost labor and more recently as a market for products from

assembly plants in the region. Over the years, parts and materials from Asian sources have been

substituted for U.S.-made components. The continued use of U.S.-origin parts is concentrated

in semiconductor manufacturing.60

Southeast Asia accounted for 16 percent ($3.9 billion) of the total value of the U.S.-origin

content in the production-sharing provisions of HTS Chapter 98 in 1996 (table 2-7). As in

earlier years, semiconductors accounted for almost all (92 percent) of the U.S. content in HTS

PSP imports from Southeast Asia in 1996. Southeast Asia was by far the preferred location for

U.S. companies to maintain semiconductor assembly and test facilities, accounting for 89

percent of the U.S. content of total U.S. imports of semiconductors entered under productionsharing provisions in 1996. The value of U.S. imports in semiconductors from Southeast Asia

fell by 7 percent ($2.7 billion) in 1996 from 1995 (tables B2-7), despite an increase in the

quantity imported; likewise, the value of semiconductors imported under HTS PSP contracted

by 5 percent ($449 million) in 1996, and the value of the U.S. content in such imports also

decreased by 5 percent ($215 million). 

61

Regional Trends

With the exceptions of Canada and Mexico, the leading countries engaged in the semiconductor

production-sharing arrangements with the United States are in Southeast Asia. In 1996,

Malaysia continued as the principal participating country, accounting for nearly 30 percent of

the U.S.-content value of semiconductor imports reported under HTS PSP, followed by the

Philippines with 18 percent, and Korea with 16 percent (table 2-7). Other traditional Southeast

Asian sources of production-sharing imports include Thailand, Taiwan, Hong Kong, and

Singapore. As labor becomes scarce and increasingly expensive in the more established

production-sharing countries, other lower labor cost countries in the region such as Indonesia

and Vietnam are attracting interest and new industry investment. Among the
2-21

leading Southeast Asian suppliers of semiconductors to the U.S. market, the value of the U.S.

content reported in HTS PSP fell by 15 to 16 percent in 1996 for Malaysia, Taiwan, and Hong

Kong (table 2-7). By contrast, imports from Korea under these provisions grew by 10 percent.

Table 2-7

Southeast Asia: U.S. content in imports of semiconductors and all other products under the

production-sharing provisions (PSP) of HTS Chapter 98, by principal countries, 1993-96

Change 1995/96

Country 1993 1994 1995 1996 Absolute Percentage

))))))))))))) Million dollars )))))))))))

Semiconductors

Malaysia ........................ 783 954 1,303 1,104 -199 -15

Philippines ...................... 421 576 700 712 12 2

Korea .......................... 396 426 560 614 54 10

Thailand ........................ 200 306 410 389 -21 -5

Taiwan ......................... 282 326 371 311 -60 -16

Hong Kong ...................... 116 122 310 260 -50 -16

Singapore ....................... 230 270 178 166 -12 -7

Indonesia ....................... 25 24 51 69 18 35

All other ........................ ( ) ( ) ( ) ( ) -2 ( )

1 1 1 1 2

Total ......................... 2,452 3,004 3,883 3,626 -257 -7

All other products

Malaysia ........................ 11 13 10 12 2 20

Philippines ...................... 64 64 85 61 -24 -28

Korea .......................... 82 54 40 39 -1 -3

Thailand ........................ 38 47 51 34 -17 -33

Taiwan ......................... 56 46 53 64 11 21

Hong Kong ...................... 15 13 14 16 2 14

Singapore ....................... 123 66 16 46 30 188

Indonesia ....................... 10 23 24 25 1 4

All other ........................ ( ) ( ) ( ) 6 6 100 1 1 1

Total ......................... 398 326 293 307 14 5

Total U.S. content

Malaysia ........................ 794 968 1,313 1,116 -197 -15

Philippines ...................... 485 640 785 773 -12 -2

Korea .......................... 478 480 600 653 53 9

Thailand ........................ 238 353 461 423 -38 -8

Taiwan ......................... 337 371 424 375 -49 -12

Hong Kong ...................... 130 135 323 276 -47 -15

Singapore ....................... 353 336 194 212 18 9

Subtotal ........................ 2,815 3,283 4,100 3,828 -272 -7

Indonesia ....................... 35 47 75 94 19 25

All other ........................ ( ) ( ) 5 17 12 240 1 1

Total ......................... 2,850 3,330 4,180 3,939 -241 -6

 Less than $500,000. 1

 Not applicable. 2

Note.—Because of rounding, figures may not add to the totals shown.

Source: Compiled from official statistics of the U.S. Department of Commerce.
 Increased demand for computers and communications equipment in Southeast Asia has 62

expanded the market for semiconductors for use in making such equipment in the region. See the

assessment of production sharing in the semiconductor industry in ch. 3 of this report.

 Garry Marchant, “Singapore, Welcome to the Future,” Asian Sources: Trade & Travel, May 63

1997, p. 21.

 Mark Lapedus,, “Asia-Pacific Gets More Important in PC Assembly,” Electronic Buyers’ 64

News, Section: Market Forces, Jan. 29, 1996 (Issue 991), found at

http://techweb.cmp.com/ebn/942/outlook6.html, retrieved Aug. 14, 1997.

 U.S. Department of Commerce, National Trade Data Bank and Economic Bulletin Board-- 65

products of STAT-USA,

 U.S. investment electronics was concentrated in the sector, particularly in the manufacture of 66

components such as semiconductor chips in which a high degree of production sharing takes place.

 The Malaysian economy grew by 9.5 percent in 1995; it has grown by more than 8 percent for 67

the last 8 years, and is estimated to have expanded by 8.3 percent in 1996. U.S. Department of

Commerce, International Trade Administration, Country Commercial Guides, Malaysia: Leading

Sectors for U.S. Exports & Investments, 1997.

2-22

Semiconductors have remained well suited for production-sharing operations due to the clear

delineation between the extremely capital-intensive fabrication stage and the more laborintensive assembly/test stage. Further, despite increased automation of semiconductor

62

assembly in recent years, these operations have remained in Southeast Asia in part because of

the increasing sophistication of the Southeast Asian semiconductor operations derived from the

region’s skilled workforce, advanced packaging technology, and relatively well developed

infrastructure. Continued assembly of semiconductors has been encouraged by the actions of

some Southeast Asian countries to liberalize trade and investment laws, and by the growth of

regional manufacturing operations that are important customers of the semiconductor industry.

Industry analysts indicate that with global liberalization of the telecommunications industry and

the explosion of the Internet, Southeast Asia is becoming even more of a focal point for U.S.

companies engaged in semiconductor production-sharing arrangements. The increasing

63

demand for personal computer (PCs) motherboards and PC laptops has turned Southeast Asia

into one of the fastest-growing markets for these kinds of products, with much of the market

being supplied by equipment that is assembled in the region.64

Malaysia

Malaysia is one of the world’s largest producers of semiconductor devices and accounted for

27 percent of the reported value of the U.S. content in semiconductors under the HTS PSP in

1996. Components used in the assembly of semiconductors accounted for 98 percent ($1.1

billion) of all U.S.-origin components contained in HTS PSP imports from Malaysia in 1996

(table B-8).

Malaysian electronics exports reached $34 billion in 1996, accounting for nearly 60 percent of

the country’s total exports and 12 percent of the gross national product. The United States 65

is the second-largest foreign investor in Malaysia, after Japan. U.S. electronics-component 66

manufacturers are attracted to Malaysia by the advantages of low business costs, an educated

work force, a stable and cooperative government, and a growing economy. Moreover,

67

production-sharing operations have access to over a dozen free trade zones categorized into Free
 To be eligible for an FIZ, a firm generally must export all production. Raw materials and 68

components imported for use in export production in the FIZ and subsequently exported are not

subjected to duty. Malaysia also offers firms wishing to locate in other parts of the country the

opportunity to establish themselves as Licensed Manufacturing Warehouses (LMWs), which operate

on the same principles as an FIZ. 

 FCZs are designed to house businesses involved in trading; goods are imported free of duty, 69

provided the final goods are exported. Malaysia has one FCZ located in Port Klang. 

 U.S. Department of Commerce, International Trade Administration, Country Commercial 70

Guides: Malaysia: Investment Climate, 1997.

 Recent developments in Malaysia are cited by Michael Bordenaro in “International 71

Development: Malaysia Moves Up the Food Chain,” Electronic Business Today, May 1997, 

pp. 62-63.

 Ibid., p. 64. 72

2-23

Industrial Zones (FIZs) and Free Commercial Zones (FCZs), located in the states of Penang, 68 69

Melacca, Selangor, Johore, Perak, and Sarawak. Approximately 25 U.S.-affiliated assembly

operations, including Motorola, Texas Instruments, Intel Corp., National Semiconductor, and

Harris, account for over half of Malaysia’s semiconductor production. Several U.S.

70

manufacturers of other electronic products, such as Seagate (computer peripherals and parts)

and Komag (blank recording media), also have significant investments in Malaysia.

Recent investments in free trade zones in the state of Penang that may lead to increased U.S. 71

exports of components and/or manufacturing equipment to Malaysia include—

• In early 1996, Dell Computer Corp. opened a 238,000-square-foot facility in Penang.

The $20 million facility has four lines producing desktop computers, laptops, and

servers.

• In 1996, Iomega Corp. began operating a 375,000-square facility in Penang (previously

owned by Quantum Corp.) that assembles disk drives. Iomega has relocated all

manufacturing from its Roy, Utah, facility to Penang, where more than 1,000 workers

are employed.

• In 1997, Intel completed its eighth building in Penang and employs more than 4,000

people in its complex there.

• Packard Bell NEC Inc. established a new manufacturing operation in Penang in 1997.

It is currently building a new facility that will exceed $400 million in land, building,

and equipment. Employment is expected to be in excess of 500 workers by 1999.

Company officials reported that the export value from the facility should reach $1

billion in 5 years and local purchasing should reach $200 million in 3 years.

The immediate future remains favorable for U.S. production-sharing operations in Malaysia,

as the 17 U.S. manufacturers in the Malaysian American Chamber of Commerce Electronics

Industries Committee (MAEI) project combined investment in Malaysia of more than $1 billion

a year for the next 2 years. For the longer term, however, the Government of Malaysia is

72

making a concerted effort to move the country away from labor-intensive manufacturing and
 The Malaysian economy is at technical full employment. Firms report difficulty in obtaining and 73

retraining workers at all skill levels. U.S. Department of Commerce, International Trade

Administration, Country Commercial Guides: Malaysia: Investment Climate, 1997.

 Tom McHale, Section: News, “Multimedia Drives Future,” Electronic Buyers’ News, Jan. 27, 74

1997, found at http://techweb.cmp.com/ebn/942/outlook6.html, retrieved Aug. 14, 1997.

 According to the Malaysian prime minister, the most visible impact of the market crash is on 75

public works projects. The falling value of the ringgit has forced the delay of several grand projects,

including the schedule for building the “cybercity,” part of Malaysia’s Multimedia Super Corridor. 

 Sandra Sugawara, “Economic Woes Build Anger in Asia- In Malaysia and Thailand, Foreign 76

Speculators Are Focus of Blame for Markets’ Tumble,” Washington Post, Sept. 12, 1997, p. G1.

 Motorola, National Semiconductor, Philips, Intel, and Texas Instruments have production- 77

sharing facilities in the Philippines; Intel, Philips, and Texas Instruments have recently expanded chip

assembly operations.

 Mark Lapedus, “The Philippines—Asia’s Next Silicon Valley?”, Electronic Buyers’ News,

78

Section: Marketplace Asia, Oct. 26, 1996 (Issue 1029), found at

http://techweb.cmp.com/ebn/942/outlook6.html, retrieved Aug. 14, 1997; Tom McHale, “Will

Politics Kill Tiger Cub?,” Electronic Buyers News, Dec. 2, 1996.

 Malaysia, the Philippines’ biggest competitor in the assembly of electronic products, will 79

graduate from the GSP program in late 1997.

 USITC, Shifts in U.S. Merchandise Trade in 1996, USITC publication 3051, July 1997, 80

p. 13-9.

2-24

towards higher value-added processes. A higher standard of living and labor shortages could 73

price Malaysia out of the competition for all but the highest level of value-added manufacturing.

Moreover, wage rates have been increasing faster than corresponding gains in productivity.

Sixteen plants shut down in 1996 as companies moved assembly production to the Philippines,

Indonesia, and China. Currently, Malaysia is being plagued with economic crises. A

74

devalued ringgit (the Malaysian currency) has meant that imports needed for Malaysia’s

manufacturers and its economic development plan have become more expensive. In addition, 75

the cost of servicing foreign debts has risen. The falling stock market has meant that Malaysian

companies have temporarily lost an important source of financing. 

76

Other Regional Developments

• Improving infrastructure and low labor costs are attracting more U.S. and Japanese

companies to establish production-sharing operations in the Philippines, especially

in the IC (integrated circuit) assembly and test industry. By October 1996, 29 U.S.

electronics companies had invested in the Philippines, compared with 118

77

Japanese companies. In addition to offering some of the lowest labor costs in

78

Asia, eligible imports from the Philippines enter the United States free of duty

under the Generalized System of Preferences (GSP). 79

• An estimated 70-percent reduction in the world price of Dynamic Random Access

Memories (DRAMs) led to a 33-percent decline ($1.4 billion) in U.S. imports of

DRAMs from Korea in 1996, to $2.8 billion. Despite the reduction in the value 80

of U.S. imports of DRAMs in 1996, the quantity imported actually increased. The

bulk of the DRAMs imported from Korea are fabricated there and are not the
 Samsung Electronics Co., Ltd., is the world’s largest producer of DRAMs. Its U.S. customers 81

include Apple Computer, Hewlett-Packard Co., IBM Corp., and Texas Instruments Inc. See Mark

Lapedus. 

 

82

 The U.S. semiconductor industry was somewhat insulated from the effects of the drop in DRAM

prices because its manufacturing and assembly operations are generally concentrated in higher valued

specialized semiconductor products, such as micro components and application specific integrated

circuits (ASICs). 

 The Malaysian Government continues to provide incentives to attract U.S. investment. For 83

example, the Government can grant “pioneer” status, which allows companies with technologies new

to the country to pay taxes on only 30 percent of income for 5 years; the government can also grant

100 percent tax exemption for 5 years if enough research and development is performed at the site.

Further incentives include training grants and exemption of import duties for raw

materials/components. 

 Lapedus, “Asia-Pacific Gets More Important in PC Assembly.” 84

 Lapedus, “Asia’s Tigers Rule in Tough Market.” 85

2-25

product of production-sharing operations. However, imports of other types of

81

semiconductors from Korea increased in value during 1995-96, from $2.7 billion

to $3.3 billion. Similarly, the U.S. content in imports of semiconductors from

Korea reported under HTS PSP rose by $54 million (10 percent) in 1996 to $614

million.82

• To remain regionally competitive, the Singapore Government has developed

industrial parks for electronics and computer companies at lower labor-cost sites

in nearby Johore Baru, Malaysia, and Batam Island, Indonesia. However, U.S.

companies such as Dell, Gateway 2000, Packard Bell, and other PC makers

reportedly are continuing to set up assembly operations in Penang, Malaysia. 83 84

Singapore is emphasizing high value-added production, as well as becoming a

regional headquarters site and research and development hub for electronic

products. Singapore is also making a major push in ICs. Future plans include the

building of more than 20 wafer fabrication facilities, and the government is

soliciting investments from multinational semiconductor companies, including

Intel Corp. These fabrication facilities would compete with assembly plants

85

operating in the region and would likely lead to a reduction in U.S. exports to the

assembly plants.
 Keith B. Richburg, The Washington Post, “Thailand’s Go-Go Economy Stopped Cold by 86

Dramatic Downturn,” Aug. 10, 1997, p. A19.

 Examples of the effects of Thailand’s financial crisis include Texas Instruments pulling out of an 87

$1.2 billion Alpha-TI DRAM project when funds could not be raised. The pull out revealed that the

fabrication complexes in Thailand owed their U.S. suppliers $200 million. 

 Lapedus, Section: News, “Can Bangkok Control Crisis?,” Electronic Buyers’ News, July 28, 88

1997, found at http://techweb.cmp.com/ebn/942/outlook6.html, retrieved Aug. 27, 1997.

2-26

• Thailand’s current financial crisis, attributed to an over reliance on credit, changing

trends in the regional economy, and the uncertain policies of two successive

governments, could adversely impact future U.S. investment in semiconductor

86

production-sharing arrangements. Reportedly, Thailand now faces at least 2

87

years of austerity policies that could inhibit production in the electronics sector.88

 

Gail Burns

(202) 205-2501

burns@usitc.gov 
 Motor vehicles and related equipment discussed in this chapter include motor vehicles, ignition 1

wiring harnesses, motor vehicle parts, and internal combustion engines.

3-1

CHAPTER 3

KEY INDUSTRY DEVELOPMENTS

IN 1996

This chapter highlights the product sectors in which the U.S. content (duty-free) portion of

production-sharing trade entered under the production-sharing provisions (PSP) of HTS Chapter

98 equaled or exceeded $500 million in 1996 and/or where a significant change (at least 20

percent) occurred in the level of such imports. The analysis for each product sector examines:

(1) the significance of the product and its markets; (2) important shifts in trade that occurred

in 1996; (3) reasons that these products are involved in production sharing; and (4) the impact

of production sharing on the competitiveness of U.S. producers with respect to these products.

The major product sectors in this chapter include apparel, motor vehicles and related

equipment, and electronic products (figure 3-1). In 1996, increased imports of apparel under 1

HTS PSP from Mexico and the Caribbean Basin, as well as strong growth in Mexican assembly

of motor vehicles, television receivers, medical goods, and measuring instruments, offset a

decline in production-sharing provision imports of semiconductors from Southeast Asia and

computers, computer peripherals, and parts mainly from Japan (tables 1-4 and B-5).

Apparel

U.S. imports of apparel under the production-sharing provisions of HTS Chapter 98 increased

by 14 percent in 1996 over the 1995 level to $8.8 billion. With overall U.S. imports of apparel

increasing by just 5 percent in 1996, the share accounted for by HTS PSP trade rose from 14

percent in 1993 to 21 percent in 1996. The U.S. content contained in such imports increased

by 16 percent in 1996 to $5.5 billion.

The growth of U.S. imports under the production-sharing provisions is attributed largely to a

competitive retail environment and the U.S. apparel producers’ need to cut costs to remain

competitive. Apparel is suited to production sharing because of high U.S. duty rates and the

high proportion of duty-free U.S. components in apparel entering under HTS PSP. The tradeweighted duty on apparel in 1996 averaged 16.7 percent ad valorem, compared with about 3

percent for other products. The duty savings in the apparel sector under HTS PSP totaled $1.1

billion, or 53 percent of total duty savings for all products entered under these provisions (table

B-17). The value of U.S. components contained in apparel imports entered
 The CBERA, enacted in 1984, grants duty-free entry to most goods from 24 beneficiary 2

countries. However, most apparel are statutorily excluded from CBERA. For further information on

CBERA, see USITC, Caribbean Basin Economic Recovery Act & Andean Trade Preference Act:

Impact on the United States, CBERA: Twelfth Report, 1996 (investigation No. 332-227); ATPA:

Fourth Report 1996 (investigation No. 332-352), USITC publication 3058, Sept. 1997.

3-2

Figure 3-1

U.S. content of U.S. imports for consumption under the production-sharing

provisions (PSP) of HTS Chapter 98; by selected product sectors, 1993 and 1996

under the HTS PSP accounted for 62 percent of the total value of such imports in 1996,

compared with only 31 percent for all other products. 

Apparel imports under HTS PSP come almost entirely from Mexico and countries designated

as beneficiaries of the Caribbean Basin Economic Recovery Act (CBERA) (table 3-1). Mexico 2

and CBERA countries compete with one another for assembly work from U.S. apparel firms.

They offer inexpensive labor to perform labor-intensive sewing operations, and their proximity

to the United States provides U.S. firms with greater management and production control,

shorter lead times, and lower transportation costs than would Asian operations. As a result,

overall apparel imports from Mexico and CBERA countries together grew by 20 percent in

1996 over the 1995 level, to $9.7 billion, compared with a 2-percent increase in apparel imports

from all other, mostly Asian, suppliers. Apparel imports from Mexico and CBERA countries

that entered under the HTS PSP accounted for $8 billion, or 83 percent, of their total apparel

shipments in 1996 (table 3-1). U.S. apparel firms supplied
3-3

Table 3-1

Apparel: U.S. imports for consumption, total and under the production-sharing provisions (PSP)

of HTS Chapter 98, by principal suppliers (based on the value of U.S. components contained in

HTS PSP imports in 1996), 1993-961

(Million dollars)

Country 1993 1994 1995 1996

Total imports

Mexico ....................................... 1,225 1,696 2,658 3,663

Dominican Republic ............................. 1,435 1,593 1,744 1,762

Honduras ..................................... 506 645 919 1,220

Costa Rica .................................... 653 685 756 706

Jamaica ...................................... 388 454 531 505

El Salvador .................................... 251 398 583 721

Guatemala .................................... 552 600 691 809

Colombia ..................................... 324 363 370 316

Haiti ......................................... 98 32 76 103

Other ........................................ 28,260 30,197 31,080 31,638

Total ...................................... 33,692 36,663 39,408 41,443

CBERA countries ............................... 4,002 4,525 5,455 6,039

HTS PSP imports

Mexico ....................................... 1,067 1,523 2,331 3,033

Dominican Republic ............................. 1,212 1,377 1,565 1,601

Honduras ..................................... 332 451 675 970

Costa Rica .................................... 543 587 670 646

Jamaica ...................................... 313 371 448 437

El Salvador .................................... 185 303 477 588

Guatemala .................................... 424 450 520 579

Colombia ..................................... 221 251 271 212

Haiti ......................................... 93 30 74 96

Other ........................................ 463 493 727 683

Total ...................................... 4,853 5,836 7,758 8,845

CBERA countries ............................... 3,165 3,632 4,508 5,008

U.S. content of HTS PSP imports

Mexico ....................................... 739 1,063 1,637 2,120

Dominican Republic ............................. 810 878 989 1,009

Honduras ..................................... 233 325 479 688

Costa Rica .................................... 375 387 443 444

Jamaica ...................................... 249 299 363 350

El Salvador .................................... 103 160 260 332

Guatemala .................................... 219 218 258 275

Colombia ..................................... 115 145 169 123

Haiti ......................................... 63 22 51 67

Other ........................................ 96 110 116 118

Total ...................................... 3,002 3,607 4,765 5,526

CBERA countries ............................... 2,090 2,328 2,888 3,215

Imports exclude nonwoven (disposable) apparel. 1

Source: Compiled from official statistics of the U.S. Department of Commerce.
 For further information on these U.S. trade programs, see USITC, Production Sharing: Use of 3

U.S. Components and Materials in Foreign Assembly Operations, 1991-94, USITC publication

2966, May 1996, p. 5-5. 

 The United States currently has GALs and regular quotas with six CBERA countries—Costa 4

Rica, the Dominican Republic, El Salvador, Guatemala, Honduras, and Jamaica. For every $10 in

f.o.b. value, a typical CBERA garment entered under the HTS PSP contains $6.40 in duty-free U.S.

parts and $3.60 in dutiable, foreign value-added. Applying the 1996 trade-weighted tariff for apparel

of 16.7 percent to the foreign value-added yields an average duty of $0.60, or an ad valorem

equivalent of 6.0 percent. 

3-4

components valued at $5.3 billion to Mexico and CBERA countries in 1996, representing an

increase of 18 percent over the 1995 level. 

The rapid growth in HTS PSP shipments to the United States followed the institution of the

special access program for CBERA countries in 1986 and the special regime for Mexico in

1988. These programs provide guaranteed access to the U.S. market for apparel assembled in

Mexico and the participating CBERA countries from “fabric wholly formed and cut in the

United States.” However, the competitive balance has shifted in favor of Mexico since the

3

North American Free-Trade Agreement (NAFTA) went into effect in 1994. In the 3 years

before NAFTA became effective, U.S. apparel imports from Mexico and the CBERA countries

under the HTS PSP rose at similar rates of around 30 percent per year. However, during the 3-

year period since NAFTA went into effect, apparel imports from Mexico under the HTS PSP

accelerated by an average annual rate of 42 percent, while those from CBERA countries rose

by an average annual rate of 17 percent. In 1996, the value of apparel imports from CBERA

countries entered under the HTS PSP and the value of U.S. content in such imports each

increased by only 11 percent—the lowest increase since 1990. By contrast, HTS PSP apparel

imports and the U.S. content in such imports from Mexico each rose by 30 percent in 1996. At

the same time, imports of apparel from Mexico that were entered under NAFTA but not

simultaneously declared eligibile under the HTS PSP doubled, increasing their share of total

apparel imports from Mexico to 16 percent (table 3-2). This increase in “NAFTA only”

imports may reflect greater use of Mexican-made fabric in apparel production in Mexico, as

post-NAFTA investments in textile mills in Mexico have begun to come on line.

The accelerated growth of Mexican apparel shipments under the production-sharing provisions

of HTS Chapter 98 relative to those of CBERA countries since 1994 is attributed largely to

preferential tariffs accorded under NAFTA to Mexican goods. Apparel assembled in Mexico

from “fabric wholly formed and cut in the United States” enter free of duty and quota under

NAFTA, whereas such garments from CBERA countries enter under guaranteed access levels

(GALs) but are subject to duty on the value added offshore. In 1996, apparel that was

4

assembled in Mexico from fabric wholly formed and cut in the United States and entered the

United States duty-free under the NAFTA provision represented 88 percent of the total import

value of apparel from Mexico. The growth in imports from Mexico was also stimulated by the

devaluation of the Mexican peso during December 1994-January 1995, which effectively

reduced assembly costs of garments in Mexico, and provided competitive advantages for U.S.

firms engaged in production-sharing operations in Mexico. Rising costs
 Rising labor costs have placed Costa Rica at a competitive disadvantage relative to Mexico and 5

Honduras. See ch. 2 of this report and ch. 2 of U.S. International Trade Commission, Caribbean

Basin Economic Recovery Act/Andean Trade Preference Act: Impact on the United States - 1996,

USITC publication 3058, Sept. 1997.

 For further discussion of NAFTA parity, see USITC, Production Sharing: Use of Components 6

and Materials in Foreign Assembly Operations, 1991-94, (Investigation No. 332-237), USITC

publication 2966, May 1996, p. 5-6.

 The legislation would provide NAFTA-like preferential tariff treatment to all textile and apparel 7

articles that originate in the territory of a participating CBERA country and are imported into the

United States, including NAFTA equivalent duty-free treatment to any textile or apparel article that is

assembled and imported from the CBERA countries from fabrics wholly formed and cut in the United

States and entered under the HTS PSP. In addition, the legislation would establish tariff preferential

levels (TPLs) for participating CBERA countries comparable to the levels established for Mexico

with respect to any textile or apparel article that is imported into the United States and that does not

qualify as an originating good from the territory of a CBERA country. U.S. apparel firms with

production-sharing arrangements in the CBERA countries contend that TPLs are essential in

(continued...)

3-5

Table 3-2

Apparel: Total U.S. imports, U.S. imports from NAFTA partners, and imports from Mexico under

NAFTA and the production-sharing provisions (PSP) of HTS Chapter 98, 1995 and 1996

Source of imports 1995 1996 1995-96 1995-96

Change in

value Change 

)))))))))) Million dollars )))))))))) Percentage

Mexico:

Total HTS PSP (including simultaneous 

imports under NAFTA):

 U.S. content ............................ 1,637 2,120 483 30

Value added ............................ 694 913 219 32

Total ................................ 2,331 3,033 702 30

NAFTA only ..............................

1

298 598 300 101

Subtotal (NAFTA and/or HTS PSP) ......... 2,629 3,631 1,002 38

Other .................................... 29 32 3 10

Total .................................. 2,658 3,663 1,005 38

Canada ...................................

2

893 1,085 192 22

All other ................................... 35,857 36,695 838 2

Total .................................... 39,408 41,443 2,035 5

 Excludes imports declaring eligibility simultaneously under both NAFTA and HTS PSP. 1

 Most imports from Canada enter free of duty and customs user fees under NAFTA. A significant share of imports of 2

manufactured goods from Canada are believed to incorporate various amounts of U.S.-origin components or metals. 

Such imports have an incentive to enter under HTS PSP only when use of non-North American components and

materials disqualifies the goods from eligibility to enter under NAFTA rules of orgin.

Note.—Because of rounding, figures may not add to the totals shown.

Source: Compiled from official statistics of the U.S. Department of Commerce. 

in certain CBERA countries have further contributed to faster growth in imports from Mexico

than from CBERA countries.5

Legislation was introduced in the 104th Congress to provide “NAFTA parity” for textiles and

apparel from CBERA countries, as well as certain other articles presently not eligible for

preferential treatment under the CBERA; however, the legislation was not passed during the

104th Congress. Similar legislation (HR 2644 and S 1278) has been introduced in the 105th 6

Congress. The U.S. apparel and textile industries are divided on various provisions of the

7
 (...continued) 7

providing flexibility to use cost-competitive, non-NAFTA materials and in balancing their needs with

the capabilities of CBERA countries. 

 “Trade Bills Would Boost NAFTA Parity for Caribbean,” The Miami Herald, distributed by 8

Knight-Ridder/Tribune Business News, received by NewsEdge/Web, July 6, 1997.

 Ibid. 9

 Standard Allowed Hour (SAH) is that amount of direct labor time (hours) that is allowed for a 10

trained operator to complete an operation, or series of operations. For example, if 200 operators are

scheduled to work 45 hours a week, for a total of 9000 hours a week, and they produce 14,376 dozens

of crewneck T-shirts per week, the SAH per dozen is 0.63. In other words, one direct operator takes

0.63 hour to produce a dozen crewneck T-shirts, the manufacturing cost of which can be calculated

based on the hourly compensation of such operator. 

 Kurt Salmon Associates (KSA), Atlanta, GA. The 1996 report on “Today’s Apparel 11

Manufacturing Costs,” by KSA included United States, Hong Kong, Costa Rica, Thailand, Mexico,

and China. 

 For further information on SAH by selected countries, see USITC, Production Sharing: Use of 12

U.S. Components and Materials in Foreign Assembly Operations, 1992-1995 (investigation No.

332-237), USITC publication 3032, Apr. 1997.

3-6

proposed legislation. A number of companies oppose extending unilateral trade benefits to any

nation without negotiating reciprocal market access for U.S. goods. U.S. textile manufacturers

oppose the legislation with respect to granting trade preferences to apparel made from textiles

woven in the Caribbean Basin. The American Apparel Manufacturers Association opposes the 8

administration’s proposal (HR 2096 and S 984) because it includes conditions on labor and

environment. As of December 1997, NAFTA parity legislation had not been enacted. 9

Major HTS Chapter 98 sources of apparel

Mexico is the largest single-country source of U.S. apparel imports under the productionsharing provisions of HTS Chapter 98 (table 3-1). In addition to preferential tariff treatment

for its goods under NAFTA, Mexico has benefited from the significant devaluation of the peso

relative to the dollar, which has lowered its labor costs as measured in dollars. The average

apparel manufacturing cost per standard allowed hour (SAH) for Mexico in 1996 ($6.00) was 10

just over one-third of that for the United States ($16.56). Mexico’s average SAH cost was 11

lower than that of Costa Rica ($7.74), the third-largest CBERA supplier of apparel. Of the six

major apparel suppliers studied, only China’s average SAH ($5.09) was lower than that of

Mexico. 

12

The Werner International Management Consultants recently conducted a cost analysis of

producing a shirt in selected countries. Among the four countries studied, the United States has

the highest cost structure (from raw material to made-up shirt), followed by Mexico,
 Werner International Management Consultants, “Dynamics of Far Eastern Markets and Impact 13

of Needle Migration to Latin/Central/South America”, May 21, 1997, prepared for Textile Analysts

Group 1997 Mid-Year Conference by Mary T. O’Rourke, Vice President, Werner International, Inc.

The study included cost analysis to produce a shirt in the United States, Mexico, India, and Thailand

and in a production-sharing operation between the United States and Mexico. 

3-7

Thailand, and India. However, production sharing between the United States and Mexico

13

would make the production cost very competitive with other countries, as shown in table 3-3.

.

Table 3-3

Shirts: Comparative production costs, by location

(Dollars)

Cost items USA Mexico India Thailand USA/Mexico

Manufacturing cost of shirt fabric .............. 2.37 2.21 2.09 2.13 2.37

Sales and administrative cost of fabric ......... 0.17 0.15 0.15 0.15 0.17

Profit .................................... 0.25 0.24 0.22 0.23 0.25

Total fabric cost of shirt .................. 2.79 2.60 2.46 2.51 2.79

Production cost of shirt from fabric ............ 4.73 2.16 1.80 2.13 2.16

Sales and administrative cost ................ 0.25 0.19 0.21 0.23 0.25

Profit .................................... 0.78 0.50 0.45 0.49 0.52

Total f.o.b. cost of shirt .................. 8.55 5.44 4.91 5.36 5.72

Cost of importing .......................... 0 1.22 2.18 2.21 0.47

Cost of shirt to retailer ...................... 8.55 6.66 7.09 7.57 6.19

Source: Werner International Management Consultants, New York, “Dynamics of Far Eastern Markets and Impact of

Needle Migration to Latin/Central/South America,” May 21, 1997.

U.S. components used in Mexican apparel assembly operations accounted for 38 percent of the

total U.S. content in all apparel imports under the production-sharing provisions in 1996 (figure

3-2). Among CBERA countries, Honduras and El Salvador increased the use of U.S.

components in their production-sharing operations to 13 percent and 6 percent, respectively.

A large part of the increase in U.S. content from Mexico, Honduras, and El Salvador is believed

to have come at the expense of the Dominican Republic and Costa Rica, both of which lost

shares between 1993 and 1996 (see ch. 2—The Caribbean Basin). 

Growth of production sharing by product category

U.S. imports of apparel under the HTS PSP now account for an important and growing share

of U.S. producers’ shipments in almost all apparel product categories (table 3-4). The volume

of imports and import growth have been especially significant in products such as underwear,

pajamas and other nightwear, shirts and blouses, and trousers. Although the HTS PSP import

share of U.S. producers’ shipments declined in foundation garments, imports still made up over

two-thirds of producers’ shipments of foundation garments, primarily brassieres.
Dom. Republic

Mexico 27

25

El Salvador

3

Costa Rica

12

Jamaica

8

Honduras

8

Guatemala

7

All other

11

Mexico

38

Dom. Republic

18

Honduras

12

Costa Rica

8

Jamaica

6

El Salvador

6

Guatemala

5

All other

7

 Fruit of the Loom is planning to lay off a total of 4,800 people in its move to relocate labor- 14

intensive sewing jobs overseas to its production-sharing operations in Mexico with a view to cut costs

and remain competitive. The Journal of Commerce, “Fired Garment Workers to be Retrained,” Aug.

13, 1997. 

3-8

Figure 3-2

Apparel: Share of U.S. content provided by major suppliers of imports under the production-sharing

provisions (PSP) of HTS Chapter 98, 1993 and 1996

(Percentage)

 1993 1996

 Total $3.0 billion Total $5.5 billion

Source: Compiled from official statistics of the U.S. Department of Commerce.

Imports of underwear under the production-sharing provisions of HTS Chapter 98 accounted

for nearly two-thirds of U.S. producers’ shipments in 1996, compared with nearly one-half in

1995. This rapid growth is largely the result of keen price competition in the mass-merchandise

market for these low-value-added products. Although the assembly of underwear involves

relatively few steps, considerable financial incentive exists in assembling underwear offshore

given the quantities involved. The U.S. content in underwear imported under the HTS PSP 14

rose by 18 percent in 1996 to $859 million.

Shirts, blouses, and trousers, more than any other apparel products, showed the greatest growth

in the provisions of HTS Chapter 98 imports in 1996. The share supplied by imports under

these provisions as a percentage of producers’ shipments in these products nearly doubled

between 1993 and 1996 (table 3-4). The assembly of these products is labor intensive and

involves standardized runs, simple tasks, and few styling changes, which tend to encourage

production sharing. Although the share supplied by HTS PSP imports of U.S. producers’
3-9

shipments of shirts and blouses doubled during 1993-96, such imports accounted for only 17

percent of total U.S. imports of shirts and blouses in 1996, largely reflecting the continued

competitiveness of Asian suppliers in the U.S. market. The U.S. content in shirts and blouses

showed the largest increase of all apparel products, increasing by 30 percent in 1996 (and by

164 percent during 1993-96) to $1.4 billion. Trousers were the largest apparel item entered

under HTS PSP at $3 billion in 1996; such trade represented 38 percent of total U.S. imports

of trousers. The U.S. content in trousers rose by 15 percent in 1996 to $1.8 billion.

Imports of dresses, skirts, and babies’ apparel also grew rapidly under the HTS PSP. The share

supplied by HTS PSP imports of U.S. producers’ shipments in all these products more than

doubled during 1993-96, with the majority of the growth occurring in 1996 (table 3-4).

Sundar A. Shetty

(202) 205-3486

Shetty@usitc.gov
3-10

Table 3-4

Selected apparel products: U.S. producers’ shipments and imports for consumption under the

production-sharing provisions (PSP) of HTS Chapter 98, 1993-96

(1,000 dozen)

Item 1993 1994 1995 1996 1 2

Shirts and blouses:

U.S. producers’ shipments .................... 159,415 162,559 159,385 160,949 3 3 3 3

HTS PSP imports .......................... 16,920 22,170 25,152 49,903

Percentage share ........................... 10.6 13.6 15.8 31.0

Trousers and shorts:

U.S. producers’ shipments .................... 93,976 95,791 97,241 92,255

 HTS PSP imports .......................... 25,175 29,551 22,864 42,051

Percentage share ........................... 26.8 30.8 23.5 45.6

Coats and jackets:

U.S. producers’ shipments .................... 9,773 9,766 9,618 9,400

 HTS PSP imports .......................... 2,329 2,312 2,335 2,991

Percentage share ........................... 23.8 23.7 24.3 31.8

Foundation garments (mainly brassieres):

U.S. producers’ shipments .................... 26,185 29,101 33,123 29,249

HTS PSP imports .......................... 19,942 20,309 23,956 19,874

Percentage share ........................... 76.2 69.8 72.3 67.9

Underwear:

U.S. producers’ shipments .................... 169,402 168,642 154,253 150,505

HTS PSP imports .......................... 42,067 55,994 74,813 98,755

Percentage share ........................... 24.8 33.2 48.5 65.6

Pajamas and other nightwear:

U.S. producers’ shipments .................... 10,370 10,215 9,142 6,999

 HTS PSP imports .......................... 2,940 3,086 3,126 4,137

Percentage share ........................... 28.4 30.2 34.2 59.1

Swimwear:

U.S. producers’ shipments .................... 4,996 4,441 4,370 4,451

HTS PSP imports .......................... 555 ( ) 824 1,130 4

Percentage share ........................... 11.1 ( ) 18.9 25.4 4

Dresses:

U.S. producers’ shipments .................... 14,781 16,542 17,339 15,232

HTS PSP imports .......................... 897 ( ) 1,544 2,549 4

Percentage share ........................... 6.1 ( ) 8.9 16.7 4

Skirts:

U.S. producers’ shipments .................... 7,943 8,036 7,432 6,985

HTS PSP imports .......................... 1,136 ( ) 1,302 1,961 4

Percentage share ........................... 14.3 ( ) 17.5 28.1 4

Babies’ apparel: 

U.S. producers’ shipments .................... 13,259 12,952 13,192 12,640

HTS PSP imports .......................... 3,832 ( ) 5,247 7,185 4

Percentage share ........................... 28.9 ( ) 39.8 56.8 4

 Revised. 1

 Preliminary. 2

 Estimated by USITC staff based on data published by the U.S. Bureau of the Census in the Current Industrial 3

Reports for apparel.

 Not available. 4

Source: U.S. Department of Commerce, Bureau of the Census, Current Industrial Reports: Apparel Summary for 1996

(MQ23A), July 3, 1997, and back issues, except as stated. 

Motor Vehicles and Related Equipment
 Includes motor vehicles, motor-vehicle parts, internal combustion piston engines, and wiring 15

harnesses for motor vehicles.

 Canada is probably the leading production-sharing partner with the United States in this sector. 16

Because motor vehicles and related equipment from Canada are eligible for duty-free treatment under

NAFTA and the Automotive Products Trade Act of 1965 (APTA), there is little incentive to enter

such trade under HTS Chapter 98, even though it involves production sharing. The preponderance of

imports from Canada in the motor vehicle sector have traditionally entered the country under

provisions of the APTA. However, beginning in 1995, imports have increasingly entered the country

under NAFTA instead of APTA. In 1995, NAFTA imports from Canada accounted for 53 percent of

total sector imports from Canada, and in 1996, this percentage rose to 77 percent. In 1994, NAFTA

imports accounted for just 17 percent of total motor vehicle imports from Canada, with APTA

accounting for 82 percent.

 The state of the Mexican economy is currently being debated by experts. Some argue that 17

indicators such as increasing real GDP, improving rates of employment in some regions, and

declining interest rates demonstrate that the Mexican economy is beginning to emerge from the 1995

recession. Others, however, cite increasing violence in urban centers and 1996 domestic demand

continuing below 1994 levels as indicators that the economy has not recovered. Tim Coone,

“Mexico: Uneven Growth,” Latin Trade, Nov. 1996, p. 12; Hall, Kevin G., “Study: Mexico Losing

Appeal to Investors,” The Journal of Commerce, Nov. 4, 1996, p. 3A; and Malkin, Elisabeth, “Bang! 

Bang! Welcome to Mexico,” Business Week, Oct. 14, 1996, p. 58.

 Andrew H. Card, Jr., President and CEO, American Automobile Manufacturers Association, 18

statement before the U.S. International Trade Commission in connection with investigation No. 332-

381, The Impact of the North American Free-Trade Agreement on the U.S. Economy and Industries: 

A Three-Year Review, May 16, 1997.

3-11

In 1996, Mexico was the leading source for U.S. imports of motor vehicles and related

equipment reported under the production-sharing provisions (PSP) of HTS Chapter 98, both 15

in terms of the total value and the value of the U.S.-origin components incorporated during the

assembly process. The value of the U.S.-made components, $5.2 billion, accounted for 57

16

percent of the value of total imports under HTS PSP. In contrast, U.S. components accounted

for less than 2 percent of the HTS PSP imports from Japan and Germany. The use of a

substantial amount of U.S.-made parts in Mexican motor vehicle and component systems

operations reflects the significant and growing integration of the U.S. and Mexican motor

vehicle industries.

Much of Mexico’s output of automotive products is produced by subsidiaries of U.S. firms and

exported to the United States. The Mexican operations of the U.S. Big Three (GM, Ford, and

Chrysler) shifted a considerable amount of their production for the local market to export

production in 1995 in response to the December 1994 peso devaluation and the weak

automotive market in Mexico. This trend continued in 1996, bolstered by a strong automotive 17

market in the United States. A U.S. industry source reports that a leading cause of increased

U.S. vehicle imports from Mexico is the enormous U.S. demand for GM, Ford, and Chrysler

vehicles. This source states that many U.S. facilities have been operating at capacity to meet

U.S. demand, and that production at Mexican facilities has helped to fill that demand. As a 18

result, total imports from Mexico rose by 27 percent to $19.7 billion in 1996. Total NAFTA

imports of these products from Mexico rose by 44 percent, while total HTS Chapter 98 imports

rose by 11 percent. This reflects the trend toward importing motor vehicles and related
 As discussed in ch. 1, many firms have an incentive to import articles assembled in Mexico both 19

under NAFTA and under the production-sharing provisions of HTS Chapter 98.

 Association of International Automobile Manufacturers (AIAM), Inc., written submission to 20

USITC, Sept. 20, 1996, p. 7.

 Includes automobiles, trucks, buses, and bodies and chassis of the foregoing. 21

 Automotive News, 1997 Market Data Book, (MI: Crain Communications, 1997), various pages. 22

 Almost all (97 percent) imports of motor vehicles from Mexico entering under the HTS PSP in 23

1996 also entered under NAFTA (table B-5). See ch. 1 for an explanation of the incentives to enter

articles under both provisions simultaneously. Imports entered under only the provisions of NAFTA

likely contain a significant amount of U.S. content, but this value is not reported.

 U.S. Department of Commerce, International Trade Administration, Office of Automotive 24

Affairs, “The Road Ahead,” found at http://www.ita.doc.gov/industry/basic/97road.html, retrieved

July 8, 1997.

3-12

equipment under NAFTA instead of under HTS Chapter 98. Industry sources note that “with 19

the implementation of NAFTA...many U.S. importers abandoned their HTS 9802 programs in

Mexico in lieu of the more favorable and often less onerous regulatory requirements of

NAFTA.”20

Motor Vehicles21

The United States is the world’s largest consumer and producer of motor vehicles. In 1996,

U.S. sales of cars and trucks totaled 15.1 million units, accounting for 29 percent of global

sales. U.S. car and truck production reached 11.7 million units in 1996, accounting for 21

percent of global production. Light trucks, which are responsible for most of the value of the 22

U.S. content in the production-sharing provisions of HTS Chapter 98 imports, accounted for 23

44 percent of the total U.S. market for passenger vehicles in 1996, with the U.S. Big Three

(GM, Ford, and Chrysler) controlling over 86 percent of that segment in the United States.24

Canada, Japan, and Mexico together accounted for 83 percent of total U.S. imports of motor

vehicles in 1996. Whereas the use of U.S.-made parts in imports of Japanese motor vehicles

is small, U.S.-made parts account for a significant portion of the value of vehicles imported

from Canada and Mexico. However, most of these vehicles enter free of duty under NAFTA

rather than the HTS PSP.

The use of production-sharing provisions by the motor vehicle sector is part of the broader trend

toward the internationalization of motor vehicle production. The U.S. motor vehicle industry,

in particular GM and Ford, has relied heavily on foreign manufacturing and assembly

operations, in part because it is more cost effective to manufacture and/or assemble vehicles in

major markets, rather than to export vehicles from the United States.

Total U.S. imports of motor vehicles rose by 23 percent during 1993-95, to $84.4 billion (table

3-5). In contrast, total imports under the provisions of HTS Chapter 98 declined by 26 percent,

to $18.7 billion for the same period, largely reflecting the reduction of the user fee on NAFTAeligible imports from Canada to zero on January 1, 1994, removing the incentive to use the HTS

PSP when importing vehicles from Canada. While total imports grew by 4 percent from 1995

to 1996, to $87.4 billion, imports under HTS PSP climbed by 25 percent (to $23.3 billion) as

vehicles from U.S.-owned assembly plants in Mexico increased their share of the U.S. market
 Automotive News, 1997 Market Data Book (MI: Crain Communications, 1997), p. 27. Of the 25

five non-U.S. automakers producing in Mexico—BMW, Honda, Mercedes-Benz, Nissan, and

Volkswagen—only Nissan and Volkswagen produce for export to the United States. These

automakers likely use some U.S.-origin auto parts in such vehicles.

 Guillermo Lira, “Mexico Sales Up, But Far Below ‘94,” Automotive News, Mar. 17, 1997, 26

p. 20D.

 Automotive News, 1997 Market Data Book (MI: Crain Communications, 1997), p. 27. 27

 According to Mexican finance ministry officials, the on-going recovery in the Mexican economy 28

has enabled foreign-owned auto assembly plants to sell an increasing share of their production to the

Mexican market in 1997, reducing the share of production that is exported. Consequently, the growth

rate in U.S. imports of motor vehicles from Mexico dropped from 40 percent in 1995-96 to 2 percent

during January-August of 1996-97.

3-13

(figure 3-3 and table 3-5). HTS PSP imports accounted for 27 percent of total motor vehicle

imports in 1996, up from 22 percent in 1995, and U.S.-origin components accounted for a $2.7

billion (11-percent) share of such imports. Imports under HTS PSP are principally comprised

of passenger cars, while duty-free U.S. content is highest for light trucks.

Imports from Mexico have consistently had the highest amount of U.S. content of all foreign

sources in imports of motor vehicles under the HTS PSP. In 1996, the U.S. content in motor

vehicle imports from Mexico under the provisions of HTS Chapter 98 totaled $2.3 billion,

accounting for 87 percent of the total U.S. content of motor vehicle imports from all sources

under the such provisions (figure 3-4). U.S. Big Three production in Mexico accounts for 70

percent of total Mexican car and truck production, and most of that production is exported

25

back to the United States. The Mexican operations of the U.S. Big Three shifted a considerable

amount of their production for the Mexican market to export production in 1995 in response to the

December 1994 peso devaluation that weakened the automotive market in Mexico. This trend continued

in 1996, bolstered by a strong automotive market in the United States. While Mexican motor vehicle

sales increased by 80 percent in 1996, Mexican industry officials estimate that the market will not return

to pre-peso devaluation levels until 2000. U.S. Big Three production for export was 63 percent of total 26

Mexican production in 1994, 88 percent in 1995, and 84 percent in 1996. The significant and growing 27

integration between the U.S. and Mexican motor vehicle industries is reflected in the use of a substantial

amount of U.S.-made parts in Mexican operations.

Total imports of motor vehicles from Mexico increased by 40 percent during 1995-96 , with 28

imports entering under the production-sharing provisions of HTS Chapter 98 rising by 51

percent and NAFTA importsthat did not also enter under the HTS PSP (labeled “NAFTA only”

in table 3-6) climbing by 53 percent. Imports under the HTS PSP accounted for 39 percent of

total motor vehicle imports from Mexico in 1996. U.S. content in HTS PSP imports, which

decreased in 1995, rose by 38 percent in 1996 to $2.3 billion. U.S.-made parts are believed to

continue to account for a significant portion of the total parts used in the assembly of vehicles

in Canada and Mexico, even for those no longer entered under the provisions of HTS Chapter

98.
1993 1994 1995 1996

0

20

40

60

80

100

Billions

Source: Based on official statistics of the U.S. Department of Commerce.

 Total U.S. Imports U.S. imports under HTS PSP U.S. content under HTS PSP 

3-14

Figure 3-3

Motor vehicles: Total U.S. imports under the production-sharing provisions (PSP) of HTS Chapter

98, and U.S. content under HTS PSP, 1993-96

Table 3-5

Motor vehicles: U.S. imports for consumption, total, under the production-sharing provisions (PSP)

of HTS Chapter 98, U.S. content, and percentage shares, 1993-96

Year imports HTS PSP HTS PSP

Total U.S. HTS PSP under total under 

 imports

U.S. content HTS PSP share of 

share of total

imports

U.S. content 

)))))))))))))) Million dollars ))))))))))))) ))))))))) Percentage )))))))))

1993 ................ 68,607 25,337 2,331 37 9

1994 ................ 79,240 23,095 2,234 29 10

1995 ................ 84,384 18,659 2,046 22 11

1996 ................ 87,366 23,322 2,657 27 11

Source: Compiled from official statistics of the U.S. Department of Commerce.
3-15

Source: Based on official statistics of the U.S. Department of Commerce.

Figure 3-4

Motor vehicles: U.S. content of imports under the production-sharing provisions (PSP) of HTS

Chapter 98, 1996

 (Percentage)

Table 3-6

Motor vehicles: Total U.S. imports, U.S. imports from NAFTA partners, and from Mexico under

NAFTA and the production-sharing provisions (PSP) of HTS Chapter 98, 1995 and 1996

Source of imports 1995 1996 1995-96 1995-96

Change in value Change

))))))))))))) Million dollars )))))))))) Percentage

Mexico:

HTS PSP1

 U.S. content ....................... 1,676 2,310 634 38

Value added ....................... 1,329 2,229 900 68

Total ........................... 3,005 4,539 1,534 51

NAFTA only 4,505 6,883 2,378 53 2

Subtotal (NAFTA and/or HTS PSP) ... 7,510 11,422 3,912 52

Other ............................... 877 292 -585 -67

Total ........................... 8,388 11,714 3,326 40

Canada ..............................

3

33,277 33,727 450 1

All other .............................. 42,719 41,926 -793 -2

Total ............................... 84,384 87,367 2,983 4

 Encompasses imports that entered under both HTS PSP and NAFTA. 1

Excludes imports declaring eligibility simultaneously under both NAFTA and HTS PSP. 2 

Most imports from Canada enter free of duty and customs user fees under NAFTA. A significant share of imports of manufactured goods from Canada are 3 

believed to incorporate various amounts of U.S.-origin components or metals. Such imports have an incentive to enter under HTS PSP only when use of nonNorth American components and materials disqualifies the goods from eligibility to enter under NAFTA rules of origin.

Note.—Because of rounding, figures may not add to the totals shown.

Source: Compiled from official statistics of the U.S. Department of Commerce.

The Mexican motor vehicle industry consists principally of U.S., German, and Japanese-owned

facilities that assemble vehicles largely from imported parts or parts assembled in the
 Global Trade Information Services, World Trade Atlas: Mexico Edition, 1993-96, Preliminary,

29

Columbia, SC, 1997.

3-16

maquiladora industry. U.S. automakers account for 70 percent of total Mexican car and truck

production. In addition to expanding their exports of motor vehicles to the United States during

1993-96, the Big Three auto producers have increased their use of assembly plants in Mexico

to supply markets in Central and South America where products from Mexico often receive

preferential treatment with regard to tariff and/or nontariff trade barriers. Mexico’s exports of

vehicles to other Latin American countries rose by an average of 44 percent annually during

1993-96, compared with a 41-percent average annual increase in exports to the United States.

Mexico’s exports of motor vehicles to Central and South America reached $915 million in

1996, accounting for 7 percent of Mexico’s total sector exports; exports to the United States

accounted for 83 percent ($11.2 billion). Principal Latin American markets for Mexican motor

vehicles exports in 1996 included Chile ($255 million), Brazil ($201 million), and Argentina

($129 million).29

Japan accounted for 4 percent of the total U.S. content in motor vehicle imports under the HTS

PSP from all sources in 1996 (table 3-7), regaining its position as the second-leading source of

such imports. The value of U.S. content in motor vehicle imports from Japan under productionsharing provisions rose by 11 percent, from $98 million in 1995 to $109 million in 1996. This

increase was significant in light of the fact that total motor vehicle imports from Japan

decreased by 7 percent in 1996. U.S. content in motor vehicles imported from Japan under the

HTS PSP is found primarily in passenger car imports.

Table 3-7

Motor vehicles: U.S. content in imports to the United States under the production-sharing provisions

(PSP) of HTS Chapter 98, by principal sources, 1993-96

(Million dollars)

Source/country 1993 1994 1995 1996

Mexico ................................................ 1,758 1,768 1,676 2,310

Japan ................................................. 237 164 98 109

Germany ............................................... 59 89 118 106

United Kingdom ......................................... 31 34 35 51

Canada ................................................ 185 125 64 23

Sweden ............................................... 26 14 17 20

Belgium ............................................... 7 13 17 20

All other ............................................... 28 27 20 17

Total ............................................... 2,331 2,234 2,046 2,657

Note.—Because of rounding, figures may not add to the totals shown.

Source: Compiled from official statistics of the U.S. Department of Commerce.
 According to a member survey conducted by the Japan Auto Parts Industry Association, reverse 30

imports from the United States will outperform equivalent domestically-produced components when

the exchange rate is ¥91.6 to the dollar. Darrell Moran, “Despite ‘Hollowing Out’ Anxiety, Parts

Makers Move Offshore at Record Pace,” The Japan Automotive Digest, Jan. 27, 1997, p. 7. 

 U.S. parts exports to Japan were double the level recorded in 1992. Office of the United States 31

Trade Representative, “USTR Barshefsky and Commerce Secretary Daley Commend Progress But

Voice Concern Over Deregulation Issues in U.S.-Japan Automotive Agreement,” press release issued

Apr. 18, 1997. 

 "Japan’s U.S. Auto Part Imports Set Record in Fiscal Year 1996,” BNA International Trade 32

Daily, Article No. 41891005, July 8, 1997.

 The types of U.S.-origin parts most frequently employed by motor vehicle producers in Japan 33

include catalytic converters and leather seat covers.

 For a more detailed discussion of conditions in the German auto industry, see Production 34

Sharing: Use of U.S. Components and Materials in Foreign Assembly Operations, 1992-95, USITC

publication 3032, Apr. 1997, p. 3-9.

 Mary Beth Sheridan, “For Mexico, NAFTA Means That Giant Job-Plucking Sound,” received 35

by NEWSEDGE/LAN, Dec. 6, 1996.

3-17

The Japanese industry has extensive automotive parts production facilities in the United States,

from which some components are sourced for motor vehicle assembly in Japan. In addition, 30

Japanese motor vehicle producers have been under intense political pressure to increase their

purchases of U.S.-made parts for motor vehicle assembly in Japan. According to the third U.S.-

Japan Automotive Agreement Monitoring Report, exports of U.S.-made automotive parts to

Japan rose to $2.0 billion in 1996, an increase of 20 percent from 1995. An official of the

31

Japan Automobile Manufacturers Association reported that this increase is attributable, at least

in part, to increased “design-in” arrangements between Japanese manufacturers and U.S.

suppliers, in which both parties work together on parts design beginning at the blue print

stage. There is no U.S.-based motor vehicle manufacturing in Japan; imports under the

32

production-sharing provisions of HTS Chapter 98 are entirely attributable to assembly by

Japanese manufacturers, who use a very limited number of U.S.-made parts.33

Although total vehicle imports and imports under the provisions of HTS Chapter 98 from

Germany rose in 1996, the value of the U.S. content in total motor vehicle imports from

Germany under such provisions fell by 10 percent to $106 million. U.S. content increased

steadily before 1996 as a result of heightened demand for German-made motor vehicles in the

United States, and increased purchases of U.S. components by German motor vehicle

manufacturers prompted by various industry and macroeconomic conditions. Similarly, U.S. 34

exports of automotive parts to Germany had been rising steadily for years before dropping off

by 3 percent to $896 million in 1996. Although the U.S. content decline was not a significant

shift in terms of value, this trend reversal in 1996 may be attributed to increased sourcing by

German automakers of parts from third markets such as Mexico. Some 80 German auto parts

firms have reportedly established Mexican production bases in recent years to enable

Volkswagen to meet NAFTA rules of origin requirements for duty-free treatment. With

production of the new Beetle, Volkswagen reportedly expects another 40 firms to set up

operations in Mexico.35 U.S. content is found primarily in passenger car imports from

Germany. 

Although light trucks accounted for just 13 percent of total HTS PSP imports in 1996, gasolinepowered light trucks contained the largest share, and diesel-powered light trucks the thirdlargest share, of U.S. content in total motor vehicle imports under such provisions (figure 3-5).
 Automotive News, 1997 Market Data Book (MI: Crain Communications, 1997), p. 27. 36

3-18

These two categories accounted for a combined 66 percent of the total value of U.S. content in

total HTS 9802 imports in 1996. U.S. automakers, which account for over 90 percent of the

light truck production in Mexico, realize a significant duty advantage from HTS PSP when

36

exporting these trucks to the United States. The value of U.S.-origin parts used in the assembly

of these vehicles is high, and is not subject to duty under the provisions in HTS Chapter 98.

This resulted in an applied tariff rate on light trucks lower than the already reduced rate of 5

percent ad valorem for Mexico in 1996. By contrast, U.S. imports of light trucks from Japan,

which generally contain few U.S. parts, are assessed a duty of 25 percent ad valorem. 

Figure 3-5

Leading motor vehicle products, total imports under HTS heading 9802.00.80 and U.S. content of

imports under HTS 9802.00.80, 1996

Laura Polly

(202) 205-2408

polly@usitc.gov
 Although the data in this commodity grouping cover all insulated electrical conductors, the 37

majority of total U.S. imports (62 percent), HTS PSP imports (86 percent), and U.S. content of those

imports (85 percent) in 1996 were of ignition wiring sets. The only other notable product categories

that were involved in production-sharing operations during 1993-96 were insulated conductors of 80

volts or less, and conductors of from 81 volts to 1,000 volts, both of which were fitted with electrical

connectors. 

 Ignition wiring harnesses are assemblies of multiple insulated electrical conductors that have 38

been fitted with assorted terminals, plugs, connectors, sockets, and other wiring devices. They are

used to connect various electrical components (e.g., lights, instruments, and motors) to a power

source (typically batteries and generators), and/or to carry high-voltage currents between selected

starting and ignition components (such as starters, generators, coils, distributors, and spark plugs) in

motor vehicles, aircraft, and ships. Most motor vehicles contain several harness assemblies, the most

notable of which are those for the engine compartment and the instrument panel. Harnesses are also

fabricated for door panel, passenger compartment, and rear light assembly applications. 

 Although these assemblies may be used in aircraft or ships, such applications do not currently 39

represent a significant portion of either U.S. industry shipments or international trade.

 In 1996, 14.1 million cars and trucks were produced in the United States and Canada; 16.6 40

million vehicles were produced in Europe; 17.5 million in the Asian Pacific region; and 3.6 million in

Latin America (including Mexico). Automotive News, 1997 Market Data Book, May 28, 1997, pp.

12 and 14.

 The operations that are typically performed offshore by U.S.-based suppliers include one or 41

more of the following: affixing assorted electrical terminal connectors to the ends of color-coded

electrical or signal wire; bundling or pairing the terminated conductors through the use of wiring

“trees” or other harness forming apparatus; wrapping or otherwise jacketing the assembled harnesses;

and performing limited finishing operations such as testing and labeling. The U.S.-origin components

that are most often consumed in the production of wiring harnesses are bulk electrical or signal wire,

electrical terminal and connector components, and jacketing materials (electrical tape and flexible

conduit). Based principally upon information obtained by staff of the USITC as the result of tours of

maquiladora facilities of major harness manufacturers conducted during Sept. 1996 in Juarez,

Mexico.

3-19

Ignition Wiring Harnesses 37

Ignition wiring harnesses are one of the leading products assembled in Mexico’s maquiladora

industry, accounting for 9 percent of the value of the U.S. components in all imports under the

production-sharing provisions (PSP) of HTS Chapter 98 in 1996, and 13 percent of the U.S.

content in such imports from Mexico. The production of ignition wiring harnesses is related 38

almost exclusively to new, original equipment manufacture (OEM) motor-vehicle assembly

operations worldwide. Over 90 percent of these devices are constructed for OEM applications,

with the remainder being consumed in the automotive replacement aftermarket. The global 39

design and production of ignition wiring harnesses (sets) mirrors that for motor vehicles, and

are closely managed to assure an uninterrupted flow of sets into the vehicle manufacturing

process. The assembly of ignition wiring sets typically involves numerous product line

40

changeovers to accommodate a wide variety of motor-vehicle model and accessory packages.

In addition, the final assembly process incorporates a myriad of intricate and complex

operations that are not economically or practically feasible to automate. As a result, over 90 41

percent of the wiring sets that are consumed in U.S. motor vehicle assembly operations are

assembled in countries with low labor costs. This labor-cost advantage, coupled with its

geographic proximity to the United States and business relationships with the Big Three U.S.

automakers, has made Mexico the leading foreign location for the assembly of ignition wiring
 Although no official data for the value of apparent U.S. consumption of wiring harnesses exists, 42

owing to the assimilation of these articles in the final assembly process for motor vehicles, a

reasonable estimate of this value can be derived by multiplying an estimated average unit value of

between $325 to $350 per vehicle by annual U.S. motor-vehicle production, which amounted to 11.7

million units in 1996. 

3-20

harnesses. In 1996, estimated U.S. consumption of ignition wiring harness was between $3.8

billion and $4.1 billion.42

Two U.S.-owned and two foreign-owned multinational companies are responsible for supplying

a major portion of the ignition wiring sets that are consumed in the North American market.

The strength of these companies in the region is derived principally from their long-term

subsidiary relationships with major U.S. and foreign vehicle manufacturers. These firms

account for an estimated 60 percent of the global market for wiring harnesses. All have set up

operations for the final assembly of wiring harnesses in Mexico as well as other foreign

locations (in particular, the Philippines, Thailand, and Taiwan) to better supply their worldwide

markets and strengthen their competitive positions in the North American market.

The trend in imports of wiring harnesses reflected the strong growth in U.S. production of motor

vehicles during 1993-96. Total imports and imports under the production-sharing provisions

of HTS Chapter 98 grew at comparable rates (67 and 68 percent, respectively) during the period,

with over half of all imports of wiring harnesses entering under the HTS PSP (table 3-8). The

value of the U.S. components contained in these HTS PSP imports grew by $195 million (11

percent) between 1995 and 1996, to $2.0 billion (61 percent of the total value of these imports)

(table 3-9).

Table 3-8

Ignition wiring harnesses: U.S. imports for consumption, total, under the production-sharing

provisions (PSP) of HTS Chapter 98, U.S. content, and percentage shares, 1993-96

Year imports HTS PSP HTS PSP

Total U.S. HTS PSP under total under 

 imports

U.S. content HTS PSP share of 

share of total

imports

U.S. content

)))))))))))))) Million dollars ))))))))))))) )))))))))) Percentage ))))))))

1993 ................ 3,564 1,979 1,122 56 57

1994 ................ 4,810 2,858 1,617 59 57

1995 ................ 5,398 3,080 1,843 57 60

1996 ................ 5,935 3,332 2,038 56 61

Source: Compiled from official statistics of the U.S. Department of Commerce.
 The growing complexity of automotive electrical systems has increased the number of functions 43

within the vehicle for which wiring harnesses are required, as well as the value of the wiring

harnesses required in each vehicle. As a result, the value of wiring harness imports increased in 1996

even though the total number of vehicles produced fell slightly. 

 See the explanation of “Customs Incentives for Entry Under HTS 9802 and NAFTA” on 44

p. 1-2.

3-21

Table 3-9

Ignition wiring harnesses: U.S. content in imports to the United States under the production-sharing

provisions (PSP) of HTS Chapter 98, by principal sources, 1993-96

(Million dollars)

Source/country 1993 1994 1995 1996

Mexico ................................................. 1,055 1,554 1,758 1,969

Philippines .............................................. 32 29 54 33

Thailand ................................................ 0 8 9 9

China .................................................. 0 0 4 6

All other ................................................ 35 24 18 21

Total ................................................ 1,122 1,615 1,843 2,038

Note.—Because of rounding, figures may not add to the totals shown.

Source: Compiled from official statistics of the U.S. Department of Commerce.

Mexico was once again the pre-eminent foreign assembly source of U.S. imports of ignition

wiring harnesses under the HTS PSP, accounting for 91 percent ($3.0 billion) of total imports

under such provisions in 1996 (table 3-10). The value of imports from Mexico under HTS PSP

rose by $267 million (10 percent), principally in response to relatively strong U.S. motor vehicle

sales, the continued expansion of U.S.- and foreign-owned production operations in Mexico, and

the increased complexity of wiring harnesses required for each new vehicle produced. The

43

U.S.-origin components contained in these imports rose`by $211 million (12 percent) to $2.0

billion in 1996 and accounted for 65 percent of the value of the HTS PSP entries from Mexico

(table 3-10). Imports under the HTS PSP accounted for 84 percent of the wiring harnesses

imported from Mexico under the combined provisions of HTS Chapter 98 and NAFTA in

1996. The bulk of the $591 million in imports entering under NAFTA, but not the provisions 44

of HTS Chapter 98, is believed to be assembled from U.S.-made components.

The only other significant foreign sources of U.S. production-sharing imports of wiring

harnesses in 1996 were the Philippines and Thailand. Thailand has only recently emerged as

an important supplier to the U.S. market, due to the establishment of wiring harness facilities

by major Japanese manufacturers as an adjunct to their U.S. and global assembly operations.

Major global automakers have rapidly expanded production capacity in Thailand to keep up

with growing demand for vehicles there and in other Far Eastern and world markets. This

expansion has indirectly created economies of scale for manufacturers of wiring sets in

Thailand, where wage rates remain low relative to those in other newly industrialized countries

in the region. As a result, U.S. imports of ignition wiring harnesses from Thailand have

partially displaced higher cost products from Taiwan. Most wiring harnesses assembled in the

Philippines and Thailand enter the United States free of duty under the Generalized System of

Preferences (GSP) instead of under the provisions of HTS Chapter 98. Total imports of
 Jorge Riberio, “Asian Focus,” Wire Journal International, May 1997, p. 8. 45

3-22

Table 3-10

Ignition wiring harnesses: Total U.S. imports, U.S. imports from NAFTA partners, and imports from

Mexico under NAFTA and the production-sharing provisions (PSP) of HTS Chapter 98, 1995 and

1996

Source of imports 1995 1996 1995-96 change 1995-96

Change in value Percentage

))))))))))) Million dollars )))))))))))) Percentage

Mexico:

HTS PSP1

 U.S. content .......................... 1,758 1,969 212 12

Value added .......................... 1,009 1,065 56 6

Total .............................. 2,767 3,034 267 10

NAFTA only 446 591 145 32 2

Subtotal (NAFTA and/or HTS PSP) ....... 3,213 3,625 412 13

Other .................................. 114 136 22 19

Total ................................ 3,327 3,761 434 13

Canada .................................

3

403 433 30 7

All other ................................. 1,668 1,741 73 4

Total ................................ 5,398 5,935 535 10

 Encompasses imports that are entered under both HTS PSP and NAFTA. 1

Excludes imports declaring eligibility simultaneously under both NAFTA and HTS PSP. 2 

Most imports from Canada enter free of duty and customs user fees under NAFTA. A significant share of imports of 3 

manufactured goods from Canada are believed to incorporate various amounts of U.S.-origin components or metals. 

Such imports have an incentive to enter under HTS PSP only when use of non-North American components and

materials disqualifies the goods from eligibility to enter under NAFTA rules of origin.

Note.—Because of rounding, figures may not add to the totals shown. 

Source: Compiled from official statistics of the U.S. Department of Commerce.

wiring harnesses from Thailand rose by 9 percent to $208 million in 1996, while those from the

Philippines fell by 19 percent to $234 million.

The use of ignition wiring harness assembly plants in Mexico has enabled U.S. producers to

maintain their price competitiveness with respect to imports from Thailand, the Philippines, and

China, the last of which was the leading non-production-sharing supplier of wiring harness

imports to the U.S. market in 1996. Total harness imports from China rose by 11 percent

during 1996 to $364 million. U.S. imports from China under the HTS PSP have risen from

$18,000 in 1993 to $20 million ($6 million of which were of duty-free U.S. content) in 1996.

In addition, Sumitomo of Japan recently announced plans to establish a joint venture with at

least two other Chinese companies to produce wire harness parts in Tianjin, China. The

45

plant’s output will likely be consumed domestically by Chinese automakers. In addition, it

currently appears that the ignition wiring harness industry in China is not yet sufficiently

developed to pose a significant competitive challenge to current suppliers to the U.S. market.

John Cutchin

(202) 205-3396

cutchin@usitc.gov
 Certain motor-vehicle parts include bumpers, safety seat belts, brakes, gear boxes, axles, road 46

wheels, suspension shock absorbers, radiators, exhaust systems, clutches, steering equipment, double

flanged wheel hub units, airbags, half-shafts, drive shafts, and parts of the foregoing. For purposes of

this analysis, ball and roller bearings are also included. Primary motor-vehicle parts that are not

covered in this analysis include engines and engine parts, seats, fuel pumps, catalytic converters,

meters, automotive storage batteries, lighting equipment, and ignition wiring harnesses. The parts

covered by this analysis account for approximately 70 percent of all automotive parts production.

 Subsidiaries of the Big Three are gaining greater independence, however, and are being 47

encouraged to pursue sales beyond their traditional clients. General Motors’ Delphi Automotive

Systems, for example, has recently taken steps to expand its customer base outside General Motors,

and may be spun off as an independent company. Ford’s Automotive Products Operations has been

reorganized, in part to better compete in the new global parts supply market.

 According to the Association of International Automobile Manufacturers (AIAM), the use of 48

HTS heading 9802.00.80 understates the value of U.S. components incorporated in foreign assembly

operations because of a variety of factors, including extensive and poorly defined documentation

requirements, inconsistent interpretation and documentation requirements, restrictions against the

commingling of U.S. and foreign components, and the use of NAFTA and GSP provisions. The

AIAM states that, as a result, “many of the major importers which have historically used 9802 have

either temporarily suspended or permanently terminated all or part of their 9802 programs....” 

Statement submitted by AIAM in connection with investigation No. 332-237, Production Sharing:

Use of U.S. Components and Materials in Foreign Assembly Operations, 1992-95, Sept. 20, 1996.

 Importers of articles that are otherwise free of duty continue to have an incentive to declare 49

eligibility for entry under HTS heading 9802.00.80. Under that provision, the U.S.-origin content of

such imports is exempt from the Customs user fee of 0.17 percent ad valorem, with a maximum fee of 

$400 per entry. Under the NAFTA, the user fee was phased out entirely on imports from Canada as

of Jan. 1, 1994, and imports from Mexico will be subject to the user fee until June 30, 1999, at which

(continued...)

3-23

Certain Motor-Vehicle Parts46

The United States is a major producer of motor-vehicle parts, accounting for an estimated onequarter ($92 billion) of the global production of these products in 1996. The U.S. motor-vehicle

parts producing industry is in the midst of considerable restructuring spurred by changing

automaker requirements, such as the shifts toward systems integration and a reduced supplier

base. To meet the global sourcing strategies of automakers, the U.S. motor-vehicle parts

industry has also accelerated its expansion into foreign markets to better serve its customers.

Although the U.S. motor-vehicle parts industry consists mostly of small producers, the leading

auto parts manufacturers are subsidiaries of the U.S. Big Three automotive producers, all of

which produce parts mainly for captive use. In general, the smaller firms in the industry

47

produce a limited number of auto parts products for niche markets, whereas the larger

independent and captive suppliers make a wide range of products for different market segments.

Systems integration is contributing to ongoing industry consolidation, however, as larger

component manufacturers in particular pursue mergers with, and acquisitions of, suppliers of

complementary technologies or components to enhance their automotive systems capabilities.

As automakers demand cost reductions from their parts suppliers, production sharing has been

integral to U.S. parts makers’ competitive strategy in lowering production costs. However, the

use of HTS heading 9802.00.80 will likely decline because of increased use of NAFTA and 48

the elimination of the customs user fee. Other automotive industry developments likely to be 49
 (...continued) 49

time the fee will be eliminated. See app. A for additional information about the Customs user fee.

 This term refers to the use of common parts across an automaker’s various platforms. 50

 This category includes, but is not limited to, plastic brake hoses, double flanged wheel hub units 51

not incorporating ball bearings, slide-in campers, radiator cores, and cable traction devices.

3-24

more critical than the use of tariff preferences to U.S. parts makers’ operating strategies include

efforts to improve productivity and cost effectiveness; the capability to supply complete

automotive systems; component commonality; increased globalization and outsourcing by U.S. 50

automakers; the ability to assume more responsibility in areas such as financing and research

and development; and greater technological innovation.

During 1995-96, U.S. imports of certain motor-vehicle parts under the production-sharing

provisions of HTS Chapter 98 rose by 4 percent to $1.9 billion and the value of U.S.-origin

components contained in imports under such provisions increased by 10 percent to $905

million, reversing declines in both measures posted during 1993-95 (table 3-11). The recovery

of the Mexican economy and the automotive sector, the expansion of the Mexican auto parts

industry, and the continued strength of the U.S. automotive market were largely responsible for

this growth. U.S.-origin components accounted for 48 percent of the value of auto parts

imported under the HTS PSP in 1996, with safety seat belts, miscellaneous parts and

accessories, and airbag inflators and modules representing about 84 percent of the value of

51

U.S. content.

Table 3-11

Certain motor-vehicle parts: U.S. imports for consumption, total, under the production-sharing

provisions (PSP) of HTS Chapter 98, U.S. content, and percentage shares, 1993-96

Year imports HTS PSP HTS PSP

Total U.S. HTS PSP under total under 

imports

U.S. content HTS PSP share of 

share of total

imports

U.S.content

)))))))))))))) Million dollars ))))))))))))))) )))))))))Percentage ))))))))

1993 ................. 15,760 2,265 1,243 14 55

1994 ................ 17,387 2,023 1,005 12 50

1995 ................ 17,818 1,808 825 10 46

1996 ................ 18,393 1,875 905 10 48

Source: Compiled from official statistics of the U.S. Department of Commerce.

Mexico was the leading supplier of motor-vehicle parts imported under HTS PSP during 1995-

96, in part because of its proximity to the U.S. market, lower wage rates, and integration into

the North American automotive industry. The value of auto parts imports from Mexico under

these provisions increased by 6 percent in 1996 to $1.5 billion, and U.S.-origin components rose

by 9 percent to $887 million (table 3-12). NAFTA provisions, however, have become

increasingly more significant to U.S.-Mexican trade flows. Ninety-one percent of imports of

certain auto parts from Mexico under the provisions of HTS Chapter 98 also entered under

NAFTA (table B-5). Whereas auto parts imported under the HTS PSP exhibited 6-percent

growth to $1.5 billion during 1995-96, “NAFTA only” imports rose by 44 percent to $909

million (table 3-13). Imports under NAFTA that were not also declared eligible for entry under

HTS PSP increased their share of total imports from Mexico to 36 percent, whereas imports

under HTS PSP accounted for 60 percent.
3-25

Table 3-12

Certain motor-vehicle parts: U.S. content in imports to the United States under the production-sharing

provisions (PSP) of HTS Chapter 98, by principal sources, 1993-96

(Million dollars)

Source/country 1993 1994 1995 1996

Mexico ................................................ 1,164 977 811 887

Canada ................................................ 68 11 3 8

All other ............................................... 11 17 11 10

Total ............................................... 1,243 1,005 825 905

Note.—Because of rounding, figures may not add to the totals shown.

Source: Compiled from official statistics of the U.S. Department of Commerce.

Table 3-13

Certain motor-vehicle parts: Total U.S. imports, U.S. imports from NAFTA partners, and imports

from Mexico under NAFTA and the production-sharing provisions (PSP) of HTS Chapter 98, 1995

and 1996

Source of imports 1995 1996 1995-96 1995-96

Change in value Change 

))))))))))) Million dollars ))))))))))) Percentage

Mexico:

HTS PSP1

 U.S. content ......................... 811 887 76 9

Value added ......................... 630 636 6 1

Total ............................. 1,441 1,523 82 6

NAFTA only ...........................

2

633 909 276 44

Subtotal (NAFTA and/or HTS PSP) ...... 2,074 2,432 358 17

Other ................................. 129 101 -28 -22

Total ............................... 2,203 2,533 330 15

Canada ................................

3

6,537 6,917 380 6

All other ................................ 9,078 8,943 -135 -1

Total ................................. 17,818 18,393 575 3

 Encompasses imports that are entered under both HTS PSP and NAFTA. 1

Excludes imports declaring eligibility simultaneously under both NAFTA and HTS PSP. 2 

Most imports from Canada enter free of duty and customs user fees under NAFTA. A significant share of imports of 3 

manufactured goods from Canada are believed to incorporate various amounts of U.S.-origin components or metals. Such

imports have an incentive to enter under HTS PSP only when use of non-North American components and materials

disqualifies the goods from eligibility to enter under NAFTA rules of origin.

Note.—Because of rounding, figures may not add to the totals shown.

Source: Compiled from official statistics of the U.S. Department of Commerce.
3-26

Imports from Mexico accounted for 98 percent of the total value of U.S.-origin components

used in the production-sharing provisions of HTS Chapter 98 assembly of certain motor-vehicle

parts in 1996 (tables B-3 and B-5). U.S. components accounted for 58 percent of the value in

sector imports from Mexico under HTS PSP in 1996, with safety seat belts and miscellaneous

parts and accessories accounting for 80 percent of total U.S. origin. TRW, Inc., Breed

Technologies, and AlliedSignal Automotive, as well as a new market entrant, Takata Corp.

(Japan), manufacture safety seat belts in Mexico for the North American market.

Canada was the second-leading source of U.S. content in imports under HTS PSP in 1996, with

a 3-fold increase from the 1995 level to $8.2 million. U.S.-origin components accounted for 24

percent of the value of auto parts imports ($33.8 million) under such provisions in 1996, with

brakes and brake parts and miscellaneous parts and accessories representing 87 percent of U.S.

content. Because of the extensive integration of the Canadian and U.S. automotive industries

since the mid-1960s resulting from the implementation of the U.S.-Canadian Auto Pact, Canada

is the leading U.S. trading partner for motor-vehicle parts. Canadian parts manufacturers, the

Big Three, and other foreign car makers and parts producers manufacture components in

Canada for use in North American vehicle production, and rationalize output of this production

to suit individual company needs. Although U.S. imports of certain motor-vehicle parts from

Canada are believed to incorporate a significant level of U.S.-origin components, the bulk of

such parts imports do not enter under the provisions of HTS Chapter 98.

Deborah A. McNay

(202) 205-3425

mcnay@usitc.gov
 These segments include marine propulsion engines, spark-ignition reciprocating piston engines 52

for motor vehicles, rotary internal combustion piston engines for motor vehicles, and compressionignition internal combustion engines (diesel or semidiesel) for motor vehicles, and parts thereof.

3-27

Internal Combustion Engines

The internal combustion engine segment of the U.S. motor-vehicle parts industry is highly

concentrated, with the Big Three (Chrysler, Ford, and General Motors) and foreign-owned

transplant automakers accounting for the majority of U.S. production of an estimated $43

billion in 1996. The engine sector is highly integrated throughout North America because of

the dominance of these automakers in the region, with production rationalized according to

company needs. As part of the larger automotive industry, this sector is also subject to many

of the same trends influencing the direction of motor-vehicle parts production, such as

globalization and outsourcing. Parts (other than cast iron) for diesel and internal combustion

engines and gasoline-powered engines of a cylinder capacity exceeding 2000cc for motor

vehicles are the leading industry segments, accounting for 55 percent of all internal combustion

engine imports under HTS 9802.00.80 in 1996.52

U.S. imports of internal combustion engines reported under the production-sharing provisions

of HTS Chapter 98 declined by 63 percent from the previous year total to $318 million in 1996,

representing 3 percent of total U.S. imports of internal combustion engines (table 3-14). The

value of U.S.-origin components contained in HTS PSP imports fell by 73 percent during the

period to $73 million, accounting for 23 percent of the total value of internal combustion

engines imported under such provisions. The declines recorded in 1996 are in marked contrast

to steady increases in both measures reported during 1993-95, and are primarily attributable to

a significant shift in reporting imports from Mexico under NAFTA rather than HTS Chapter 98.

Table 3-14

Internal combustion engines: U.S. imports for consumption, total, under the production-sharing

provisions (PSP) of HTS Chapter 98, U.S. content, and percentage shares, 1993-96

Year imports HTS PSP HTS PSP

Total U.S. HTS PSP under total under 

imports

U.S. content HTS PSP share of 

share of total

imports

U.S.content

))))))))))))))) Million dollars )))))))))))))) )))))))) Percentage ))))))))

1993 ................. 6,623 629 122 10 19

1994 ................. 7,798 771 177 10 23

1995 ................. 8,863 858 272 10 32

1996 ................. 9,914 318 73 3 23

Source: Compiled from official statistics of the U.S. Department of Commerce.

Mexico remained the leading source of U.S. content in imports of internal combustion engines

under the HTS PSP in 1996, despite registering an 83-percent decline to $104 million in sector

imports under the provisions of HTS Chapter 98 during 1995-96. The value of U.S. content in

engine imports from Mexico under HTS PSP exhibited a comparable decline—78

percent—during the period to $55 million (table 3-15). Whereas the share of total imports of

internal combustion engines from Mexico accounted for by imports under HTS PSP dropped

from 39 percent in 1995 to 6 percent in 1996, the share accounted for by imports under NAFTA

that were not simultaneously declared eligible under the HTS PSP grew from 46 percent to 74
3-28

percent. “NAFTA only” imports increased by 74 percent during this 2-year period, totaling

$1.3 billion in 1996 (table 3-16). In particular, imports of internal combustion engines with a

cylinder capacity over 2000cc, the largest import category in 1995, exhibited a notable shift to

NAFTA from HTS PSP in 1996. There were no U.S. imports of these engines reported under

HTS PSP from Mexico in 1996 compared to the previous year’s total of $481 million, whereas

“NAFTA only” imports grew by 72 percent to $714 million during the same period. 

Table 3-15

Internal combustion engines: U.S. content in imports to the United States under the productionsharing provisions (PSP) of HTS Chapter 98, by principal sources, 1993-96

(Million dollars)

Source/country 1993 1994 1995 1996

Mexico .................................................. 91 144 253 55

Germany ................................................. 19 25 10 12

Japan ................................................... 5 5 6 4

All other ................................................. 6 2 3 0

Total ................................................. 122 177 272 73

Note.—Because of rounding, figures may not add to the totals shown.

Source: Compiled from official statistics of the U.S. Department of Commerce.

Table 3-16

Internal combustion engines: Total U.S. imports, U.S. imports from NAFTA partners, and imports

from Mexico under NAFTA and the production-sharing provisions (PSP) of HTS Chapter 98, 1995

and 1996

Source of imports 1995 1996 1995-96 1995-96

Change in value Change 

)))))))))))) Million dollars )))))))))))) Percentage

Mexico:

HTS PSP1

 U.S. content ......................... 253 55 -198 -78

Value added ......................... 375 49 -326 -87

Total ............................. 628 104 -524 -83

NAFTA only ...........................

2

733 1,275 542 74

Subtotal (NAFTA and/or HTS PSP) ...... 1,361 1,379 18 1

Other ................................. 245 334 89 36

Total ............................... 1,606 1,713 107 7

Canada ................................

3

1,829 2,572 743 41

All other ................................ 5,428 5,629 201 4

Total ............................... 8,863 9,914 1,051 12

Encompasses imports that are entered under both HTS PSP and NAFTA. 1 

Excludes imports declaring eligibility simultaneously under both NAFTA and HTS PSP. 2 

Most imports from Canada enter free of duty and customs user fees under NAFTA. A significant share of imports of 3 

manufactured goods from Canada are believed to incorporate various amounts of U.S.-origin components or metals. 

Such imports have an incentive to enter under HTS PSP only when use of non-North American components and

materials disqualifies the goods from eligibility to enter under NAFTA rules of origin.

Note.—Because of rounding, figures may not add to the totals shown.

Source: Compiled from official statistics of the U.S. Department of Commerce.

Germany was the second-leading source of U.S. content in internal combustion engine imports

under HTS PSP, with a 12-percent increase from the 1995 level to nearly $12 million in 1996;

this corresponded with a 10-percent growth in overall sector imports under these provisions.

Germany initially emerged as a major U.S. supplier of engines with the start-up of BMW’s

assembly facility in South Carolina, which incorporates German engines in its U.S.-made

vehicles. In an effort to reduce production costs, German automakers, as well as foreign
 U.S. Department of State, Market Research Report, Germany - Automotive Parts and Services,

53

Frankfurt, June 1, 1996, ISA 960601.

3-29

automakers with German operations, have also increased their purchases of parts from U.S.

component manufacturers.53

Deborah A. McNay

(202) 205-3425

mcnay@usitc.gov
 Electronic products include office machines; telephone and telegraphic apparatus including 54

optical fiber; microphones, loudspeakers, and audio amplifiers; tape recorders and players; video

cassette recorders and compact disc players; recorded and unrecorded media; radio transmission and

reception apparatus; television receivers (video monitors, cathode-ray tubes, and other special

purpose tubes); television apparatus (cameras, camcorders, and cables); electric sound and visual

signaling apparatus and other electrical and electronic articles; computer hardware; and electronic

components such as semiconductors, capacitors, printed circuit boards, and connectors. Medical

equipment includes medical and optical goods. Precision manufactures include photographic

equipment and supplies; watches and clocks; balances, surveying/navigational instruments, and

drawing/mathematical and calculating instruments; and measuring and testing instruments (meters).

 For example, according to semiconductor industry representatives, imports of semiconductors 55

reported under HTS PSP understate imports from production-sharing operations by at least half. 

Imports under HTS PSP accounted for 22 percent of total U.S. imports of semiconductors in 1996.

3-30

Electronic Products, Medical Equipment, and Precision

Manufactures54

U.S. producers of electronic products, medical equipment, and precision manufactures (as a

group, referred to as electronic products) continued to shift labor-intensive operations to regions

with lower labor costs to remain price competitive in the global marketplace. U.S. imports of

electronic products increased by $4.1 billion (2 percent) in 1996 to $180.5 billion, accounting

for 23 percent of total U.S. imports. Imports of electronic products entered under the

production-sharing provisions of HTS Chapter 98 increased by $142.6 million (1 percent) to

$18.8 billion and accounted for 28 percent of all imports under the HTS PSP. The U.S.-origin

content in HTS PSP imports of electronic products rose by $60.0 million (1 percent) to

$8.3 billion.

A significant portion of U.S. imports of electronic products is believed to be imported from

production-sharing operations (and contain U.S.-made components) but is not entered under

HTS PSP. The elimination of duties or duty exemption under the GSP, NAFTA, and the

55

Uruguay Round of GATT removed much of the incentive for importers to report productionsharing imports under HTS PSP. As a result, statistics on imports under these provisions reflect

those production-sharing operations for which U.S. import duties and/or customs user fees still

apply.

The principal supplier countries of electronic products to the United States under the

production-sharing provisions of HTS Chapter 98 were Mexico, Malaysia, the Philippines, and

Korea, which together accounted for 76 percent of total U.S. sector imports. The principal

electronic products entered under HTS PSP were semiconductor devices, television receivers

(including picture tubes and other electron tubes), and electrical circuit apparatus, which

together accounted for 68 percent of all electronic products imported under HTS PSP in 1996.
 Semiconductor Industry Association (SIA), World Semiconductor Forecast, 1996-1999 (San 56

Jose, CA: SIA, May 1996), p. 26; and Integrated Circuit Engineering (ICE), Bill McLean, ed., MidTerm 1996, A Report on the Integrated Circuit Industry (Scottsdale, AZ: ICE, 1996), p. 1-18.

 USITC staff estimates based on Yearbook of World Electronics Data, 1996, Vol. 2, America, 57

Japan, and Asia Pacific, Elsevier Science Ltd., Apr. 1996, pp. 229-236; and Semiconductor

Industries Association (SIA), Chip Industry Statistics: World Market Sales and Shares 1991-1996,

found at http://www.semichips.org/indstats/shares.htm, retrieved July 17, 1997.

 Industry representatives, telephone interviews by USITC staff, Sept.-Oct. 1996 and July 22-24, 58

1997. According to the market research firm Integrated Circuit Engineering, U.S. semiconductor

producers account for over a quarter of the value of world semiconductor fabrication but less than 10

percent of the value of world semiconductor assembly.

 McLean, ed., Mid-Term 1996, p. 5-37. 59

3-31

Semiconductor Devices

Semiconductor devices are one of the most significant articles of U.S. international trade,

accounting for 5 percent of total U.S. imports in 1996 and 17 percent of the value of U.S.

components in production-sharing imports reported under the production-sharing provisions

of HTS Chapter 98. Semiconductor devices are integral components in nearly all electronic

products including computers, communications equipment, and automotive and consumer

electronics. Semiconductors can be divided into three categories: discretes, integrated circuits

(ICs), and hybrids, with ICs constituting roughly 90 percent of the value of U.S. production and

trade. Despite a significant decline in the U.S. and global semiconductor markets in 1996, the 56

United States remains the world’s largest consumer and one of the largest producers of

semiconductor devices. U.S. production in 1996 was approximately $40 billion with a domestic

market of approximately $48 billion. The U.S. semiconductor industry is comprised of

57

hundreds of firms, including Intel, Motorola, Texas Instruments (TI), Advanced Micro Devices

(AMD), IBM, and Micron Technology. According to industry representatives, all but one of

the major U.S. semiconductor manufacturers are engaged in production-sharing arrangements.58

Semiconductors are particularly well suited to production sharing because of the two easily

delineated stages involved in the manufacturing process. These two stages are commonly

referred to as fabrication and assembly/test. The fabrication stage is extremely capital intensive

and is conducted in the United States. Fabrication involves the repeated use of expensive

lithography and implantation equipment to transfer numerous identical copies of microscopic

circuits, or semiconductors, to different locations on a circular silicon wafer. Each wafer may

contain hundreds of separate but identical semiconductors. 

At the conclusion of the fabrication process, the silicon wafers are transported abroad for the

lower technology, lower-value-added steps of assembly and testing. These steps are somewhat

more labor intensive than fabrication and often entail sawing the silicon wafers into individual

semiconductors, attaching metal leads, packaging the semiconductors in plastic or ceramic

carriers, and final testing for defects. The finished semiconductors are either returned to the 59

United States or sent to third countries. The assembly stages can be conducted by a foreign

subsidiary of the U.S. manufacturer or, as is becoming increasingly popular, by foreign contract

assemblers. Contract assemblers can be particularly useful to small and medium-sized U.S.

semiconductor fabricators that rely on the contractor’s expertise and existing infrastructure to

keep overall production costs down and retain competitiveness. Contract assemblers are

typically responsible for assembly/test research and development (R&D) and equipment and
 Lewis Young, “Business Trends,” Electronic Business Today (Colorado: Cahners Publishing, 60

May 1997), p. 28.

 Semiconductors have a high value-to-weight ratio and can be economically shipped over long 61

distances. As a result, there is little need to locate production-sharing facilities in close proximity to

fabrication plants in the United States. 

 Lapedus, “Asia’s Tigers Rule”; and Paul Hyman, “Silicon Valley, Manila-Style,”Electronic 62

Buyers’ News Daily News Digest, Sept. 25, 1996, found at Electronic Buyers’ News,

http://techweb.cmp.com/ebn/942/news0926.html, retrieved Jul. 18, 1997.

 Industry representatives, telephone interviews by USITC staff, Jul. 22-24, 1997. 63

 Ibid. 64

3-32

facility costs, allowing the U.S. fabricators to concentrate their resources on semiconductor

design and fabrication.60

With the exceptions of Canada and Mexico, most of the major participating countries engaged

in semiconductor production-sharing arrangements with the United States are located in East

Asia. The semiconductor assembly industry has largely been shifting to this region since the 61

1970s. Chief among these East Asian locations are Malaysia, the Philippines, Korea, and

Singapore. Initially, U.S. semiconductor manufacturers shipped unfinished products to these

countries to take advantage of lower labor costs in a relatively labor-intensive assembly process.

Over time, the assembly of semiconductors has become more automated, with labor comprising

lower percentages of assembly costs. Despite increased automation, the semiconductor

assembly industry has remained in East Asia in part because the industrial infrastructure,

advanced packaging technology, and experienced labor are strongly in place. However, even

with the increased levels of automation involved in assembly and test, lower-labor-cost countries

in the region such as the Philippines, China, and Indonesia are attracting a significant share of

new industry investment.62

Production sharing in the manufacture of semiconductors occurs on a very large scale. U.S.

industry representatives have conservatively estimated that the annual value of the U.S. content

of the operations may be as high as $12 billion to $15 billion. However, accurately tracking 63

the level of production sharing in semiconductors is problematic. The United States maintains

no tariff on semiconductors and, as a result, importers have very little incentive to report the

U.S. content in the HTS PSP. The principal existing incentive for entering semiconductors

under the production-sharing provisions is to receive an exemption from the Customs user fee

of 0.17 percent ad valorem on the value of the U.S. content, with a maximum fee of $400 per

shipment. However, according to industry representatives, the amount of savings from the

Customs user fee exemption frequently does not compensate for the costs of complying with

the HTS PSP documentation requirements and importers often do not use the provision. The 64

results are that both the aggregate totals for imports of semiconductors under the HTS PSP and

certain country totals likely substantially understate the actual use of production sharing, and

trends in the data reported under the HTS PSP may not accurately reflect trends in

semiconductor production sharing. 
 The lack of comprehensive production-sharing data is especially pronounced in regard to 65

Canada and Mexico, and is likely to worsen. In addition to semiconductors being free of duty, the

Customs user fee has been eliminated on all Canadian exports to the United States under the NAFTA. 

As a result, there is now no incentive for Canadian exporters to use the HTS PSP when exporting to

the United States. HTS PSP reporting from Mexico is also likely to decrease substantially in 1999

when the customs user fee is eliminated under the North American Free-Trade Agreement for U.S.

imports from Mexico (see Chapter 1).

 Representative of IBM Corp., telephone interviews by USITC staff, Jul. 23 and Aug. 8, 1997; 66

IBM Canada, “Manufacturing and Development.”http://www.can.ibm.com/about/manu/, retrieved

Jul. 9, 1997.

 The U.S. content in imports reported under the production-sharing provisions of HTS Chapter 67

98 accounted for 21 percent of all semiconductor imports from Malaysia in 1996. By contrast, the

U.S. content of imports reported in HTS PSP accounted for 28 percent of total U.S. semiconductor

imports from the Philippines; 10 percent from Korea; 0.8 percent from Japan; and 44 percent from

Mexico.

3-33

Although Canada does not appear on the list of principal sources of semiconductor imports

under the provisions of HTS Chapter 98, it is likely one of the primary production-sharing

partners of the United States. According to IBM Corp., one of the largest U.S. semiconductor 65

manufacturers, approximately 90 percent of its U.S. semiconductor production is assembled or

tested in Quebec, Canada, before being returned to the U.S. market. Canada does not have 66

a substantial semiconductor fabrication industry, and therefore, it is probable that a large share

of the value of Canadian semiconductor exports to the United States in 1996 is, in fact, U.S.

content. Total U.S. imports of semiconductors from Canada grew by 24 percent ($409 million)

in 1996 to $2.1 billion (table 3-17).

U.S. imports of semiconductor devices reported under the production-sharing provisions of HTS

Chapter 98 decreased by 5 percent in 1996 from the total for 1995, dropping to $8.2 billion

(table 3-18). Of this, $4.1 billion was U.S. content. The 5- percent decline in imports of

semiconductors reported under HTS PSP paralleled the 6-percent decrease in overall U.S.

semiconductor imports for 1996 from the previous year and the 9-percent downturn in the

global market. Malaysia is the largest supplier of semiconductors imported under the

production-sharing provisions of HTS Chapter 98. In 1996, Malaysia accounted for 27 percent

of the value of U.S. content of semiconductor imports under HTS PSP (table 3-19). Many of

the major U.S. manufacturers, including Intel, AMD, and TI, have assembly affiliates in

Malaysia. Malaysian semiconductor exports to the United States reported under HTS PSP

declined by 15 percent ($199 million) to $1.1 billion in 1996 compared with 1995, while total

Malaysian semiconductor exports to the United States grew by 0.2 percent ($12 million). The 67

reported value of the U.S. content in HTS PSP imports from Taiwan and Hong Kong also fell

in 1996: Taiwan by $60 million (16 percent) to $311 million, and Hong Kong by $50 million

(16 percent) to $260 million. By contrast, Korea experienced the most significant growth in

1996 in the reported value of the U.S. content of HTS PSP exports to the United States, with

such exports rising by $54 million (10 percent) to $614 million.
3-34

Table 3-17

Semiconductor devices: Total U.S. imports, U.S. imports from NAFTA partners, and imports from

Mexico under NAFTA and the production-sharing provisions (PSP) of HTS Chapter 98, 1995 and

1996

Source of imports 1995 1996 1995-96 1995-96

Change in value Change

))))))))))))) Million dollars ))))))))))))) Percentage

Mexico:

HTS PSP1

 U.S. content ....................... 326 352 26 8

Value added ....................... 273 237 -36 -13

Total ........................... 599 589 -10 -2

NAFTA only .........................

2

0 0 0 0

Subtotal (NAFTA and/or HTS PSP) .... 599 589 -10 -2

Other ............................... 140 209 69 49

Total ............................. 739 798 59 8

Canada ..............................

3

1,695 2,104 409 24

All other .............................. 36,733 33,869 -2,864 -8

Total ............................... 39,167 36,771 -2,396 -6

 Encompasses imports that are entered under both HTS PSP and NAFTA. 1

 Excludes imports declaring eligibility simultaneously under both NAFTA and HTS PSP. 2

Most imports from Canada enter free of duty and customs user fees under NAFTA. A significant share of imports of manufactured goods from Canada 3

are believed to incorporate various amounts of U.S.-origin components or metals. Such imports have an incentive to enter under HTS PSP only when use of nonNorth American components and materials disqualifies the goods from eligibility to enter under NAFTA rules of origin.

Note.—Because of rounding, figures may not add to the totals shown.

Source: Compiled from official statistics of the U.S. Department of Commerce.

Table 3-18

Semiconductor devices: U.S. imports for consumption, total, under the production-sharing provisions

(PSP) of HTS Chapter 98, U.S. content, and percentage shares, 1993-96

Year imports HTS PSP HTS PSP

Total U.S. HTS PSP under total under 

imports

U.S. content HTS PSP share of 

share of total

imports

U.S. content 

)))))))))))))) Million dollars ))))))))))))) )))))))))) Percentage )))))))

1993 ................ 19,466 5,051 2,715 26 54

1994 ................ 26,020 6,243 3,311 24 53

1995 ................ 39,168 8,613 4,302 22 50

1996 ................ 36,771 8,164 4,087 22 50

Source: Compiled from official statistics of the U.S. Department of Commerce.
3-35

Table 3-19

Semiconductor devices: U.S. content in imports to the United States under the production-sharing

provisions (PSP) of HTS Chapter 98, by principal sources, 1993-96

(Million dollars)

Source/country 1993 1994 1995 1996

Malaysia ............................................... 783 954 1,303 1,104

Philippines .............................................. 421 576 700 712

Korea .................................................. 396 426 560 614

Thailand ................................................ 200 306 410 389

Mexico ................................................. 224 257 326 352

Taiwan ................................................. 282 326 371 311

Hong Kong .............................................. 116 122 310 260

Singapore ............................................... 230 270 178 166

Japan .................................................. 35 45 69 70

Indonesia ............................................... 25 24 51 69

All other ................................................ 3 6 23 39

Total .............................................. 2,715 3,311 4,302 4,087

Note.—Because of rounding, figures may not add to the totals shown.

Source: Compiled from official statistics of the U.S. Department of Commerce.

The U.S. content in the PSP of HTS Chapter 98 imports from Mexico grew by $26 million (8

percent) in 1996 to $352 million (table 3-17). All imports from Mexico under NAFTA also

entered under HTS PSP. Imports under the HTS PSP accounted for 74 percent of total imports

of semiconductors from Mexico in 1996. Imports from Mexico ($798 million) accounted for

2 percent of total imports of semiconductors in 1996, while imports from Canada accounted for

6 percent. 

 

Robert Carr

(202) 205-3402

rcarr@usitc.gov
 Also includes video monitors, picture tubes, other cathode-ray tubes, magnetrons, klystrons, and 68

other electronic tubes.

 Some double counting exists in that some of the picture tubes produced in the United States are 69

consumed in the production of television receivers in the United States.

 

70 Television receivers and related equipment accounted for 9 percent of total U.S. imports from

Mexico under HTS heading 9802.00.80 in 1996, and 27 percent of the such imports of electronic

products from Mexico (table B-5).

 USITC staff telephone interview with Zenith representative, July 14, 1997. 71

 Ibid. 72

 Found at http://www.samsung.co.kr/present/learn/global2.html, retrieved July 17, 1997, 73

3-36

Television Receivers68

The United States is the world’s largest market for color television receivers (CTVs), video

monitors, cathode-ray tubes, and other electronic tubes. It is also one of the leading producers

of parts used in the assembly of televisions. U.S. shipments of these products in 1996 are

estimated at $8.5 billion, of which color television receivers and monitors accounted for

55 percent, cathode-ray tubes for 40 percent, and other electronic tubes for 6 percent. The

69

U.S. industry producing CTVs consists of 14 companies with affiliates or subsidiaries that

produce color television picture tubes (CPTs), which account for about 90 percent of all

cathode-ray tubes. Prior to the mid-1980s, the major U.S. CTV producers were also U.S.-

owned; however, within the last decade, all U.S. CTV and CPT producers were purchased by

European or Asian companies. There are about 40 U.S. producers of other electronic tubes.

Narrowing profit margins in consumer electronics have influenced U.S. producers’ choice of

assembly facilities for decades, and led to the relocation of U.S. TV assembly plants to Mexico

to take advantage of lower labor costs, beginning in 1976 with RCA. By the late 1980s, every

U.S. producer of CTVs had moved the assembly of CTVs with high labor content (generally

CTVs with screen sizes under 20 inches in viewable diagonal measurement) to maquiladora

plants just south of the U.S.-Mexico border. Most U.S. producers continued to assemble

70

higher-value, large-screen CTVs in the United States. The design and R&D facilities of

formerly U.S.-owned producers also remain in the United States.

In 1996, LG Electronics, a Korean firm, bought a controlling interest in Zenith Electronics, the

last U.S.-owned CTV producer, and moved Zenith’s remaining CTV assembly operations to

Mexico. Zenith continues to manufacture CPTs in the United States. Another major U.S.

71

producer, Thomson Consumer Electronics, plans to shut down its remaining U.S. CTV

assembly plant in Indiana in 1998 and move all assembly to Mexico, while continuing to operate

its two CPT plants in the United States. The Korean company Samsung built several factories 72

on a multiplant site in March 1996 in Tijuana, Mexico. Now making CPTs, the Samsung

facility eventually will make CTVs, TV-VCR combinations, tuners, and other products.73

U.S. imports of television receivers grew steadily during 1993-95, but decreased by 3 percent

in 1996 to $5.7 billion (table 3-20). Imports of CTVs alone declined by 1 percent to

$4.5 billion in response to declining U.S. demand. Imports of picture tubes and other cathoderay tubes decreased by 12 percent to just under $1 billion, as Asian-made tubes that were
 Importers of articles that are otherwise free of duty continue to have an incentive to declare 74

eligibility for entry under HTS PSP. Under that provision, the U.S.-origin content in such imports is

exempt from the customs user fee, which is currently 0.17 percent ad valorem, with a maximum fee of

$400 per entry. Under the CFTA, the user fee was phased out entirely on imports from Canada as of

Jan. 1, 1994. Under NAFTA, imports from Mexico will be subject to the user fee of 0.19 percent ad

valorem (with a $400 per entry cap) until June 30, 1999, after which the fee will be reduced to zero. 

See app. A of this report for additional information about the customs user fee.

3-37

Table 3-20

Television receivers: U.S. imports for consumption, total, under the production-sharing provisions

(PSP) of HTS Chapter 98, U.S. content, and percentage shares, 1993-96

Year imports HTS PSP HTS PSP

Total U.S. HTS PSP under total under 

imports

U.S. content HTS PSP share of 

share of total

imports

U.S.content

))))))))))))))) Million dollars )))))))))))))) ))))))) Percentage ))))))))

1993 ................ 4,600 2,257 701 49 31

1994 ................ 5,538 2,606 850 47 33

1995 ................ 5,930 2,511 835 42 33

1996 ............... 5,738 2,625 1,031 46 39

Source: Compiled from official statistics of the U.S. Department of Commerce.

formerly sent to U.S. factories were sent to Mexican assembly plants instead. At the same time,

U.S. CPT exports to Mexican factories increased by 13 percent to almost $1 billion. 

The majority of cathode-ray tubes for CTVs imported from Mexico are produced in the United

States and then shipped to Mexico for assembly into complete receivers. NAFTA provides that

the 15-percent ad valorem duty on U.S. imports of color television picture tubes will not be

assessed on tubes of North American origin. As a result, Mexican-assembled CTVs hold a

considerable duty advantage over similar Asian products, which generally do not contain North

American tubes.74

U.S. imports of television receivers and tubes entered under the production-sharing provisions

of HTS Chapter 98 increased by 5 percent in 1996 (table 3-20), while imports from NAFTA

countries increased by 7 percent (table 3-21). The U.S. content in television receivers and tubes

entering under these provisions increased by $196 million during 1996, largely as a result of

Zenith moving its U.S. assembly operations to Mexico (tables 3-20 and 3-22). Consequently,

the share of HTS PSP imports accounted for by U.S.-made parts rose from 33 percent in 1995

to 39 percent in 1996.

Mexican affiliates of U.S., Asian, and European electronics producers have been the largest

suppliers of sector products to the United States for a number of years. Mexico accounted for

60 percent of total U.S. sector imports and 97 percent of imports under HTS PSP. Total imports

of televisions and tubes from Mexico increased by 8 percent in 1996 to $3.5 billion and imports

under HTS PSP rose by 6 percent to $2.6 billion as more U.S. assembly operations were shifted

to Mexico (table 3-21). 

Table 3-21

Television receivers: Total U.S. imports, U.S. imports from NAFTA partners, and imports from

Mexico under NAFTA and the production-sharing provisions (PSP) of HTS Chapter 98, 1995 and

1996
3-38

Source of imports 1995 1996 1995-96 1995-96

Change in value Change

))))))))))) Million dollars ))))))))))) Percentage

Mexico:

HTS PSP1

U.S. content .......................... 814 1,015 201 25

Value added .......................... 1,607 1,540 -67 -4

Total .............................. 2,421 2,555 134 6

NAFTA only ............................

2

724 860 136 19

Subtotal (NAFTA and/or HTS PSP) ....... 3,145 3,415 270 9

Other .................................. 95 51 -44 -46

Total ................................ 3,240 3,466 226 7

Canada .................................

3

124 117 -7 -6

All other ................................. 2,566 2,154 -412 -16

Total .................................. 5,930 5,738 -192 -3

 Encompasses imports that are entered under both HTS PSP and NAFTA. 1

Excludes imports declaring eligibility simultaneously under both NAFTA and HTS PSP. 2 

Most imports from Canada enter free of duty and customs user fees under NAFTA. A significant share of imports of manufactured goods from Canada 3 

are believed to incorporate various amounts of U.S. origin components or metals. Such imports have an incentive to enter under HTS PSP only when use of

non-North American components and materials disqualifies the goods from eligibility to enter under NAFTA rules of origin.

 

Note.—Because of rounding, figures may not add to the totals shown.

Source: Compiled from official statistics of the U.S. Department of Commerce.

Table 3-22

Television receivers: U.S. content in imports to the United States under the production-sharing

provisions (PSP) of HTS Chapter 98, by principal sources, 1993-96

(Million dollars) 

Source/country 1993 1994 1995 1996

Mexico ................................................ 676 839 814 1,015

Italy ................................................... 18 8 18 13

All other ............................................... 5 2 3 3

Total ............................................... 701 850 835 1,031

Note.—Because of rounding, figures may not add to the totals shown.

Source: Compiled from official statistics of the U.S. Department of Commerce.
 Imports under the production-sharing provisions of HTS Chapter 98 accounted for 74 percent of 75

total U.S. imports of television receivers from Mexico in 1996 (table 3-21).

 Consequently, most Japanese and Korean television assembly plants are located in Tijuana and 76

elsewhere in Baja California. Asian-made television components are usually brought to the

maquiladora operations in sealed containers via the Port of Long Beach, CA. Zenith, RCA, and

Philips are less reliant on components from Asia, and their assembly plants generally are located

across the border from Texas, with good interstate access to sister plants in Missouri, Illinois, Indiana,

and Tennessee.

3-39

Ninety-one percent of all television receivers from Mexico that entered under the productionsharing provisions of HTS Chapter 98 in 1996 also entered under NAFTA (table B-5). Imports

under NAFTA that did not also claim eligibility under HTS PSP rose by $136 million

(19 percent) in 1996 to $860 million, and accounted for 25 percent of total imports from

Mexico (table 3-21). Such “NAFTA only” imports were likely assembled from a combination 75

of U.S. and Asian parts. The value of the U.S.-made parts contained in HTS PSP imports from

Mexico increased by $201 million (25 percent) in 1996 to $1.0 billion. The picture tube

represents an increasing percentage of the value of a CTV, and the majority of televisions

imported from Mexico incorporate U.S.-made picture tubes. However, television assembly

remains the sector of the maquiladora industry most reliant on parts imported from Asia.76

John Kitzmiller

(202) 205-3387

jkitzmiller@usitc.gov
 Computer hardware includes computers, computer peripheral equipment, and computer parts or 77

components.

 Estimated by USITC staff based on official statistics of the U.S. Department of Commerce. 78

 Bernard Levine and Fred Guinther, “Contract Industry in Growth Mode,” Electronic News, Oct. 79

7, 1996, p. 1; TechSearch, http://www.techweb.com/, retrieved Feb. 6, 1997; and Albert Pang, “SCI:

The secret behind the giant PC makers,” Computer Reseller News, June 3, 1996. 

 Graham Vickery, “Globalization in the Computer Industry,” ch. 3 in Globalization of Industry: 80

Overview and Sector Reports (Paris: Organization for Economic Cooperation and Development

(OECD)), 1996. For a detailed discussion of globalization in the electronics industry, including the

computer sector, see also Dieter Ernst, From Partial to Systemic Globalization: International

Production Networks in the Electronics Industry, Joint Publication of The Data Storage Industry

Globalization Project Report 97-02, Graduate School of International Relations and Pacific Studies,

University of California at San Diego and BRIE Working Paper No. 98, Berkeley Roundtable on the

International Economy, University of California at Berkeley, Apr. 1997.

 Michael Kanellos, “Compaq distributes its PC making,” C/Net, July 29, 1997, found at 81

http://www.news.com/, retrieved July 30, 1997.

3-40

Computer Hardware77

The United States is one of the world’s largest producers of and markets for computers,

computer peripherals, and computer parts or components. U.S. shipments of these products

totaled $78.9 billion in 1996. They are also a significant part of U.S. trade, accounting for 8 78

percent of total U.S. imports in 1996. The U.S. industry producing computer hardware consists

of hundreds of companies with the largest, such as IBM, Hewlett-Packard, Compaq Computer,

Digital Equipment Corp., Apple Computer, Seagate Technology, and Dell Computer,

comprising a majority of total sales. Prior to the 1980s, the industry was dominated by

vertically organized corporations that produced virtually all of the components of a computer

system. However, since the 1980s, the industry has become intensely competitive and driven

by rapid technological innovation, increasing product performance, and continual price

reductions. Today, U.S. companies lead the world in the development of innovative products

by focusing on the research, development, and design of new computer technologies. U.S.

companies are increasing their reliance on U.S.-owned foreign manufacturing and assembly

facilities, contract manufacturing by third-parties based in the United States or overseas, and 79

high levels of international investment and collaboration to reduce costs. In addition, U.S.

80

computer hardware producers lead the world in lowering the costs of shipping, inventory, and

delivery to the end user through the efficient management of the product supply chain and

distribution channels.81

Total U.S. imports of computer hardware increased by $5.1 billion (9 percent) during 1995-96

(table 3-23). The average annual growth rate of these imports during 1993-96 was even higher

at 18 percent, rising from $37.9 billion in 1993 to $61.4 billion in 1996. These imports mainly

consist of computer hardware produced by manufacturing facilities owned by U.S. firms, or by

Asian suppliers that provide computer components and peripheral equipment to be configured

into computers or computer systems by companies in the United States. Typically, a finished

computer hardware product sold in the United States will consist of various parts and

components sourced from the United States and other countries. As such, it is difficult to track

the actual U.S. content and value of production sharing that goes into
 Industry representatives, interviews by USITC staff, Fall 1996, Apr. 25, 1997, and Aug. 5-6, 82

1997; and Mark Lapedus, “Asia-Pacific Gets More Important in PC Assembly,” Electronic Buyers’

News, Jan. 29, 1996, TechSearch, found at http://www.techweb.com/se, retrieved Feb. 6, 1997.

 In the case of Mexico, all computer products and parts have been allowed duty-free entry into the 83

United States since the implementation of NAFTA in 1994. 

 Under NAFTA, the customs user fee applicable to goods of North American origin from Mexico 84

will be eliminated on July 1, 1999.

 Industry representatives, interviews by USITC staff, Aug. 5-6, 1997. 85

3-41

Table 3-23

Computer hardware: U.S. imports for consumption, total, under the production-sharing provisions

(PSP) of HTS Chapter 98, U.S. content, and percentage shares, 1993-96

Year imports HTS PSP HTS PSP

Total U.S. HTS PSP under total under 

imports

U.S. content HTS PSP share of 

share of total

imports

U.S.content

)))))))))))))))) Million dollars ))))))))))))))) ))))))) Percentage ))))))))

1993 ................. 37,906 1,693 452 4 27

1994 ................. 46,161 1,307 390 3 30

1995 ................. 56,308 1,372 405 2 30

1996 ................. 61,457 1,297 318 2 25

Source: Compiled from official statistics of the U.S. Department of Commerce.

the manufacture and assembly of a finished computer system. For instance, logic chips and

microprocessors may be sourced from the United States or Japan; storage units from the United

States or Singapore; memory chips from Japan or Korea; CD-ROM drives from Japan,

Singapore, or Taiwan; motherboards from the United States or Taiwan; keyboards and mice

from Taiwan; and computer monitors from Taiwan, Singapore, Korea, or Mexico.82

A significant portion of computer hardware imported from production-sharing operations are

not entered under the production-sharing provisions of HTS Chapter 98 because they are free

of duty. Examples of computer hardware with a free rate of duty include certain unhoused

computer motherboards, unhoused disk drives, unassembled printers, printed circuit assemblies,

and parts for computers. The incentive for entering duty-free computer hardware under HTS 83

PSP is to receive exemption from the customs user fee of 0.17 percent ad valorem on the value

of the U.S. content, with a maximum fee of $400 per entry. The cost of associated

84

documentation, however, may outweigh the duty savings of complying with the HTS PSP

requirements. Therefore, it is likely that importers often refrain from claiming entry under these

provisions. With this in mind, reported HTS PSP trade data at both the aggregate and country 85

levels are likely to be substantially less than the actual production sharing that occurs in the

computer hardware industry.

U.S. imports of computer hardware reported under HTS PSP declined to $1.3 billion, or 2

percent of all computer hardware imports in 1996, compared with $1.7 billion, or 4 percent of

all computer hardware imports in 1993. In addition, the reported U.S. content in computer

hardware imports under such provisions decreased by $134 million (30 percent) during 1993-

96, from $452 million in 1993 to $318 million in 1996. During 1995-96, the reported U.S.

content in computer hardware imports under HTS PSP fell by $87 million (21 percent) from

$405 million in 1995. The reported U.S.-content share in HTS PSP imports of computer

hardware also decreased from 30 percent in 1995 to 25 percent in 1996. 
 Japan External Trade Relations Organization (JETRO), “Japanese Manufacturers Surge Into 86

Vietnam,” Feb. 1997, found at http://www.jetro.go.jp, retrieved Sept. 10, 1997.

 

87 Although the reported U.S. content in HTS PSP computer products from Singapore rose from

zero in 1995 to $33 million in 1996, a Singapore Trade Development Board official indicated that

computer hardware manufactured in Singapore and exported to the United States, including goods

sent for further manufacturing and shipped back to the parent companies, increased steadily during

1993-96.

 Lapedus, “Asia-Pacific Gets More Important in PC Assembly,” See also, JETRO, “Parts 88

Procurement Goes Global,” July/Aug. 199, found at http://www.jetro.go.jp, retrieved Sept. 10, 1997. 

For a detailed discussion of globalization in the electronics industry, including the computer sector, 

see Dieter Ernst, From Partial to Systemic Globalization: International Production Networks in the

Electronics Industry, Joint Publication of The Data Storage Industry Globalization Project Report 97-

02, Graduate School of International Relations and Pacific Studies, University of California at San

Diego and BRIE Working Paper No. 98, Berkeley Roundtable on the International Economy,

University of California at Berkeley, Apr. 1997.

 

89 Reported imports of computer hardware from Mexico under NAFTA that did not also claim

eligibility under HTS Chapter 98 increased to $1.1 billion from $376 million in 1995 (table 3-25).

3-42

Several factors may explain the decrease in reported U.S. content in HTS PSP computer

hardware imports during 1995-96. In 1996, an HTS reclassification that was implemented to

distinguish computer hardware shipped as part of a complete system from stand-alone units

caused some confusion as nearly all finished products were given new classification numbers.

In addition, a $100-million drop, from $102 million to $2 million, in reported U.S. content in

HTS PSP imports of computer hardware from Japan may reflect the establishment or expansion

of computer hardware production operations in countries such as Vietnam, Singapore, and 86 87

elsewhere in Asia (table 3-24). A decrease of $30 million in U.S. content in HTS PSP

88

computer hardware imports from Mexico during 1995-96 may be due to increased entry of such

products under NAFTA, instead of HTS PSP (table 3-25).89

Table 3-24

Computer hardware: U.S. content in imports to the United States under the production-sharing

provisions (PSP) of HTS Chapter 98, by principal sources, 1993-96

(Million dollars)

Source/country 1993 1994 1995 1996

Mexico ................................................ 161 135 281 251

Singapore .............................................. 84 28 0 33

Ireland ................................................. 15 7 2 12

Korea ................................................. 32 7 1 8

Japan ................................................. 126 177 102 2

China ................................................. 3 4 3 2

Indonesia .............................................. 0 3 2 2

Taiwan ................................................ 7 9 4 2

All other ............................................... 24 20 8 6

Total ............................................... 452 390 405 318

Note.—Because of rounding, figures may not add to the totals shown.

Source: Compiled from official statistics of the U.S. Department of Commerce.

Table 3-25

Computer hardware: Total U.S. imports, U.S. imports from NAFTA partners, and imports from

Mexico under NAFTA and the production-sharing provisions (PSP) of HTS Chapter 98, 1995 and

1996

Source of imports 1995 1996 1995-96 1995-96

Change in value Change

)))))))))))) Million dollars ))))))))))))) Percent
3-43

Mexico:

HTS PSP1

 U.S. content ....................... 281 251 -30 -11

Value added ....................... 515 753 238 46

Total ........................... 796 1,004 208 26

NAFTA only 376 1,101 725 193 2

Subtotal (NAFTA and/or HTS PSP) .... 1,172 2,105 933 80

Other ............................... 746 956 210 28

Total ................................. 1,918 3,061 1,143 60

Canada ..............................

3

4,057 3,450 -607 -15

All other .............................. 50,333 54,946 4,613 9

Total ............................. 56,308 61,457 5,149 9

 Encompasses imports that are entered under both HTS PSP and NAFTA. 1 

Excludes imports declaring eligibility simultaneously under both NAFTA and HTS PSP. 2 

Most imports from Canada enter free of duty and customs user fees under NAFTA. A significant share of imports of manufactured goods from Canada 3 

are believed to incorporate various amounts of U.S.-origin components or metals. Such imports have an incentive to enter under HTS PSP only when use of

non-North American components and materials disqualifies the goods from eligibility to enter under NAFTA rules of origin.

Note.—Because of rounding, figures may not add to the totals shown.

Source: Compiled from official statistics of the U.S. Department of Commerce.

It is likely that reported production-sharing imports of computer hardware worldwide will

decline even further as tariffs on computer hardware are gradually reduced and eliminated as a

result of the NAFTA, the GATT Uruguay Round, and the Information Technology Agreement.

The incentive to declare these products under the production-sharing provisions of HTS Chapter

98 will remain negligible as importers are unlikely to claim an exemption due to documentation

costs. While reported production-sharing imports will likely decline, sourcing of computer

products from foreign operations and suppliers still remains an important element of U.S.

competitiveness in the global market.

Scott Ki

(202) 205-2160

ski@usitc.gov
 Measuring, testing, controlling, and analyzing instruments are devices that make calibrated 90

measurements of physical, electrical, or chemical quantity, which they may display, transmit, and/or

automatically control. The name of an instrument often describes the function for which it was

designed, such as a hardness tester, flowmeter, revolution counter, and voltage meter.

 Imports under HTS PSP accounted for 11 percent of total U.S. imports of measuring and 91

controlling instruments in 1996 (table 3-26).

 U.S. industry representative, telephone interview by USITC staff, July 22, 1997. 92

3-44

Measuring, Testing, Controlling, and Analyzing Instruments 90

The United States retained its position as the largest global producer and consumer of

measuring, testing, controlling, and analyzing instruments (measuring and controlling

instruments) in 1996, accounting for approximately 45 percent of the world’s output of such

products. U.S. producers continued to experience expanding demand for their high-technology,

user-friendly instruments, as reflected in a $2 billion rise in total U.S. shipments to an estimated

$33.9 billion in 1996. U.S. exports accounted for 37 percent of these shipments during the

period. The global competitiveness of the U.S. industry also remained relatively strong during

1996, as the trade surplus in measuring and controlling instruments increased by 11 percent to

$5.4 billion. Process control instruments, analytical and scientific instruments, and equipment

for testing electrical, radio, and communication circuits accounted for approximately 55 percent

of U.S. shipments. The major end users of these instruments included manufacturing and

process industries; industrial, institutional, scientific, and commercial laboratories; and public

utility companies.

Although U.S. producers are largely technology oriented and employ a relatively highly skilled

workforce, a significant portion of the industry’s labor-intensive assembly and manufacturing

operations is performed in Mexico and reported under the production-sharing tariff provisions

of HTS Chapter 98. Production sharing with Mexico (which has consistently been the

91

industry’s principal partner country for such operations) is considered to be an essential means

of lowering production costs to enhance the price competitiveness of U.S. producers. The

relatively low-labor costs in Mexico and the ease with which U.S.-affiliated producers can

monitor the quality and efficiency of production have encouraged production sharing in that

country. The improved skills of Mexican workers and the country’s ongoing efforts to upgrade

its infrastructure also have made production sharing more attractive to the U.S. industry. 

With respect to other countries, intracompany shipments of subassemblies, components, and

manufactured products among U.S. affiliated operations in the United Kingdom, Japan, China,

and Thailand have supported the production-sharing concept of lower costs through reduced

tariffs. Although labor costs within certain Asian countries (such as Thailand and China) may 92

be less than such costs in Mexico, the cost of shipping merchandise to and from those countries

is considerably higher. While the largest volume of U.S. imports under the HTS PSP primarily

reflects U.S. producers’ use of low-cost assembly operations in Mexico’s maquiladora industry,

a relatively smaller value of these imports from Canada and the United Kingdom may indicate

that U.S. producers also rely upon the more sophisticated assembly techniques provided by

operations in those countries. Production-sharing imports from
3-45

developed countries may also reflect the use of high-quality, low-cost, and/or specialized U.S.-

made components in foreign manufacturing operations.

Imports of measuring and controlling instruments under the production-sharing provisions of

HTS Chapter 98 grew by 14 percent ($102 million) in 1996 from 1995, twice as fast as the rise

in total sector imports (table 3-26). The value of U.S.-origin components contained in these

HTS PSP imports climbed by 25 percent ($70 million) to $353 million. Most of this growth

($64 million) was accounted for by imports from Mexico (table 3-27). Production-sharing

operations in Mexico accounted for 95 percent of the U.S. components used in the foreign

assembly and reimport of measuring and controlling instruments under Chapter 98 in 1996.

Table 3-26

Measuring, testing, controlling, and analyzing instruments: U.S. imports for consumption, total, under

the production-sharing provisions (PSP) of HTS Chapter 98, U.S. content, and percentage shares, 1993-

96

Year imports HTS PSP HTS PSP

Total U.S. HTS PSP under total under 

imports

U.S. content HTS PSP share of 

share of total

imports

U.S.content

))))))))))))))) Million dollars ))))))))))))) )))))))) Percentage ))))))))

1993 ................. 4,553 647 286 14 44

1994 ................. 5,727 682 298 12 44

1995 ................. 6,665 713 283 11 40

1996 ................. 7,136 815 353 11 43

Source: Compiled from official statistics of the U.S. Department of Commerce.

Table 3-27

Measuring, testing, controlling and analyzing instruments: U.S. content in imports to the United States

under the production-sharing provisions (PSP) of HTS Chapter 98, by principal sources, 

1993-96

(Million dollars)

Source/country 1993 1994 1995 1996

Mexico .................................................. 265 275 272 336

Taiwan .................................................. 2 3 2 3

China ................................................... 0 0 1 3

Dominican Republic ........................................ 1 1 1 2

All other ................................................. 18 18 7 9

Total ................................................. 286 298 283 353

Note.—Because of rounding, figures may not add to the totals shown.

Source: Compiled from official statistics of the U.S. Department of Commerce.

The leading measuring and controlling instruments imported under HTS PSP were

speedometers, tachometers, certain process control instruments, and thermostats for air

conditioning, refrigeration, and heating equipment. Significant factors contributing to the
 Total U.S. consumption of measuring and controlling instruments increased by about 5 percent to 93

an estimated $28.5 billion during 1995-96.

 The U.S. content in these imports from Mexico grew by 24 percent ($64 million) to $336 94

million.

 U.S. industry representative, telephone interview by USITC staff, July 22, 1997. 95

3-46

increase in these imports entering under the production-sharing provisions (including U.S.

component imports) included a strong demand in the U.S. market for measuring and controlling

instruments used in the manufacturing and process industries and the devaluation of the peso, 93

which stymied industrial growth in Mexico and encouraged export shipments to the United

States. In addition, shipments to the United States were encouraged by the increased capacity

of Mexican assembly plants, which raised assembly capabilities in anticipation of NAFTA’s

favorable effects on demand in the home market. 

Imports of measuring and controlling instruments from Mexico under HTS PSP rose by 40

percent to $748 million in 1996 over 1995, and accounted for 58 percent of sector imports from

Mexico (table 3-28). Thirty-five percent of the imports under HTS PSP also entered under 94

NAFTA. NAFTA imports that did not simultaneously declare eligibility to enter under HTS

PSP increased by 44 percent in 1996 to $262 million and accounted for 20 percent of sector

imports from Mexico. Since the implementation of NAFTA, coupled with the growing

popularity of production sharing, U.S. producers have expanded assembly and manufacturing

operations in Mexico to capitalize on the duty-free provisions. In addition, several Asian-based

manufacturers of measuring and controlling instruments have established operations in the

border region of Mexico (using U.S.-made components) to benefit from lower production costs

in Mexico and duty-free access to the U.S. market (provided the companies’ operations meet

NAFTA rules-of-origin requirements).95
3-47

Table 3-28

Measuring, testing, controlling, and analyzing instruments: Total U.S. imports, U.S. imports from NAFTA

partners, and imports from Mexico under NAFTA and the production-sharing provisions (PSP) of HTS

Chapter 98, 1995 and 1996

Source of imports 1995 1996 1995-96 1995-96

Change in value Change

))))))))))))) Million dollars ))))))))))) Percentage

Mexico:

HTS PSP1

U.S. content .......................... 272 336 64 24

Value added .......................... 263 412 149 57

Total .............................. 535 748 213 40

NAFTA only ............................

2

182 262 80 44

Subtotal (NAFTA and/or HTS PSP) ....... 717 1,010 293 41

Other .................................. 573 281 -292 51

Total ................................ 1,290 1,291 1 ( )

2

Canada .................................

3

766 814 48 6

All other ................................. 4,609 5,031 422 9

Total .................................. 6,665 7,136 471 7

 Encompasses imports that are entered under both HTS PSP and NAFTA. 1

Less than 0.5 percent. 2 

Most imports from Canada enter free of duty and customs user fees under NAFTA. A significant share of imports of

 3 

manufactured goods from Canada are believed to incorporate various amounts of U.S. origin components or metals. Such

imports have an incentive to enter under HTS PSP only when use of non-North American components and materials

disqualifies the goods from eligibility to enter under NAFTA rules of origin.

Note.—Because of rounding, figures may not add to the totals shown.

Source: Compiled from official statistics of the U.S. Department of Commerce.

James M. Brandon

(202) 205-3433

brandon@usitc.gov
 The data and analysis in this section are limited to medical goods trade and, thus, are a subset of 96

the data presented in appendix B tables that pertain to total trade in both the medical and optical

goods industries. The medical goods covered include all products classified in HTS headings 9018-

9022.

 Estimated by USITC staff based on official statistics of the U.S. Department of Commerce; 97

Health Industry Manufacturers Association, 1997 Global Market Technology Update: The

Challenges Facing U.S. Industry and Policy Makers; and U.S. industry representatives, telephone

interviews by USITC staff, July 15-17, 1997.

 U.S. trade data in this report consist of official statistics of the U.S. Department of Commerce. 98

 This has particularly had an effect on major suppliers of commodity hospital supplies such as 99

bougies, catheters, drains, disposable surgical trays, and blood transfusion and collection equipment. 

However, such cost pressures have also affected producers of certain more specialized respiratory,

dental, and electrodiagnostic equipment.

 U.S. medical industry representatives, telephone interviews by USITC staff, Apr. 8, 1997. 100

3-48

Medical Goods96

The United States is the world’s largest producer of medical goods. In 1996, U.S.

manufacturers accounted for $28.9 billion, or 45 percent of world output of medical goods. 97

The U.S. trade surplus in medical goods increased by almost 22 percent to $4.8 billion in 1996

from the previous year; U.S. exports grew by 14 percent to $10.2 billion, while U.S. imports

grew more slowly, by 8 percent, to $5.4 billion. Much of the growth in U.S. exports is of

98

high-value-added, high-technology medical equipment in which U.S. producers excel, including

sophisticated electromedical and electrosurgical equipment and cardiology devices such as

pacemakers, coronary stents, and cardiac catheters.

In response to pressures by government and private-sector health care insurers to contain rapidly

increasing health care costs, U.S. medical goods suppliers have had to reduce manufacturing

costs to maintain their competitiveness in an increasingly price-sensitive product market.99

Consequently, large U.S. medical manufacturers, including Baxter Healthcare, Johnson &

Johnson, Abbott Laboratories, and Becton Dickinson, have established significant productionsharing operations in Singapore, Mexico, the Dominican Republic, and Costa Rica to take

advantage of relatively low wage rates to reduce the costs of assembling U.S.-made components

into finished medical goods. Although many of these companies have been able to use the

production-sharing provisions of HTS Chapter 98 to reduce customs duties when the final

assembled goods are imported into the United States, the provision is one of several vehicles

used by companies engaged in production sharing to reduce customs duties (others include

NAFTA, GSP, and CBERA).

In 1996, Mexico, the Dominican Republic, and Costa Rica continued to be important sources

of import growth for the United States, as U.S.-based producers of highly price-sensitive

hospital consumables have continued to increase their use of low-wage assembly in those

countries to keep products competitive in cost-conscious health care markets. As a result,

100

production-sharing imports of medical goods reported under HTS PSP increased by 20 percent

($165 million) in 1996 over 1995 to $994 million and increased their share of total imports of

medical goods to 19 percent (table 3-29).
 Some U.S. companies continued to import products assembled in Mexico at reduced duties 101

under HTS 9802 even after the rate of duty was reduced to free under NAFTA because of initial

uncertainty by the companies regarding documentation required to qualify for duty-free treatment

under NAFTA's rules of origin. Some companies also indicated that they continued to import goods

under production-sharing provisions after duties on medical and optical goods were eliminated under

NAFTA on Jan. 1, 1994, because they were not aware of the elimination of tariffs under NAFTA. 

U.S. industry officials, telephone interviews by USITC staff, Aug. 26-29, 1996 and July 29, 1997.

 U.S. industry representatives, telephone interviews by USITC staff, July 15-17, 1997. 102

 Ibid. 103

3-49

Table 3-29

Medical goods: U.S. imports for consumption, total, under the production-sharing provisions (PSP) of

HTS Chapter 98, U.S. content, and percentage shares, 1993-96

Year imports HTS PSP HTS PSP

Total U.S. HTS PSP under total under 

imports

U.S. content HTS PSP share of 

share of total

imports

U.S.content

)))))))))))))) Million dollars )))))))))))))) ))))))) Percentage ))))))))

1993 ................ 4,381 595 303 14 51

1994 ................ 4,405 617 290 14 47

1995 ................ 4,951 829 428 17 52

1996 ................ 5,368 994 543 19 55

Source: Compiled from official statistics of the U.S. Department of Commerce.

Mexico was the leading supplier of such imports, contributing $566 million (57 percent) of total

U.S. production-sharing imports reported under HTS PSP in 1996 (tables B-3 and B-5). This

represented an increase of $75 million (30 percent) in 1996, with imports under HTS PSP

accounting for 85 percent of total imports of medical goods from Mexico in that year. U.S.- 101

origin (duty-free) content in HTS PSP imports from Mexico amounted to $324 million, or 60

percent of the total (table 3-30). Many U.S. industry representatives assert that lower wage

costs and proximity to the United States have been the factors that most influenced initial

decisions to invest in production-sharing facilities in Mexico. Increasingly, however, U.S.- 102

based manufacturers of medical goods are interested in Mexico as a production and supply base

for goods destined for Mexico’s own market and emerging health care markets in other Latin

American countries. Further, there has been an increase in the number of more sophisticated 103

products assembled in Mexico and imported into the United States under HTS PSP. Some of

these products include anesthetic instruments, electrosurgical equipment, and other

electromedical apparatus.
 See the explanation of “Customs Incentives for Entry Under the Production-Sharing Provisions 104

of HTS Chapter 98 and NAFTA” on p. 1-2. Also, note that although the data presented in table 3-31

pertain to both medical and optical goods, the portion of HTS PSP trade reflected in the table related

to optical goods is negligible.

 Representatives of Dominican Republic subsidiaries of U.S. companies, telephone interviews 105

by USITC staff, June 16, 1997.

 That provision provided incentives for U.S. producers with Puerto Rican manufacturing 106

operations to establish assembly facilities in Caribbean countries to promote development in both

Puerto Rico and neighboring countries. The Puerto Rican subsidiaries of these companies perform

the more capital-intensive functions in the manufacture of medical devices and supplies, then send the

semifinished goods and components to Dominican subsidiaries for final assembly.

3-50

Table 3-30

Medical goods: U.S. content in imports to the United States under the production-sharing provisions

(PSP) of HTS Chapter 98, by principal sources, 1993-96

(Million dollars)

Source/country 1993 1994 1995 1996

Mexico .................................................. 208 198 249 324

Dominican Republic ........................................ 64 63 143 185

Netherlands .............................................. 13 10 12 12

Costa Rica ............................................... 3 6 8 9

Canada .................................................. 7 6 7 6

All other ................................................. 9 7 7 7

Total ................................................. 303 290 428 543

Note.—Because of rounding, figures may not add to the totals shown.

Source: Compiled from official statistics of the U.S. Department of Commerce.

Imports under the production-sharing provisions of HTS Chapter 98 accounted for over 80

percent of the medical goods imported from Mexico under the combined provisions of HTS

Chapter 98 and NAFTA in 1996 (table 3-31). The bulk of the imports entering under

104

NAFTA but not HTS PSP in 1996 is believed to be assembled from U.S.-made components.

Imports under HTS PSP accounted for 79 percent of total imports of medical and optical goods

from Mexico in 1996, while imports under NAFTA that did not simultaneously enter under HTS

PSP accounted for 13 percent.

The Dominican Republic has emerged in just the past several years as the fourth leading

supplier of all medical goods to the United States. Starting from having virtually no medical

goods industry a decade ago; in 1996, it was the second-largest supplier of U.S. imports under

the provisions of HTS Chapter 98, in terms of U.S.-origin content, accounting for 34 percent

of the total. Total production-sharing imports from the Dominican Republic increased by 33

percent from 1995 to $248 million, with U.S.-origin (duty-free) content accounting for $185

million, or 75 percent of the total. Products imported under the HTS PSP included blood and

plasma transfusion products, blood collection sets, solution administration sets, and sterile

feeding tubes. Large U.S.-based manufacturers with significant production facilities in Puerto 105

Rico initially established assembly operations in the Dominican Republic in the late 1980s to

take advantage of preferential tax treatment provided under section 936 of the United States

Internal Revenue Code, which was designed to promote further Caribbean development.106

They also benefited from various laws and incentives provided by the
 U.S. industry representatives, telephone interviews by USITC staff, July 28, 1997; Counselor 107

for Economic Affairs, Embassy of the Dominican Republic, letter dated Aug. 30, 1996; and Central

Bank of the Dominican Republic, “Free Zones as a Development Model in the Dominican Republic,”

1996, pp. 19-24.

 U.S. industry representatives, telephone interviews by USITC staff, July 28, 1997. 108

3-51

Table 3-31

Medical and optical goods: Total U.S. imports, U.S. imports from NAFTA partners, and imports from

Mexico under NAFTA and the production-sharing provisions (PSP) of HTS Chapter 98, 1995 and

1996

Source of imports 1995 1996 1995-96 1995-96

Change in value Change

))))))))))) Million dollars ))))))))))))) Percentage

Mexico:

HTS PSP1

 U.S. content ......................... 253 325 72 28

Value added ......................... 202 246 44 22

Total ............................. 455 571 116 25

NAFTA only ...........................

2

92 95 3 3

Subtotal (NAFTA and/or HTS PSP) ...... 547 666 119 22

Other ................................. 46 53 7 15

Total ............................... 593 719 126 21

Canada ................................

3

198 213 15 8

All other ................................ 6,980 7,550 570 8

Total ................................. 7,771 8,482 711 9

 Encompasses imports that are entered under both HTS PSP and NAFTA. 1

 Excludes imports declaring eligibility simultaneously under both NAFTA and HTS PSP. 2

Most imports from Canada enter free of duty and customs user fees under NAFTA. A significant share of imports of

 3 

manufactured goods from Canada are believed to incorporate various amounts of U.S.-origin components or metals. Such

imports have an incentive to enter under HTS PSP only when use of non-North American components and materials

disqualifies the goods from eligibility to enter under NAFTA rules of origin.

Note.—Because of rounding, figures may not add to the totals shown.

Source: Compiled from official statistics of the U.S. Department of Commerce.

Dominican Republic that reduced the costs and simplified regulations for foreign producers to

assemble goods in free trade zones. The finished goods from these facilities were exported 107

to the United States, where various U.S. tariff provisions and tariff preference programs, such

as the production-sharing provisions of HTS Chapter 98, CBERA, or GSP, were used to reduce

or eliminate customs duty costs. U.S. industry representatives indicate that they have been

pleased with the success of their Dominican assembly operations, as well as the development

of a viable workforce in that country, and have continued to increase manufacturing capacity

each year. This has contributed to the increase in U.S. imports from the Dominican Republic 108

under the HTS PSP (and CBERA). 

Another Caribbean supplier, Costa Rica, accounted for $8.5 million of U.S.-content in

production-sharing imports under the HTS PSP in 1996, an increase of 3 percent over 1995.

U.S.-based Baxter Healthcare, the largest producer of hospital supplies in the world, moved a

significant portion of its production from Singapore to Costa Rica in 1994. Rising wages in

Singapore and the advantages of Costa Rica’s proximity to the United States have made
 Representatives of Costa Rican subsidiary of Baxter Healthcare, interview by USITC staff, 109

Cartago, Costa Rica, May 20, 1997.

 Ibid. 110

3-52

the latter country an increasingly attractive location for assembly of price-sensitive, commodity

hospital products.109

The principal products imported from Costa Rica are transfusion apparatus and blood collection

sets assembled from components manufactured by Baxter in its Puerto Rican and mainland U.S.

facilities. Similar to the Dominican Republic, the U.S. content of medical products imported 110

from Costa Rica under HTS PSP is relatively high, accounting for about 85 percent of the value

of HTS PSP imports of medical goods from that country in 1996. 

Producers of more advanced medical goods in the Netherlands and other EU countries continued

to take advantage of U.S. production-sharing provisions during 1993-96, primarily to reduce

tariff costs on the value of U.S.-made parts, components, and subassemblies, which,

nevertheless, represented a relatively small portion of the total cost of the finished medical

goods exported to the United States.

Christopher Johnson

(202) 205-3488

cjohnson@usitc.gov
 Canada does not have a tariff incentive program comparable to the U.S. production-sharing tariff 1

provisions of HTS Chapter 98.

 Guy Beaumier, Free Trade in North America: The Maquiladora Factor (Canadian Library of 2

Parliament Research Branch: BP-247E, Dec. 1990), Ottawa, p.5.

 According to Statistics Canada officials, Canadian merchandise exports to Mexico may be 3

understated by as much as 40 percent due to significant transshipments of goods via the United States.

4-1

CHAPTER 4

CANADIAN INVOLVEMENT IN

MEXICO’S MAQUILADORA

INDUSTRY 

Canadian Maquiladoras Before and After NAFTA

Prior to NAFTA, a small number of Canadian firms with little or no experience in direct

manufacturing investment abroad were initially drawn to the maquiladora program because it

permitted up to 100 percent non-Mexican ownership and enabled the establishment of a plant

anywhere in the country. Canadian firms benefited from shifting the labor-intensive portions

of assembly operations to Mexico and from the use of U.S.-made components to reduce the

price (or increase the profitability) of their goods, particularly when serving the U.S. market.12

This chapter will examine experiences of Canadian firms engaged in production sharing prior

to the NAFTA, as well as the rapid growth in the number of Canadian firms with established

maquiladoras operations in Mexico after NAFTA (table 4-1).

In late 1992, Canadian interest in Mexico’s maquiladora industry increased significantly when

the United States, Canada, and Mexico ratified NAFTA. Prior to the conclusion of the NAFTA

negotiations, Canada traditionally accounted for about 1 percent of Mexico’s total export

market and provided approximately 2 percent of Mexican imports. During 1992, Canada’s

principal exports to Mexico were seeds, motor vehicles and parts, cereals, paper and pulp, ores,

machinery and mechanical appliances, and engines; Mexico’s primary exports to Canada were

motor vehicles and parts, machinery, mechanical appliances and engines, and electrical

equipment. The bulk of motor vehicle parts exported by Canada to Mexico were destined for

the maquiladora industry.3

Several of the first Canadian firms with investment in Mexico’s maquiladora program prior to

NAFTA were automotive accessory and apparel firms seeking to maintain their price

competitiveness and their strategic customer base in the U.S. market. Nearly all of the first
4-2

Table 4-1

Canadian firms with assembly plants in Mexico as of September 1997

Canadian affiliated company Number of Start

(location) Maquila subsidiary (location) Type of product employees up

American Sensors (Toronto, Ontario) Dicon Safety Products (Cd. Juarez, Smoke alarms 160 1994

Chihuahua)

A.P.S. Canada Automotive Parts Autopartes y Manufacturas de Automotive 200 1997

(Mississauga, Ontario) Mexico (Manijita, Chihuahua) components

Bauerhin Electro Bauerhin Technologia S.A. Baby seats 75 1993

(Montreal, Quebec) (Cd. Acuna, Cohuila)

Bay Mills Ltd. (Oakville, Ontario) Bay Mills S.A. (Chihuahua City, Decorative 70 1996

Chihuahua) window panels

Bay Mills Co. (Oakville, Ontario) Dor Seal, S.A. (Nogales, Sonora) Ornamental glass 75 1995

windows

Beck Electric (Concord, Ontario) Sistemas y Conexiones (Imuris, Automotive wire 400 1993

Sonora) harnesses

Conformex Inc. of Canada (Montreal, Accesorios Decorativos de Mexico Decorative ( ) (

Quebec) (Puebla, Puebla) pillows/cushions

1 1

Conross Corp. (Scarborough, American Fire Logs (Cd. Juarez, Fire logs 75 1988

Ontario) Chihuahua ) 

Company Resentel (Quebec, Corporacion Resentel, S.A. Bicycle parts 50 1994

Quebec) (Saltillo, Coahuila)

2

Custom Trim Ltd. (Waterloo, Auto Trim de Mexico (Matamoros, Leather wheel 2,800 1984

Ontario) Tamaulipas) covers

DOT Plastic Ltd. (Winston, Ontario) Winston de Mexico (Agua Prieta, Plastic injection 45 1989

Sonora) molding

IFS (Aurora, Ontario) Missalla Manfred Friedreich (San Metal frame parts 9 (

Luis Potosi, San Luis, Potosi)

La Compagnie Rosentel Ltd. Corporacion Resentel, S.A. Plastic articles ( ) 1994

(Marieville, Quebec) (Reynosa, Tamaulipas)

1 4

Neozum Manufacturing (Langley, Industria Nauticas de Noreste Scuba diving 90 1991

British Columbia) (Ensenada, Baja California) suits

Northern Telecom (Montreal, Nortel de Mexico (Monterrey, Digital telephone 1,600 1994

Quebec) Nuevo Leon) sets/pay

telephones

Noma Industries Ltd. (Tillsonburg, Noma Appliances (Nogales, Appliance wire 2,000 1994

Ontario) Sonora) harnesses

Noma Industries Ltd. Noma de Mexico Christmas trees ( ) (

(Tillsonburg, Ontario) (Cd. Juarez, Chihuahua) and lights

1

See notes at end of table.
4-3

Table 4-1—Continued

Canadian firms with assembly plants in Mexico as of September 1997

Canadian affiliated company Number of Start

(location) Maquila subsidiary (location) Type of product employees up

Pilgrim Live Aboard Yachts Inc. Manufacturera Internacional Fiber glass ( ) (

(Toronto, Ontario) Marina, S.A. (Merida, Yucatan) pleasure craft

1

Siemens Electric (Chatham, Ontario) Siemens Automotive (Cd. Juarez, Automotive 560 1994

Chihuahua) sensors & bulbs

Span Manufacturing Ltd. (Markham, Span de Mexico (Chihuahua City, Electrical, metal, 250 1991

Ontario) Chihuahua) and electric

components

Stuard Entertainment Inc. (St Stuard Entertainment, S.A. Bingo cards 275 1991

Catherine, Ontario) (Reynosa, Tamaulipas)

Tan-Jay/Alia Div. of Nygard Majilosa Tehuazan (Puebla, Apparel for 250 1994

International (Winnipeg, Manitoba) Puebla) women

Tan-Jay/Alia Div. of Nygard Zhalpulco Agro Industrias (Puebla, Apparel 250 1994

International (Winnipeg, Manitoba) Puebla)

TecTrol Inc. (Toronto, Ontario) Industrias Techtrol de Mexico Wire harnesses 420 1993

(Nogales, Sonora) and cable

Travel Way Group International Three Way S.A. (Puebla, Puebla) Playera shirts and 95 1994

(Saint-Laurent, Quebec) t-shirts

Versatech Ltd. (Mississauga, Gecamex Automotive parts 240 1994

Ontario) (Villa Acuna, Coahuila)

Vogue Brassiere Inc. (London, Vogue Dessous, S.A. (Merida, Woman’s ( ) (

Ontario) Yucatan) undergarmets

1

Ventra Group (Cambridge, Ontario) VentraMex (Queretaro, Queretaro) Automotive parts 50 1994 5

W.J. Holdings Inc. (Rodney, Ontario) Emblematico de Mexico Metallic broaches ( ) (

(Matamoros, Tamaulipas)

1

 Not available. 1

 Declared Canadian bankruptcy in Nov. 1996. 2

Sold to an undisclosed U.S. firm, Feb. 1997. 3 

 Discontinued maquiladora operations in Reyosa, Tampulipas, and relocated to Saltillo, Coahuila. 4

Operates under Program of Temporary Imports to Produce Export Articles (PITEX). The PITEX program allows 5 

duty-free imports of inputs, fuels, and lubricants used in the production of exports if a minimum of 30 percent of a firm’s production is exported. 

Additionally, PITEX provides exemptions from Mexican value-added taxes on purchases of inputs that go into products for export for

firms that export a minimum of $3 million annually.

Source: Solunet Inc. of El Paso, Texas, and Consejo Nacional de la Industria Maquiladora de

Exportacion, Mexico City, Library of the Embassy of Canada in Washington, DC, and USITC staff

telephone conversations with listed companies.
 Industry sources report that, on the whole, the bureaucratic process for gaining approval of 4

applications to sell directly from maquiladora operations into Mexico has improved. Although

reporting and performance requirements have been added, procedures are now more transparent, and

the treatment of applications is more consistent. Currently, it is less difficult to obtain approval for

sales between maquiladoras, but industry representatives are optimistic that Government approval to

sell to nonmaquiladora customers in Mexico will come more expeditiously as the domestic economy

continues to improve and local producers adapt to increased competition under NAFTA.

 Bureau of National Affairs, “NAFTA Breathes Life Into Maquiladoras,” International Trade 5

Reporter, Aug. 3, 1995, p. 133.

 "Maquiladoras Change Rules,”North American Free Trade & Investment Report, Oct. 31, 1996, 6

pp. 3-4.

4-4

Canadian firms to establish maquiladora operations were low- technology, labor-intensive

assembly firms. Several of these Canadian firms indicated that they purchased their plants from

U.S. firms who were moving their manufacturing operations to plants in Mexico’s interior

where the labor market was more abundant.

By 1993, there were a total of nine Canadian maquiladoras operating in Mexico, principally

small- to medium-sized companies that produced products ranging from electrical and electronic

components to scuba diving suits. These Canadian firms were primarily located along the U.S.-

Mexico border to benefit from established distribution channels and warehousing facilities,

which were less available in Mexico’s interior. Six of the nine Canadian firms were situated

along the U.S.-Mexico border, with the remainder situated within 250 miles from the border.

Under NAFTA, Mexico agreed to eliminate it’s Maquiladora Program by January 1, 2001. The

phase-out of the program permits maquiladora firms to direct an increasingly larger proportion

of their production to the Mexican domestic market. In 1994, maquiladora operations were

permitted to sell up to the equivalent of 55 percent of their previous year’s production to the

domestic market. That amount is scheduled to rise to 100 percent in the year 2001. Although

most of the contacted Canadian maquiladora operations have postponed selling directly to the

domestic Mexican market due to the large amount of documentation required to gain permission

from the approving authorities in Mexico, several Canadian firms have indicated that they plan

to explore ways to increase their sales to the domestic market or to other maquiladora

operations.4

Since implementation of NAFTA, the number of Canadian firms making use of Mexico’s

maquiladora program has increased from 9 to 29. Canadian firms and U.S. companies were

attracted to the maquiladora industry for the same reasons. Several Canadian firms established

maquiladora operations in Mexico to maintain their supplier relationships with the Big Three

automotive producers. Other important factors were the elimination of U.S. quotas and duties

on apparel and textile products sewn in Mexico making use of U.S. formed and cut fabric.

Additionally, various Canadian and U.S. firms established maquiladora operations in the interior

of Mexico to take advantage of a more suitable labor supply for production of labor-intensive

articles that do not require advanced labor skills. Additionally, various state governments in 5

Mexico have actively sought to lure foreign firms away from the U.S.-Mexico border by

providing assistance with worker training, moratoriums in real estate taxes, and providing

exemptions on sales taxes to firms that make use of local suppliers. Finally, devaluation of the 6

Mexican peso in December 1994 was influential in attracting a record amount of new
 U.S. Department of State Telegram, Aug. 9, 1997, Mexico City, Message Reference No. 12356. 7

 USITC staff telephone interview with officials of Nortel de Mexico officials on Aug. 29, 1997. 8

4-5

investment in Mexico’s maquiladora program as foreign assembly operations benefited from

lower labor costs and the improved price competitiveness of Mexican exports to world markets.

Profile of Selected Canadian Maquiladoras and

Outlook for the Maquiladora Sector

In 1997, there were a total of 29 Canadian maquiladoras operating in Mexico. Of these, 54

percent were located in the interior, away from the U.S.-Mexico border where the majority of

the maquiladora industry is located. Automotive and apparel assembly were the leading sectors

attracting Canadian maquiladora operations (figure 4-1). Nearly all Canadian automotive

components maquiladoras are in Mexico because local producers in Mexico have yet to make

significant inroads in providing inputs to the Big Three U.S. producers, and because of the

7

Mexican peso devaluation in December 1994. Canadian apparel firms have been attracted to

Mexico’s maquiladora program because of the absence of quotas and duty-free entry to the U.S.

market. Wire harness producers make up approximately 8 percent of all Canadian maquiladoras

operating in Mexico in 1997. The labor-intensive manufacturing processes in this industry

make it essential that Canadian firms operate in Mexico to remain price competitive. Practically

all wiring harnesses for the U.S. motor vehicle market are assembled in Mexico.

The following company profiles provide a cross section of Canadian firms with assembly plants

in Mexico.

Northern Telecom (Nortel de Mexico)8

In 1994, Nortel commenced operations in Mexico and presently employs 1,600 workers in its

Monterrey, Mexico establishment. The facility produces digital telephone sets, pay telephones,

advanced power systems, and cable harnesses primarily for export to the United States and

Canada. Ten percent of total production is currently marked for the Mexican market. Mexico’s

Avantel (telephone company) is one of Nortel de Mexico’s largest Mexican clients. Principal

competitors in Mexico include Lucent Technologies, Motorola, and AT&T. In 1998, Nortel de

Mexico plans to introduce digital wireless products (e.g., cellular telephones) and to divert a

much larger share of its total product line to the Mexican and Latin American markets to benefit

from Mexico’s preferential trade agreements with several Latin markets, for products “made

in Mexico.” Thus, Nortel de Mexico has established operations in Mexico not only to benefit

from duty-free entry into the U.S. market for their products, but to gain long-term access to the

Mexican and other Latin American domestic markets.
 A discussion of the global trend to adopt International Organization for Standardization (ISO) 9

quality standards is contained in USITC “Emerging Focus on Quality Systems Registration Enhances

Market Prospects...,” Industry, Trade, and Technology Review, Oct. 1994.

4-6

Figure 4-1

Distribution of Canadian companies involved in Mexico’s maquiladora industry by

sector, 1997

(Percentage)

S

ou

rc

e:

C

o

mpiled by the U.S. International Trade Commission from telephone interviews and published sources.

According to company officials, Monterrey’s highly rated educational system was a primary

factor influencing the selection of this location by Northern Telecom. Monterrey’s location near

the U.S.-Mexico border, relatively new infrastructure, flexible labor unions and strong business

environment were other major factors cited. Nortel’s Monterrey facility is ISO 9000 certified9

as are all of its vendors, including local suppliers. The bulk (90 percent) of all components and

parts are purchased from firms in the United States and Canada, with a very small amount

provided by companies in the Far East. Nortel makes use of just-in-time (JIT) inventory

practices. Local suppliers in the Monterrey area include Kemet (South Carolina) for capacitors,

MPS (Connecticut) for plastic components, and Thomas and Betts (Tennessee) for electronic

connectors. Mexican suppliers outside the maquiladora sector account for less than 3 percent

of the value of all parts and components required by Nortel de Mexico. Nortel’s suppliers

include wholly owned Mexican producers of plastics, metal components, and packaging

materials.
 USITC staff interview with officials of Nygard International on Aug. 15 and Aug. 27, 1997. 10

 USITC staff interview with officials of Noma Appliances and Electronics on Aug. 22, 1997. 11

 Prior to 1994, the maquiladora facilities were owned by Fleck Industries. Noma purchased 12

Fleck in 1994 and continues to use the Fleck name in Canada. Noma operates in the United States as

Electronic Systems Inc.

4-7

Nygard International, Tan Jay Division (Nygard S.A.)10

Nygard International of Winnipeg, Canada, is reportedly the largest women’s apparel producer

in Canada. Nygard has several operating divisions: Bianca, Bianca Signature, Tan-Jay; TanJay/Alia; each of which operates as a profit center. The Tan-Jay/Alia division of Nygard

operates several contract manufacturing facilities in Mexico and exports approximately 75

percent of its production of woman’s trousers to the United States. The remaining 25 percent

of apparel production is shipped to Canada (the duty rate in Canada for these products is very

high, whereas qualifying U.S. imports are free of duty). The bulk of production for the U.S.

market is shipped to the Los Angeles and Southern California areas by truck. Tan-Jay/Alia

woman’s trousers are marketed in the low-to-medium price range of $20 to $40. Presently,

Tan-Jay/Alia procures its raw materials such as zippers and threads in the domestic market.

The company currently does not sell in the local market, but it plans do so within the next 2

years. Major competitors in Mexico are Hagger and Cheloid. The availability of a stable lowcost labor force was the principal factor in locating in Mexico’s interior.

Noma Appliance and Electronics (Noma Appliances)11

Noma Appliance and Electronics operates two maquiladora facilities. Noma Appliance and 12

Electronics exports nearly all of its Mexican wire harnesses production to U.S. producers of

major household appliances such as Whirlpool, Maytag, and Frigidaire. Noma also sells a very

small amount of its production to other Mexican maquiladora operations. Noma has two

principal raw material suppliers in the United States, Aircraft Marine Products (Harrisburg,

Pennsylvania) and Molex Inc. (Chicago, Illinois). Noma also has a facility in Cd. Juarez that

produces artificial Christmas lights and trees.
 USITC staff interview with officials of Beck Electric Co., Aug. 26, 1997. 13

 Joel Millman, “Asian Investment Floods Into Mexican Border Region: Access to U.S. Markets 14

Draws Makers of Televisions, Toys,---and Shabu-Shabu,” Wall Street Journal, Sept. 6, 1996, p. 10.

4-8

Beck Electric Co., subsidiary of Noma Industries (Sistemas y

Conexiones)13

In 1994, Noma Industries acquired Beck Electric from Fleck industries. Beck employs 400

workers at its plant in Imuris, Sonora. Beck Electric ships all of its production of automotive

wiring harnesses to the Big Three U.S. auto producers. Major U.S. competitors include SysMex

of Chrysler, Cincinnati Electronics, and Delphi Electronics. Beck’s wire harnesses typically go

into a single car model assembly line. Because of the long lead times required to bid on an

automotive contract (on average 18 to 24 months including the time involved in producing a

prototype), the Big Three U.S. producers require Beck to have a JIT facility in Mexico. Beck’s

maquiladora plant does not sell any of its products in the Mexican market, but plans to do so

within the next 2 years if the Mexican market continues to become more open.

Outlook

The structure of Canadian maquiladoras is likely to change substantially after Mexico’s

maquiladora Program is legally phased out. As of January 1, 2001, assembly plants will be

placed on an equal footing with the domestic industry in Mexico, and will no longer be able to

import components, materials, and machinery duty-free from non-NAFTA member nations. At

the same time, foreign-owned assembly plants will have unrestricted access to the Mexican

market. Consequently, both foreign-owned assembly plants and the domestic industry will have

an incentive to import required inputs from the United States and Canada rather than from

Europe or Asia because of duty-free (or reduced duty) treatment under NAFTA. In addition,

Canadian companies (as well as U.S. firms) may find opportunities as suppliers to assembly

plants in Mexico that are trying to increase their North American-origin content.

This is especially true for operations that have relocated to Mexico from Asia in order to qualify

under NAFTA’s rules of origin for duty-free treatment when goods enter the United States or

Canada.14

Ruben E. Mata

(202) 205-3403

 Mata@usitc.gov
 This chapter is based on fieldwork conducted by USITC staff in Hungary during July-Aug. 1997, 1

including interviews with Hungarian officials and representatives of private firms engaged in

assembly operations.

 For purposes of this discussion, Central Europe is defined as the original founding members of 2

the Visegrad countries (Czech Republic, Hungary, Poland, and Slovakia), as well as Croatia and

Slovenia. Although Romania and Bulgaria have expressed an interest to be included in this

geographical conglomerate, they are frequently regarded as part of Eastern Europe, a region that also

includes the ex-Soviet republics flanking the east-Carpathian mountains. 

 "Outward processing relief arrangements” allow EU goods to be temporarily exported from the 3

customs territory of the EU for the purpose of processing operations. Products resulting from such

production-sharing activities may be granted partial relief from duties upon importation into the EU. 

The types of operations that may benefit from EU production-sharing provisions include the working

(including fitting or assembly or adaptation to other uses), processing, and repair of goods. By

contrast, U.S. production-sharing provisions are applicable only to goods that have been assembled or

metal that has been processed. 

 Shortly after pro-Soviet communist leadership was removed from power in Central and Eastern 4

Europe, the EU signed trade agreements with most of these nations permitting duty-free access to the

EU market for a wide range of articles. Most agricultural, steel, and textile products were exempted

from this preferential tariff arrangement.

5-1

CHAPTER 5

THE ASSEMBLY INDUSTRY IN

HUNGARY: IMPLICATIONS OF

THE USE OF PRODUCTION

SHARING IN CENTRAL EUROPE

FOR U.S. INDUSTRIES1

U.S. and European Union (EU)-based companies forge economic ties and business relationships

in Central Europe (CE) for reasons that include the search for new markets, the attempt to

2

secure competitive production and assembly through lower labor costs, and the need to enhance

price competitiveness in the global marketplace. Production-sharing trade between the EU and

the three leading CE trading partners (the Czech Republic, Hungary, and Poland) has been

structured in ways that are similar to U.S. assembly in Mexico.

EU customs law has an “outward processing trade” (OPT) tariff provision, which is

3

comparable to production-sharing provisions (PSP) of HTS Chapter 98. The value of the EUorigin content in imported articles is exempt from duty, provided that record-keeping

requirements are complied with and all necessary permits are obtained prior to exporting the

EU-origin materials to be processed. The EU, however, has many preferential tariff

arrangements that minimize the incentive to import under OPT. As a result, apparel and other 4

textile products account for the bulk of EU imports under OPT from CE; most production

sharing between the EU and CE in the motor vehicles and parts, electronic products, and
 Hungary has been an associate member of the EU since 1994. The Association Agreement, 5

which came into effect in February 1994, provided for an asymmetrical liberalization of trade over the

next 5 years. At the Copenhagen summit conference in 1994, further EU concessions were

announced which exempted over 90 industrial products from customs duties and quotas beginning

Jan. 1, 1995 (2 years before it would have been officially required by the Association Agreement).

 USITC staff interview with officials of the U.S. Commercial Service, Budapest, Hungary, July 8, 6

1997.

 U.S. Department of State, U.S. Embassy, Budapest, 1998 Country Commercial Guide: 7

Hungary, prepared by U.S. Embassy, Budapest, p. 4.

 Assembly in Hungary is called “bermunka,” or in literal translation “contract work.” Hungarian 8

literature typically describes assembly and/or production-sharing type activities as contract work.

5-2

machinery sectors is free of duty and is not reported under OPT. Moreover, the ratio of EU 5

OPT imports to total EU imports was approximately 2 percent in 1996, whereas U.S. imports

under the PSP of HTS Chapter 98 accounted for roughly 10 percent of total U.S. imports.

Hungary quickly emerged as a leading location for U.S.- and EU-based companies for new

investment during the CE transition to market-based economies beginning in 1989. During

1989-96, Western companies invested $16.5 billion in Hungary, making it by far the leading

recipient of foreign direct investment in the ex-Warsaw Pact region, attracting over one-third

of total foreign direct investment in Central and Eastern Europe (including the former Soviet

Union) since 1989 (figure 5-1). U.S. companies accounted for $4.5 billion (27 percent) of the

investment in Hungary. EU and U.S. firms have chosen Hungary as a manufacturing and

6

distribution center because of Hungary’s central location to supply all of Europe, low labor

costs, skilled labor, good educational and training facilities, evolving transportation and

financial infrastructures, and the clustering of high-technology companies to service the region.

Good highway and rail connections to Germany through Austria have been particularly

important in boosting the flow of investment into Western Hungary, making the ViennaBudapest highway an assembly corridor. Industrial parks operating as free-trade zones has been

established along the route, attracting maquiladora-type assembly operations. These

transportation networks and proximity make it feasible to import materials and components

from Western Europe and to re-export finished goods to leading customers in Austria and

Germany.

Products manufactured at least in part by foreign-owned companies are estimated to have

accounted for nearly 70 percent of Hungary’s total exports in 1996. Although trade preference 7

programs with the EU and liberalized EU customs laws continue to reduce the incentive to use

these provisions, the OPT, or “contract work,” sector in Hungary is an

8
 KOPINT-DATORG, Guide to Hungarian Exporters and Subcontractors, 1997, p. 8. 9

 Compiled by USITC staff from Eurostat trade statistics. 10

5-3

Figure 5-1

Accumulated investment in Hungary 1989-96, by source country

Source: Estimated by USITC staff from data obtained from the International Trade Development

Agency, Budapest, Hungary and the Embassy of the Republic of Hungary, Washington, DC.

important and growing source of export earnings and employment for the country, accounting

for roughly 27 percent of Hungary’s total exports in 1996.9

During 1993-96, Hungary accounted for an average of 10 percent of total EU OPT imports and

it contributed about 20 percent of EU OPT imports from the region defined as Central Europe.

Poland was the largest source of EU OPT imports, contributing 40 percent of all such imports

from CE countries. The Czech Republic accounted for an average of 19 percent of total EU

OPT imports from Central Europe during the period. KOPINT-DATORG, a leading

10

Hungarian source for international trade statistics, estimated that the export value of contract

or assembly activities from Hungary amounted to $3.5 billion in 1996. Only about one-third

($1.3 billion) of those activities was reported under the EU OPT program in 1995.
 The Hungarian Government broke ranks with Soviet-style economic management principles as 11

early as 1968, when the country embarked on a major reform, called the “New Economic

Mechanism.” The essence of the reform was to incorporate market principles and introduce

production incentives in the management of state-owned enterprises and to allow private ownership

for small- to-medium-sized businesses. 

 U.S. Department of State, 1998 Country Commercial Guide: Hungary, p. 6. 12

 General Motors and Ford Motor Co. expanded their manufacturing operations in Europe during 13

the past decade. GM assembles cars in Germany, Spain, the Czech Republic, and Hungary, while

Ford has manufacturing locations in the United Kingdom, Belgium, Germany, and Spain. GM and

Ford have benefitted from the Association Agreement between Hungary and the EU, which provides

for the staged elimination of Hungary’s 43 percent rate of duty on vehicles imported from the EU. By

contrast, Chrysler does not have an auto assembly plant in the EU and its vehicles are subject to the

full 43 percent Hungarian duty. 

 The Hungarian Economy, A Quarterly Economic and Business Review, vol. 24, No. 4, 1996, p. 14

19.

5-4

The Role of Hungary in EU Trade

The importance of Hungary for EU and U.S. companies lies in the country’s geographic location

at the crossroads of Central and Eastern Europe, its flexible and longstanding adherence to

western economic standards, its historic role as a banking and financial center in Central

11

Europe (particularly Budapest), a relatively skilled and well educated work force, and its

commitment to privatization, modernization, and investment. Hungary also has a good

reputation for strict adherence to debt repayment schedules.12

Many U.S. and EU firms forged business relationships in Hungary after the transition to a

market economy began in 1989, establishing either a manufacturing or distribution presence in

Hungary to serve surrounding markets in the region. The new wave of investors included firms

such as Audi, Ford, General Electric, General Motors (Opel), Levi Strauss, Merck Sharp &

Dohme, Microsoft, Nabisco, Oracle, Packard Bell, Pepsi Cola International, Philips, Siemens,

Unilever, and United Technologies.13

Since 1989, the Government of Hungary has made significant strides to ease the regulatory

burden, to reduce trade barriers, and to curb duty rates. At a WTO meeting in Singapore in

December 1996, the Hungarian minister of trade reiterated Hungary’s intention to decrease

average import duty rates from 13 percent to 8 percent. However, Hungarian officials

confirmed that they have no intention to take part in an accelerated phasing out of duties and

added that, at this time, Hungary was not interested in joining the group that aims to phase out

duties on information technology and telecommunication products. 

14

Trade between the EU and Hungary is defined primarily by traditional alliances and

geographical proximity. Therefore, the three most important trading partners for Hungary

continue to be Austria, Germany, and Italy. The three countries together consumed 48 percent

of Hungary’s total exports and more than three-quarters (84 percent) of its exports resulting

from contract work (assembly) in 1996 (figure 5-2). Roughly one-half of all of Hungary’s

production from contract work is sold to Germany. Hungary’s industrial duty-free zones

(DFZs) experienced a sharp increase in foreign trade in 1996, increasing their role in
 Compiled by USITC staff from KOPINT-DATORG statistics. 15

5-5

Figure 5-2

Hungary’s exports from production-sharing operations (contract work) by leading

markets, 1996

Source: Compiled by the U.S. International Trade Commission from official statistics of KOPINTDATORG Co. Ltd. Budapest, Hungary, 1997.

Hungary’s overall economy. Hungarian exports originating from DFZs amounted to $2.8

billion in 1996, an increase of 73 percent compared with the previous year, while imports into

DFZs totaled $2.4 billion, an increase of 83 percent. 

15

However, the most important recent development influencing trade between the EU and

Hungary has been the so-called Pan-European Cumulation System (PECS), comprising a set of

EU bilateral agreements, which aims to harmonize standards and rules-of-origin laws between

the EU, EFTA, CEFTA, and other countries (a total of 28 countries) that includes the EU-15

plus Bulgaria, the Czech Republic, Estonia, Hungary, Iceland, Latvia, Lithuania, Norway,

Poland, Romania, the Slovak Republic, Slovenia, and Switzerland. The Government of

Hungary signed an agreement conforming to the PECS with the EU on December 28, 1996; it

became effective on July 1, 1997. Under the PECS, companies that import inputs from outside

the cumulation region must pay duty in order to take advantage of free-trade preferences when

exporting their finished goods to PECS countries. If, on the other hand, the importer opts to
 The Hungarian Economy, p. 13. 16

 The reverse also applies; i.e., materials and components originating in Hungary will be treated as 17

EU articles provided that they are incorporated into a finished product manufactured in the EU.

 Donal Power, “Szekesfehervar Imposes Tax Hikes,” in Business Hungary, American Chamber 18

of Commerce in Hungary, April 1997.

5-6

receive a so-called duty drawback (credit for duty paid when the input is imported), eligibility

for preferences is lost and the finished product is exported on a most-favored-nation basis.

Maximum duty rates and exemptions have been allowed during a co-called transition period to

mitigate any negative effects of the new regime. 

Hungary’s trade agreements with the EU, EFTA, and CEFTA member states traditionally set

the rate of local content requirement at 50 percent for industrial products to qualify for

preferential treatment. However, under the new regulations on certificates of origin (the socalled “diagonal rule-of-origin cumulation”), if raw materials and/or components originating in

any of these countries are processed in Hungary and then re-exported to EU territory, the value

of raw materials and components will be considered local content. Separate agreements were 16

also signed between the EU and these partner countries to validate the PECS and implement the

bilateral rules-of-origin cumulation. The agreement allows Hungary to treat materials and

components originating in the EU as articles of Hungarian origin, provided that those materials

and components comprise a finished product manufactured in Hungary.17

Although Hungarian exports accounted for only about 2 percent of total EU imports in 1995,

Hungary is important to EU companies as a partner for low-cost assembly. Despite the EU’s

dominance in Hungarian trade, the United States and several other countries have also

developed key roles in the assembly industry in Hungary.

The Assembly Industry in Hungary

Assembly or contract work has existed between Hungary and its neighbors since the 1970s.

Operations were typically located by Western firms in the more developed areas, such as the

West-Transdanubian counties bordering Austria (e.g., Gyor-Moson-Sopron, Vas, and Zala

counties), where infrastructure and a more developed labor force attracted investment. 

One community that has attracted a significant amount of foreign investment is Szekesfehervar.

The free- trade zone there is home to subsidiaries of Ford Motor Co., Philips Electronics, IBM,

and Alcoa. According to Robert Pel, Managing Director of the Philips’ plant, despite the

relatively high taxes paid by foreign assembly plants to the local government, Szekesfehervar

is a good place to establish an assembly plant because of its “technically skilled workforce, a

location close to European borders and a good infrastructure.”18

Critics in Hungary contend that unlike foreign investments in Poland and the Czech Republic,

where foreign investors have purchased state-owned companies and tried to upgrade them into

profitable concerns, multinationals investing in Hungary have largely set up assembly

operations that do not rely heavily on local inputs. One official expressed concern that there is

a “dual structure” in the economy, noting that multinationals do not pull domestic suppliers

along with them, but rather tend to import, assemble, and export with hardly a link to the local
 USITC staff interview with an official of the Ministry of Industry and Trade, Budapest, Hungary, 19

July 30, 1997.

 KOPINT-DATORG Co. Ltd., Guide to Hungarian Exporters and Subcontractors, 1997, 

20

p. 8.

5-7

economy. Others hold that assembly is advantageous for Hungary because foreign investment 19

in modern assembly operations has enabled Hungarian companies to acquire technological

know-how and special machinery that would have otherwise taken years to develop. 

20

According to the U.S. Embassy in Budapest, the 12 largest foreign investments in Hungary

since 1989 include the following:

Investor Country U.S. dollars) Industry Company name

Amount

(Millions of

Ameritech/Deutche United States 2,700 Telecommunications MATAV

Telecom and Germany

General Electric United States 690 Light Bulbs Tungsram

General Motors United States 650 Finished autos, auto Opel Hungary

parts

Volkswagen/Audi Germany 550 Finished autos, auto Audi Hungary

parts

Eridania France 540 Sugar Eridania BeghinSay

RWE Energie-EVS Germany 350 Electricity Elmu Supply Co.

Scandinavian PTTS Finland, Sweden, 340 Telecommunications Pannon GSM

Denmark, the

Netherlands

U.S. West United States 330 Telecommunications Westel

International

Suzuki Japan 300 Finished autos Magyar Suzuki

CGE Telecom France 300 Telecommunications Deltav Rt. CG Tel.

Div.

UTS The Netherlands 300 Telecommunications UTS

Although apparel dominates production-sharing trade reported under OPT (about one-half of

all garments sewn in Hungary are exported to Germany), Hungarian statistics verify that exports

resulting from contract work are much more diverse. Hungarian exports from productionsharing operations include articles such as ignition wiring sets (Loranger, Ford, UT

Automotive); record and cassette players (Videoton); footwear; television and radio equipment
 "Social costs” include contributions to programs such as health care, social security, and 21

employee housing.

 USITC staff interview with an official of KOPINT-DATORG Co. Ltd., Budapest, Hungary, 22

August 1997.

 Based on USITC staff interviews with the following Ford representatives in Szekesfehervar, 23

Hungary, in July 1997: Dan Linder, Production Manager; Edit Gyulai, Treasurer; and Izolda Mayer,

Customs Specialist.

5-8

(Philips); brassieres (Styl Clothing Factory); seats for motor vehicles; and printed circuit boards

and disc drives (IBM).

EU companies often express concern that the social cost of production in Hungary and other 21

countries in CE is relatively high, and therefore prefer to set up structures that enable them to

avoid these costs. For example, Italian firms have typically established joint ventures with

Hungarian partners in which they retain majority ownership, then use contract work within this

arrangement to avoid Hungarian health care, pension, and other related costs. 

22

Company Profiles and Outlook

To provide insight into the operating strategies of companies that have established productionsharing subsidiaries in Hungary, six facilities are profiled below.

Ford Motor Company’s Alba Plant23

Ford has invested $146 million in its wholly owned subsidiary in Szekesfehervar, Hungary.

Construction began in 1990 and the Alba plant opened its first shift in 1992. Employment at

the plant is currently 1,340. The plant maintains a 1 to 2 percent employee turnover rate

compared with an industry average of 6 to 8 percent. Ford received a 5-year tax holiday for the

plant. Production line wages are about $2 to $3 per hour.

Principal products assembled at the plant include fuel pumps, ignition coils, and starter motors

for motor vehicles. Car models using these products include Fiesta, Escort, Mondeo, Scorpio,

Ka, Transit, and Galaxy. Vehicle assembly plants using these auto parts are located as follows:
 Based on USITC staff interviews with the following Loranger representatives in Szekesfehervar, 24

Hungary, in July 1997: Sandy Roth, general manager, and Nandor Szvetko, production manager.

5-9

Country Plant Location

Germany Cologne, Merkenaich, Karmann, and Saarlouis

Belgium Genk

Spain Valencia

United Kingdom Bridgend, Enfield, Dagenham, Daventry,

Southampton, and Halewood

United States Rawsonville, Ypsilanti, and Bedford

Motor vehicle parts from the Alba plant are also exported to Ford operations in Argentina,

Brazil, India, Malaysia, Poland, South Africa, Taiwan, and Thailand. The only Alba customer

outside Ford Motor Company is Mazda in Japan.

There are 73 suppliers to the Alba Plant, of which most ship components and materials from

EU and U.S. locations by sea containers and truck. Ford reports there are 5 sea containers and

30 truck shipments weekly. Hungarian suppliers include Loranger (see discussion below), Le

Carbone, Berva, and Bakony Muvek. Together, these Hungarian suppliers represent 20 percent

of Alba’s purchases of components and materials.

Loranger Ipari Kft.24

Ford Motor Co. prefers that its suppliers have production or assembly facilities located close

to its vehicle assembly plants in order to provide JIT delivery, participate in coordinated design

and production planning, and reduce transportation costs. At the urging and assistance of Ford,

Loranger established a plant to manufacture precision-molded engineered plastic components

for Ford’s Alba plant. Both facilities are located in Szekesfehervar, with the Loranger plant,

which has a workforce of about 200 employees, located on space previously occupied by a

Soviet military base. Loranger’s investment there totaled about $30 million. Loranger

representatives claimed that Szekesfehervar is one of the most cost-effective locations in Europe

for assembly and manufacturing.

Loranger is a family-owned company based in Warren, Pennsylvania that specializes in the

thermoplastic molding technology, an area in which the Loranger plant in Hungary also focuses.

Although the company currently serves as an exclusive supplier to Ford, Loranger officials

stated that the company is considering the expansion of its customer base in Hungary and

elsewhere in Europe, targeting Opel and Audi for supplier contracts.
 Based on USITC staff interviews with the following General Motors representatives in 25

Szentgotthard, Hungary, in July 1997: Edit Legradi, public relations manager; Gyula Herkli, Customs

Coordinator; and Tamas Vass, supervisor of purchasing.

 Based on interviews with trade officials in Budapest, Hungary, July 1997. 26

 For example, Hungarian authorities agreed that Audi could schedule production around the clock 27

every day of the week. By contrast, German labor laws prescribe a 5-day work week and the consent

of both the trade union and the factory council is needed for any weekend hours or overtime work,

which hampered flexible response in German production facilities.

5-10

GM-Opel/General Motors Hungary25

The General Motors-Opel plant in Szentgotthard represents the third-largest foreign investment

in Hungary, valued at $650 million. The plant assembles approximately 12,000 Opel Astra

automobiles annually from imported components. Although most of the Astras are sold in the

Hungarian market, vehicles are also exported to Italy, Greece, and China. The bulk of the

plant’s 1,245 workers, however, are involved in the production of cylinder heads, drive axles,

and engines, principally for export to the EU and other foreign markets (including Mexico).

Opel is the market leader in Hungary with a 21-percent share of the market in 1996. Suzuki was

second with a 19-percent market share, followed by Daewoo, Volkswagen, and Ford. Opel

Hungary has approximately 250 suppliers; 25 of these use JIT delivery requiring no inventories.

Hungarian sources supplied 8 percent of the components and materials used in the auto

assembly plant in 1996 and 4 percent of those used in the engine plant. Examples of parts

supplied by Hungarian producers include wiring harnesses, batteries, windshield wipers, tires,

and inside sun shades.

Audi Hungaria Motor Kft./Volkswagen-Audi 26

The Audi plant in Gyor has facilities for both the manufacture of engines and the assembly of

engines from imported parts. Cylinder heads and engines are assembled inside railway cars that

are equipped with assembly kits. Most of the components in the kits are made in Germany.

Workers do not unload the components or kits, but are positioned in and around the railway cars

to perform the necessary assembly work. Once the work is completed, the train returns to

Germany. The total elapsed time from departure from the plant in Germany, to assembly in

Hungary, to return to the plant in Germany is usually 24 hours or less. The engine blocks are

all imported into Hungary directly from the Volkswagen foundry in Germany; parts made in

Hungary account for 6 to 8 percent of the value of all parts used to make the complete engine.

Finished engines are sent to Audi’s main vehicle assembly plant in Ingolstadt, Germany.

The Volkswagen Group established Audi Hungaria Motor Kft. (AMH) in 1993 with an equity

of about $1.5 million. Audi has invested about $550 million in the Gyor facility thus far, but

is on schedule to invest an additional $200 million to bring the plant up to full capacity

producing 4-, 6- and 8-cylinder engines and the TT coupe Roadster in Gyor by 1998. Audi

picked Gyor out of 180 competing sites. Key elements in making their decision were the

existence of an operational assembly facility (previously owned by the Raba railway company),

an excellent railway connection, and the flexibility displayed by Hungarian authorities to

accommodate Audi’s needs. The Government of Hungary has made the AMH facility a free 27

trade zone, expediting the movement of goods in and out of the plant.
 Based on USITC staff interview with Norbert Wolpert, Finance Manager, IBM Storage 28

Products, Szekesfehervar, Hungary, July 1997.

 Based on USITC staff interview with Robert Pel, General Manager, IR3 Video International 29

Kft., in Szekesfehervar, Hungary, July 1997.

 The company’s name IR3 is an acronym for image, reception, recording, and replay. 30

5-11

IBM Storage Products Kft. 28

IBM Storage Products Kft. is a wholly owned subsidiary of IBM producing hard disk drives for

desktop computers. Total production exceeded 1 million drives in 1996 and IBM expects to

triple its output in 1997. IBM is Hungary’s largest exporter, with foreign sales valued at more

than $1 billion in 1996. The plant, which employs nearly 3,000 people, is in Szekesfehervar

and operates in a free- trade zone. 

The manufacturing process for hard disc drives is labor-intensive. It takes about 15 hours to

assemble a single hard drive. Components are source from Italy, Malaysia, Thailand, and

Germany. Two-thirds of the plant’s production is sold to original equipment manufacturers in

Europe, such as Apple, Gateway 2000, and Compaq. The principal competition for IBM

Hungary are manufacturers in Southeast Asia, where wages are often lower than in Hungary.

IBM Hungary currently produces 2.1-, 2.6-, and 3.2- gigabyte hard disk assemblies. The

Szekesfehervar hard disk drive units make use of magneto-resistive (MR) heads and No-ID

sector formatting technology, which were both developed by IBM. The company’s magnet disk

storage unit production is centered in San Jose, California. However, plants in China, Germany

(Mainz), Hungary (Szekesfehervar), Japan (Fujisawa), Mexico (Guadalajara), Singapore, and

Thailand also assemble storage technology products for IBM, with most using some parts made

in San Jose.

IR3 Video International Kft.29

Philips and Grundig established IR3 Video in Szekesfehervar for the assembly of VCRs and 30

VCR-television combos. The plant assembles 450 different models of VCRs and VCRtelevision combos, with annual production estimated at 5 million units. The facility employed

1,200 people in 1997. About 70 percent of the value of all of the components used in the

assembly process are of EU origin; most of the EU components are produced in Austria and the

United Kingdom. Components made in Hungary account for a small share of the products

value. All of the assembled products are exported, with most going to the EU or South

America. 
 Hungarian wages went down by about 7 percent in 1996 because of the appreciation of the U.S. 31

currency.

 U.S. Department of State, 1998 Country and Commercial Guide: Hungary, p. 3. 32

 According to Hungarian Government officials, Hungary is expected to become a full member of 33

the EU by 2002. 

 Ibid., p. 23. 34

5-12

Prior the shifting assembly to Hungary, Philips used Portugal as its main European location for

assembly. However, wages in Portugal doubled relative to wages in the Netherlands, rising

from about 20 percent as high as Dutch wages in the late 1980s to approximately 40 percent

as high in 1997. By contrast, Hungarian wages in 1997 were approximately 20 percent as high

as wages in the Netherlands or Germany.31

Outlook

Companies continue to establish assembly plants in Hungary to take advantage of the

combination of low labor costs, skilled workforce, economic and political stability, and

proximity to markets throughout Europe. U.S. companies seeking a low-cost manufacturing 32

base in Europe have been able to use well-developed transportation links to distribute finished

goods to Western European markets. Investment in assembly operations in Hungary has also

positioned U.S. companies to take advantage of anticipated growth in markets in Central and

Eastern Europe.

U.S. companies that have met local content or transformation requirements have been eligible

for preferential tariff treatment in the EU market from their Hungarian assembly plants.

Hungary’s recent Association Agreement with the EU will assure many U.S. companies with

continued and expanded preferential access to the EU market from their Hungarian

manufacturing bases. Some U.S. companies, however, will be placed at a competitive

disadvantage because membership in the EU will require Hungary to adopt the EU common 33

external tariff (CET), which are sometimes higher than the Hungarian rates of duty. U.S.-made

components that are currently imported free of duty into Hungary’s free trade zones for

processing and re-export to the EU will be subject to duty when the EU CET becomes

applicable. Furthermore, in response to pressure from the EU, Hungary recently has established

new regulations that make it much more difficult to establish a free trade zone.34

All U.S. companies with manufacturing operations in countries in Central and Eastern Europe

that have negotiated association agreements with the EU will have duty-free access to the EU

from their qualifying assembly operations in the region, but will ultimately be subject to the EU

CET on imports of components and materials from the United States or other countries that are

not parties to the association agreements. Some firms, however, will benefit when Hungary

joins the EU. The duty rate on Chrysler vehicles, for example, will be reduced from the current

Hungarian rate of 43 percent to the EU CET rate of 10 percent. 

Adam Topolansky

(202) 205-3394

Topolansky@usitc.gov 
APPENDIX A

THE CUSTOMS TREATMENT OF

CERTAIN AMERICAN GOODS

RETURNED (HTS 9802.00.5010,

9802.00.60, 9802.00.80, AND

9802.00.90)
 The CBERA requires that the cost or value of materials from one or more beneficiary countries 1

plus the direct costs of processing (including labor) therein must total 35 percent of the appraised

value of goods for which duty-free entry is claimed, and that the goods be a "product of" a beneficiary

country. The cost or value of U.S. materials (not counting those of Puerto Rico) may be counted

toward that value threshold in an amount not to exceed 15 percent of the finished goods' appraised

value upon entry. See HTS general note 7.

 See 19 C.F.R. 12.130(c)(1). 2

 No blanket duty exemption for goods of U.S. origin—even those imported by or for most U.S. 3

Government agencies—is afforded elsewhere in the HTS; and duties must generally be paid on such

goods each time they are entered unless the HTS specifies another tariff treatment. See general note 1

(continued...)

A-2

The goods eligible for duty treatment under the tariff provisions discussed in this

appendix are those exported from the United States and returned to the customs

territory after being advanced in value or improved in condition abroad by assembly

or particular processing operations. Goods for which conditional duty reductions or

exemptions are claimed in chapter 98 remain classifiable in the appropriate legal

categories in chapters 1 through 97 of the Harmonized Tariff Schedule of the United

States (HTS); the duty treatment available under chapter 98 is not automatic but

must be claimed and justified by the importer under the terms of applicable Customs

Service regulations. Subheading 9802.00.60 and heading 9802.00.80 of the HTS

were discussed in greater detail in earlier Commission reports on production sharing,

and the legal text of these provisions and of subheading 9802.00.50 and heading

9802.00.90 can be found in the HTS. Reference should also be made to current

Customs regulations (19 C.F.R. 10.9, 10.11-10.24). The customs treatment available

to goods resulting from qualifying Caribbean Basin assembly and processing, the

trade agreement status of these chapter 98 provisions and their relation to

preferential tariff programs, and the special access program are briefly discussed

below; an update on the merchandise processing (user) fee is likewise included.

Caribbean Basin Assembly or Processing

Section 222 of the Customs and Trade Act of 1990 created U.S. note 2(b) to subchapter II of

HTS chapter 98. The note provides the tariff and country-of-origin treatment available to

certain U.S.-fabricated components, materials, or ingredients that are exported for assembly or

processing in a designated Caribbean Basin Economic Recovery Act (CBERA) beneficiary

country. It was enacted because certain goods resulting from such assembly or processing do

not otherwise qualify for duty-free entry, under CBERA rules of preference, in subheadings of

chapters 1 through 97 because (1) no substantial transformation in the beneficiary country is

found to have occurred, or (2) inadequate value is added in or attributable to the beneficiary

country, or (3) the goods otherwise are considered preference-ineligible. Again, it is noted that 1

an importer must claim this duty status and comply with applicable Customs requirements.

In general terms, this note specifies two key aspects of the customs treatment of these goods.

First, the note provides that such CBERA-assembled goods shall not be considered foreign

articles; though this language effectively would seem to require by implication that they have

domestic (U.S.) origin, Customs regulations do not so provide. Second, the note provides that 2

these goods are not subject to duty upon entry into the U.S. customs territory. Some confusion 3
 (...continued) 3

to the HTS.

 Goods described in heading 9802.00.80 are partially dutiable, to the extent that the pertinent 4

tariff provision in chs. 1 through 97 provides for a duty rate other than "free," but no duty is payable

on the U.S. content.

 Pursuant to concessions negotiated in the Uruguay Round of multilateral negotiations, the duty 5

rate under these provisions for goods certified for use in civil aircraft is bound at "free." A tariff

binding is a stated ceiling: GATT contracting parties giving bindings on individual tariff categories

agree not to exceed the bound rates other than in circumstances provided for in the GATT (such as

actions taken for emergency balance of payments reasons). If a country exceeds a bound rate in cases

not covered by any GATT provision, other parties may initiate dispute settlement, undertake limited

retaliation, or request compensation. U.S. tariff bindings and other concessions are enumerated in

schedule XX; other numbered GATT schedules list the bindings and concessions of other contracting

parties.

 The FTA with Israel specifies that all goods described by and imported under these two HTS 6

provisions should be admitted free of duty, along with all other products of Israel as provided in HTS

(continued...)

A-3

has resulted because the duty treatment of such goods is set forth in a tariff legal note, rather

than in the rate of duty columns of a tariff heading, and significant administrative and

compliance difficulties have reportedly arisen as well. To help Customs carry out the note,

because the rate of duty it accords is "free" instead of the duty rates enacted by Congress for 4

the tariff provisions covered by this report, a nonlegal 10-digit statistical reporting category

(numbered 9802.00.8040) was created under heading 9802.00.80 to capture trade in assembled

goods entered by importers under the terms of the U.S. note. A complementary statistical

category (numbered 9802.00.5010) was created under subheading 9802.00.50 to capture trade

in goods that were processed (but not assembled) in whole from materials or ingredients (other

than water) that are the product of the United States and entered by importers under the terms

of U.S. note 2(b). Congress has considered proposals to create a separate legal tariff heading

or subheading for these goods, to clarify the requirements and to simplify administration; to date

no such provision has been enacted.

Trade Agreement Status and Special Tariff Treatment

The general rates of duty in column 1 for subheadings 9802.00.5010 and 9802.00.60 and

headings 9802.00.80 and 9802.00.90, unlike most general rates in headings of HTS chapters

1 through 97, are not "bound" concession rates under schedule XX to the General Agreement

on Tariffs and Trade (known as GATT 1994), except with respect to goods certified for use in

civil aircraft. Nor does schedule XX impose on the United States a legal obligation to maintain 5

these tariff provisions, but merely to ensure that the agreed tariff treatment for civil aircraft

goods is somehow provided. Moreover, because these tariff provisions fall in chapter 98—not

part of the nomenclature structure of the Harmonized Commodity Description and Coding

System (HS)—the international convention establishing the HS does not require them and they

are unique to the United States. Thus, with certain provisos, these tariff rate lines could be

amended or repealed, even though such an action could amount to an effective duty increase on

goods now allowed entry thereunder. Two U.S. free-trade agreements (FTAs), one with Israel6
 (...continued) 6

general note 8.

A-4

and the other with Canada and Mexico (the North American Free Trade Agreement or NAFTA),

and the Automotive Products Trade Act (APTA) require that the United States continue current

duty treatment for eligible goods, however, it is reflected in the HTS. Accordingly, various

Presidential proclamations have included preferential duty rates in the "special" rate subcolumn

of rate of duty column 1 for the covered production-sharing provisions of chapter 98 to carry

out these U.S. obligations. Eligible goods entered under the civil aircraft program are also

accorded a “free” rate to meet GATT obligations.

For goods not eligible for tariff preferences and covered by the first 3 production-sharing

provisions, the general duty rates from the applicable permanent tariff categories in chapters 1

through 97 must be paid on the declared foreign value, including costs of labor. For shipments

of preference-eligible goods, the special subcolumn of the “Rates of Duty 1" column of the HTS

for these chapter 98 tariff provisions states that, if such goods are accorded entry thereunder,

the duty payable would be computed by applying the otherwise applicable special duty rate from

chapters 1 through 97 to the foreign value. In most instances, the special rate provided in

chapters 1 through 97 for the eligible preference programs is “Free” and no duty advantage from

claiming entry under chapter 98 would appear possible. The designated preference programs,

as indicated above, are the APTA, the Agreement on Trade in Civil Aircraft, the NAFTA, and

the U.S.-Israel FTA, under the terms of applicable general notes to the HTS. 

In the case of the NAFTA, however, the special subcolumn for the applicable provision in

chapters 1 through 97 may state a rate of duty for goods of Mexico (and for goods of Canada

through the close of December 31, 1997) that is other than “free.” If a good is eligible for a

tariff preference under the terms of general note 12 as an originating good and qualifies to be

marked under Customs regulations (see 19 C.F.R. part 102) as a good of Canada or of Mexico,

the HTS indicates that importers can claim that the appropriate NAFTA tariff rate on non-U.S.

content from the normal tariff category would apply to the goods in question. Thus, if Customs

deems that the goods originate, then the appropriate special duty rate, if other than “free,” would

be applied to the non-U.S.-origin part of the shipment’s value, while the U.S. value would be

free of duty. However, if goods originate in the NAFTA region but do not qualify to be marked

as goods of a single NAFTA country, Customs regulations provide that the special NAFTA rate

of duty applicable to the last NAFTA country of significant processing would be assessed on

the foreign content. If the “marking rules” indicate that an originating good is a product of the

United States for NAFTA purposes, and the good was merely advanced in value or improved

in condition in another NAFTA country, the rate of duty for the last NAFTA country of

processing would be imposed. See 19 C.F.R. 102.19. In addition, heading 9802.00.90 applies

only to certain textile and apparel articles that are assembled in Mexico from U.S.-formed-andcut fabric components and has a general rate of duty of “free” for qualifying goods; these

imports need not be originating goods under HTS general note 12.
 Commonly called the Multifiber Arrangement or MFA. Under the Agreement on Textiles and 7

Clothing of GATT 1994, MFA quantitative restraints must be eliminated as of Jan. 1, 2005, fully

integrating this sector into GATT 1994 and its disciplines. As restrictions are gradually removed

under this agreement, the SAP and other preferential regimes also lose their previous access

advantages.

 See HTS ch. 98, subch. II, for the legal text of the provisions and applicable notes, and Customs 8

regulations at 19 C.F.R. 12.130-131. The Office of Textiles and Apparel of the U.S. Department of

Commerce can be consulted for further information.

 Announced by President Reagan on Feb. 20, 1986, and implemented June 11, 1986 (51 FR 9

21208).

 See HTS heading 9802.00.90 and the notes to section XI. The special regime was discussed in 10

earlier Commission reports on production sharing.

A-5

Special Access Program

Pursuant to 7 U.S.C. 1854 and pertinent regulations, under the legal umbrella of the multilateral

Agreement Regarding Trade in Textiles, the United States has negotiated bilateral agreements 7

with numerous countries to impose quantitative limitations and monitoring requirements on

imports of enumerated textile and apparel products. The combined product scope found in these

agreements (the Arrangement plus bilaterals) as of the date of enactment of the CBERA has

been determined to define the range of the statutory exclusion from duty-free entry for textile

and apparel goods from beneficiary countries. Accordingly, most goods of cotton, of wool/fine

animal hair, of man-made fibers, or of blends thereof cannot enter free of duty under the

CBERA. However, such goods—including goods assembled in whole or in part from U.S.

materials or components in such CBERA countries—represent a significant portion of overall

exports from these countries. Thus, to obviate in part the exclusion from duty-free entry, a

partial relaxation of otherwise applicable quota and related restrictions has been accorded by

the United States under specified circumstances.

Statistical reporting number 9802.00.8015 is used by importers in making entry of "articles

eligible pursuant to bilateral textile agreements for entry under a Special Access Program and

entered in compliance with procedures established by the Committee for the Implementation of

Textile Agreements (CITA)." Importers are required to report the value of the U.S.-fabricated 8

components included in the merchandise and the shipment's dutiable value (total value less the

value of U.S.-fabricated components), pursuant to statistical note 1(b), subchapter II, chapter

98. The Special Access Program (SAP) is available only to designated CBERA beneficiary

countries that have bilateral textile agreements with the United States; the former Special

9

Regime (SR), which had applied to textile and apparel products of Mexico, was replaced by

other preference provisions in the NAFTA as of January 1, 1994—primarily heading

9802.00.90.10

SAP bilateral agreements have contained two categories of restraints: guaranteed access levels

(GALs) for apparel assembled in the particular CBERA country from U.S.-formed-and-cut

fabric, and regular quota limits for apparel of the applicable MFA categories but not of such

fabric. In general terms, a GAL is negotiated for each MFA category covered by a SAP

bilateral agreement, along with a specific limit (SL) or a designated consultation level (DCL)

for regular quotas. It has been possible to increase the GALs upon exporter request unless

market disruption occurs, while SLs are subject to agreed allowable annual percentage increases
 Ibid., pp. 1-2. New origin rules for this sector are based upon enumerated changes of tariff 11

classification (from inputs to more advanced goods); some administrative practices changed because

of Customs’ implementation of the Uruguay Round Agreements Act. See 19 C.F.R. 102.21, as well

as sections 12.130-12.132.

 Caribbean Basin Initiative. 12

A-6

and DCLs are raised only after bilateral consultation. GAL shipments under heading

9802.00.80 generally have duties assessed only on the value added overseas. Special CBI 11 12

Export Declarations must be filed at the time the U.S.-formed-and-cut fabric parts are exported

from the customs territory, and Customs can request documentary proof concerning such

garment parts during Post-Entry Compliance Reviews. According to the Office of Textiles and

Apparel, foreign-origin findings, trimmings, and elastic strips not exceeding 25 percent of the

cost of components in the assembled product do not disqualify an apparel article from entry

under the GAL/SAP, but other components must be formed and cut in the United States. Also,

CBERA assemblers must file declarations, and goods must be accompanied by the textile visas

and certificates of origin specified in the bilaterals. The program has not undergone significant

changes in the year covered by this report.

User Fees

Enacted in 1986 as a temporary revenue measure and set at 0.22 percent ad valorem on

imported goods, the so-called user fee has been continued to help defray costs of Customs

Service operations. Customs regulations treat the fee—properly known as the merchandise

processing fee—as a customs duty; it is applied to the dutiable value or cost (the foreign value

added) of imports under the four production-sharing provisions of HTS chapter 98 covered by

this report, but not to the nondutiable portion of value attributable to domestic materials. From

October 1, 1987 through December 31, 1989, the fee was reduced to 0.17 percent ad valorem;

subsequently, the fee was restructured and continued at the 0.17-percent rate but with a floor

($21 minimum fee per entry) and cap ($400 maximum fee) as of October 1, 1990. Current

Customs regulations concerning the user fee are set forth in 19 C.F.R. 24.23. Although the

merchandise processing fee for formal entries has for short periods been at a higher level (such

as the 0.21 percent ad valorem level following enactment of the Uruguay Rounds Agreements

Act), the current fee set by Customs regulations is 0.19 percent ad valorem for formal entries,

with the minimum fee set at $21 and the cap at $400 per entry. A $3 surcharge is added to each

entry processed manually, informal entries are assessed fees of from $2 to $8 each, and other

rules govern the aggregation of the ad valorem fee for particular monthly entry programs. Other

fees, such as the harbor maintenance fee, are also provided for in Customs regulations. 

Under article 403 of the U.S.-Canada Free-Trade Agreement, since suspended (and section

24.23 of the Customs regulations), goods originating in the territory of Canada were assessed

the merchandise-processing fee under a negotiated phase-out scheme, with the fee scheduled to

be eliminated as of January 1, 1994. This previously-agreed treatment was continued under the

NAFTA when it was implemented on January 1, 1994, so that no fees are collected on "goods
 This phrase is a term of art in the HTS covering goods imported from and the product of Canada 13

(regardless of whether they are marked as such) that are deemed to qualify for preferential duty rates

under the NAFTA as goods originating in the NAFTA region. This test represents a departure from

the normal rule requiring that imported goods be marked with a single country of origin.

A-7

of Canada under the terms of general note 12 to the HTS." Goods of Mexico can be assessed 13

the ordinary fee until June 30, 1999, as of which date no such fee can be charged under article

310 and annex 310.1 of the NAFTA and section 204 of the NAFTA Implementation Act. In

both cases, the marking rules adopted pursuant to annex 311 of the NAFTA determine the

status of the goods with respect to whether they qualify as goods of Canada or of Mexico for

purposes of the user fee. In simpler terms, because of the differential duty rates, fees, and

staging applicable to goods of Canada and of Mexico under the NAFTA, the treatment of

composite goods (containing content from 2 or 3 NAFTA countries) during the staging period

is determined by the marking rules published and administered by Customs, after goods are

found to be “originating” in the 3-country region under the rules of origin set forth in HTS

general note 12 (when it includes content or inputs from non-NAFTA countries).

Customs regulations separately specify the user fee status of other classes of goods, such as

agricultural products of the United States that are processed and packed in a U.S. foreign trade

zone. Notably for this report, goods from most non-NAFTA countries entered under HTS

chapter 98 are subject to the imposition of the fee, with limited exceptions for products of

preference-eligible countries (notably CBERA beneficiaries and the insular possessions of the

United States). In addition, all products of Israel, under the free-trade agreement with that

country, are eligible for exemption from user fees for such time as the United States Trade

Representative determines that reciprocal treatment for U.S. products exists.

Janis L. Summers

(202) 205-2605

jsummers@usitc.gov
B-1

APPENDIX B

STATISTICAL TABLES
B-2

B-2

Table B-1

U.S. imports for consumption under HTS headings 9802.00.60 and 9802.00.80 , 1971-96 1

(Million dollars)

Total value Dutiable value U.S. content value

))))))))))))))))))))))))))))))))))))))) )))))))))))))))))))))))))))))))))))))))))) ))))))))))))))))))))))))))))))))))))))))))))

Year 9802.00.60 9802.00.80 Total 9802.00.60 9802.00.80 Total 9802.00.60 9802.00.80 Total

1971 ............ 199.4 2,566.4 2,765.8 75.1 2,030.8 2,105.9 124.3 535.6 659.9

1972 ............ 318.3 3,090.5 3,408.8 130.3 2,410.1 2,540.4 187.9 680.4 868.3

1973 ............ 462.6 3,784.5 4,247.1 212.9 3,025.4 3,238.3 249.7 759.1 1,008.8

1974 ............ 543.7 4,828.1 5,371.8 240.4 3,818.6 4,059.0 303.3 1,009.5 1,312.8

1975 ............ 454.6 4,707.8 5,162.4 192.6 3,703.9 3,896.5 262.0 1,003.9 1,265.9

1976 ............ 474.0 5,247.5 5,721.5 199.2 3,976.2 4,175.4 274.8 1,271.3 1,546.1

1977 ............ 465.1 6,723.4 7,188.5 190.7 5,021.4 5,212.1 274.4 1,702.0 1,976.4

1978 ............ 398.1 9,337.1 9,735.2 154.8 6,988.9 7,143.7 243.2 2,348.3 2.591.5

1979 ............ 407.7 11,559.3 11,967.0 172.8 8,468.3 8,641.1 234.9 3,091.0 3,325.9

1980 ............ 254.1 13,762.2 14,016.5 83.5 10,178.2 10,261.8 170.5 3,584.0 3,754.7

1981 ............ 256.5 15,924.0 16,180.8 80.3 11,653.9 11,734.2 176.2 4,270.3 4,446.6

1982 ............ 358.0 17,950.8 18,308.8 116.0 13,473.2 13,589.2 242.0 4,477.5 4,719.5

1983 ............ 341.5 21,234.4 21,575.9 112.5 16,076.8 16,189.3 229.0 5,157.6 5,386.6

1984 ............ 450.2 28,122.4 28,572.6 140.9 21,221.2 21,362.1 309.3 6,901.2 7,210.5

1985 ............ 419.7 30,115.4 30,535.1 144.6 24,565.7 24,710.3 275.0 5,549.7 5,824.7

1986 ............ 465.5 36,031.5 36,496.9 157.1 30,059.3 30,216.4 308.4 5,972.1 6,280.5

1987 ............ 953.9 67,595.1 68,549.0 538.4 55,067.9 55,606.2 415.6 12,527.2 12,942.8

1988 ............ 929.1 72,803.5 73,732.6 459.2 56,449.4 56,908.5 469.8 16,354.1 16,823.9

1989 ............ 1,141.3 73,031.8 74,173.1 444.2 54,110.5 54,554.7 697.1 18,921.3 19,618.4

1990 ............ 1,379.8 75,122.2 76,502.0 561.4 54,302.9 54,864.3 818.4 20,819.2 21,637.6

1991 ............ 1,142.1 56,412.8 57,554.9 514.3 42,521.2 43,035.5 627.8 13,891.6 14,519.4

1992 ............ 1,003.4 55,437.6 56,441.0 406.5 40,676.5 41,083.0 596.9 14,761.1 15,358.0

1993 ............ 836.6 56,526.4 57,363.0 280.3 39,522.7 39,803.0 556.3 17,003.7 17,560.0

1994 ............ 600.3 58,709.7 59,310.0 219.2 39,573.8 39,793.0 381.2 19,135.8 19,517.0

1995 ............ 503.4 60,376.6 60,880.0 126.6 38,643.4 38,770.0 376.8 21,733.2 22,110.0

1996 ............ 549.6 66,964.9 67,514.5 154.8 43,394.9 43,549.7 394.8 23,570.0 23,964.8

HTS 9802.00.80 includes HTS 9802.00.90 and 9802.00.5010. 1

Note.—Because of rounding, figures may not add to the totals shown.

Source: Compiled from official statistics of the U.S. Department of Commerce, except as noted. Minor adjustments to official statistics were made to correct cases of

misreporting.
B-3

Table B-2

U.S. imports for consumption under the production-sharing provisions (PSP) of HTS Chapter 98:

Total imports; imports under HTS PSP and U.S. content, by principal sources, 1993-96

1993

Imports Imports

Total under U.S. Total under U.S.

Source Imports HTS PSP content Imports HTS PSP content

)))))))))) Million dollars )))))))))) ))))))))))) Percentage )))))))))))

Japan .................... 106,163 14,185 489 18.5 24.7 2.8

Germany .................. 28,103 4,586 87 4.9 8.0 0.5

Canada ................... 110,482 3,035 1,125 19.2 5.3 6.4

United Kingdom ............ 21,303 1,009 93 3.7 1.8 0.5

Sweden .................. 4,447 955 29 0.8 1.7 0.2

France ................... 14,953 810 84 2.6 1.4 0.5

Belgium .................. 5,151 654 11 0.9 1.1 0.1

Netherlands ............... 5,406 261 65 0.9 0.5 0.4

Italy ...................... 13,056 129 34 2.3 0.2 0.2

Ireland .................... 2,480 82 24 0.4 0.1 0.1

Australia .................. 3,268 68 5 0.6 0.1 0.0

Spain .................... 2,964 51 6 0.5 0.1 0.0

Austria ................... 1,395 41 15 0.2 0.1 0.1

All other .................. 13,970 43 9 2.4 0.1 0.0

Total, developed

countries .............. 333,141 25,908 2,075 58.0 45.2 11.8

Mexico ................... 38,668 18,992 9,887 6.7 33.1 56.3

Malaysia .................. 10,482 1,669 794 1.8 2.9 4.5

Korea .................... 16,986 1,664 478 3.0 2.9 2.7

Dominican Republic ......... 2,667 1,531 1,041 0.5 2.7 5.9

Singapore ................. 12,744 1,461 353 2.2 2.5 2.0

Philippines ................ 4,864 1,049 485 0.8 1.8 2.8

Taiwan ................... 24,981 961 337 4.3 1.7 1.9

Costa Rica ................ 1,542 575 399 0.3 1.0 2.3

Guatemala ................ 1,178 426 220 0.2 0.7 1.3

China .................... 31,425 405 52 5.5 0.7 0.3

Thailand .................. 8,539 397 238 1.5 0.7 1.4

Hong Kong ................ 9,418 338 130 1.6 0.6 0.7

Honduras ................. 914 337 236 0.2 0.6 1.3

Jamaica .................. 710 321 254 0.1 0.6 1.4

Brazil ..................... 7,763 272 16 1.4 0.5 0.1

Colombia ................. 3,010 223 116 0.5 0.4 0.7

El Salvador ................ 481 203 118 0.1 0.4 0.7

Bahamas ................. 342 155 149 0.1 0.3 0.8

Indonesia ................. 5,342 146 35 0.9 0.3 0.2

Haiti ..................... 154 108 73 0.0 0.2 0.4

India ..................... 4,536 53 10 0.8 0.1 0.1

All other .................. 54,974 170 64 9.6 0.3 0.4

Total, less developed

countries .............. 241,722 31,456 15,485 42.0 54.8 88.2

Grand total 574,863 57,364 17,560 100.0 100.0 100.0

See notes at end of table.
B-4

Table B-2—Continued

U.S. imports for consumption under the production-sharing provisions (PSP) of HTS Chapter 98:

Total imports; imports under HTS PSP and U.S. content, by principal sources, 1993-96

1994

Imports Imports

Total under U.S. Total under U.S.

Source Imports HTS PSP content Imports HTS PSP content

)))))))))) Million dollars )))))))))) ))))))))))) Percentage )))))))))))

Japan ..................... 117,532 10,534 500 17.9 17.8 2.6

Germany ................... 31,566 5,877 128 4.8 9.9 0.7

Canada .................... 128,753 1,663 688 19.6 2.8 3.5

United Kingdom ............. 24,529 1,212 110 3.7 2.0 0.6

Belgium ................... 6,319 1,021 18 1.0 1.7 0.1

Sweden ................... 4,999 859 17 0.8 1.4 0.1

France .................... 16,299 710 80 2.5 1.2 0.4

Netherlands ................ 5,970 161 40 0.9 0.3 0.2

Spain ..................... 3,496 117 18 0.5 0.2 0.1

Italy ....................... 14,572 69 12 2.2 0.1 0.1

Ireland ..................... 2,889 66 17 0.4 0.1 0.1

Austria .................... 1,726 60 24 0.3 0.1 0.1

Australia ................... 3,228 41 3 0.5 0.1 0.0

Switzerland ................. 6,278 20 3 1.0 0.0 0.0

All other ................... 9,289 49 9 1.4 0.1 0.0

Total, developed

countries ............... 377,443 22,460 1,667 57.4 37.9 8.5

Mexico .................... 48,605 23,068 11,608 7.4 38.9 59.5

Malaysia ................... 13,877 1,938 968 2.1 3.3 5.0

Korea ..................... 19,547 1,724 480 3.0 2.9 2.5

Dominican Republic .......... 3,077 1,707 1,109 0.5 2.9 5.7

Philippines ................. 5,712 1,378 640 0.9 2.3 3.3

Singapore .................. 15,287 1,231 336 2.3 2.1 1.7

Taiwan .................... 26,586 1,127 371 4.0 1.9 1.9

Costa Rica ................. 1,645 623 411 0.3 1.1 2.1

China ..................... 38,572 603 74 5.9 1.0 0.4

Thailand ................... 10,276 594 353 1.6 1.0 1.8

Honduras .................. 1,092 452 325 0.2 0.8 1.7

Guatemala ................. 1,284 451 219 0.2 0.8 1.1

Jamaica ................... 740 380 306 0.1 0.6 1.6

Hong Kong ................. 9,621 329 135 1.5 0.6 0.7

El Salvador ................. 608 322 175 0.1 0.5 0.9

Colombia .................. 3,132 252 146 0.5 0.4 0.7

Indonesia .................. 6,416 205 47 1.0 0.3 0.2

Brazil ...................... 8,847 147 17 1.3 0.2 0.1

India ...................... 5,286 50 4 0.8 0.1 0.0

Haiti ...................... 59 35 25 0.0 0.1 0.1

All other ................... 60,173 233 100 9.1 0.4 0.5

Total, less developed

countries ............... 280,442 36,851 17,851 42.6 62.1 91.5

Grand total ............... 657,885 59,311 19,517 100.0 100.0 100.0

See notes at end of table.
B-5

Table B-2—Continued

U.S. imports for consumption under the production-sharing provisions (PSP) of HTS Chapter 98:

Total imports; imports under HTS PSP and U.S. content, by principal sources, 1993-96

1995

Imports Imports

Total under U.S. Total under U.S.

Source Imports HTS PSP content Imports HTS PSP content

)))))))))) Million dollars )))))))))) ))))))))))) Percentage ))))))))))))

Germany ................... 37,126 6,526 153 5.0 10.7 0.7

Japan ..................... 122,402 6,069 360 16.5 10.0 1.6

United Kingdom ............. 26,594 1,628 120 3.6 2.7 0.5

Canada .................... 144,882 1,539 605 19.6 2.5 2.7

Sweden ................... 6,208 1,375 21 0.8 2.3 0.1

Belgium ................... 5,996 812 35 0.8 1.3 0.2

France .................... 16,497 431 72 2.2 0.7 0.3

Spain ..................... 3,814 174 27 0.5 0.3 0.1

Netherlands ................ 6,309 151 34 0.9 0.2 0.2

Italy ....................... 16,339 129 30 2.2 0.2 0.1

Ireland ..................... 4,067 73 18 0.6 0.1 0.1

Austria .................... 1,951 73 32 0.3 0.1 0.1

All other ................... 21,469 101 19 2.9 0.2 0.1

Total, developed

countries ................. 413,652 19,081 1,526 55.9 31.3 6.9

Mexico .................... 61,721 24,962 12,833 8.3 41.0 58.0

Malaysia ................... 17,401 2,778 1,313 2.4 4.6 5.9

Dominican Republic .......... 3,385 1,965 1,278 0.5 3.2 5.8

Korea ..................... 24,026 1,798 600 3.2 3.0 2.7

Philippines ................. 6,990 1,749 785 0.9 2.9 3.6

Taiwan .................... 28,875 1,193 424 3.9 2.0 1.9

Singapore .................. 18,493 958 194 2.5 1.6 0.9

China ..................... 45,370 873 109 6.1 1.4 0.5

Thailand ................... 11,337 786 461 1.5 1.3 2.1

Costa Rica ................. 1,842 707 472 0.2 1.2 2.1

Honduras .................. 1,441 676 480 0.2 1.1 2.2

Hong Kong ................. 10,232 637 323 1.4 1.0 1.5

Guatemala ................. 1,515 521 259 0.2 0.9 1.2

El Salvador ................. 813 497 276 0.1 0.8 1.3

Jamaica ................... 838 456 369 0.1 0.7 1.7

Indonesia .................. 7,340 410 75 1.0 0.7 0.3

Colombia .................. 3,807 272 169 0.5 0.4 0.8

Brazil ...................... 8,989 178 20 1.2 0.3 0.1

Haiti ...................... 129 79 54 0.0 0.1 0.2

India ...................... 5,702 38 4 0.8 0.1 0.0

Hungary ................... 547 32 5 0.1 0.1 0.0

All other ................... 65,217 234 81 8.8 0.4 0.4

Total, less developed

countries ............... 326,008 41,800 20,584 44.1 68.7 93.1

Grand total ................ 739,660 60,880 22,110 100.0 100.0 100.0

See notes at end of table.
B-6

Table B-2—Continued

U.S. imports for consumption under the production-sharing provisions (PSP) of HTS Chapter 98:

Total imports; imports under HTS PSP and U.S. content, by principal sources, 1993-96

1996

Imports Imports

Total under U.S. Total under U.S.

Source Imports HTS PSP content Imports HTS PSP content

)))))))))) Million dollars )))))))))) ))))))))))) Percentage ))))))))))))

Japan ..................... 114,762 7,797 265 14.5 11.5 1.1

Germany ................... 39,215 7,414 153 5.0 11.0 0.6

Sweden ................... 7,118 1,758 23 0.9 2.6 0.1

United Kingdom ............. 28,574 1,758 132 3.6 2.6 0.6

Canada .................... 156,299 1,579 618 19.8 2.3 2.6

Belgium ................... 6,745 845 35 0.9 1.3 0.1

France .................... 17,914 408 52 2.3 0.6 0.2

Netherlands ................ 6,582 182 40 0.8 0.3 0.2

Spain ..................... 4,231 160 17 0.5 0.2 0.1

Italy ....................... 18,036 97 18 2.3 0.1 0.1

Ireland ..................... 4,749 87 24 0.6 0.1 0.1

Austria .................... 2,082 61 24 0.3 0.1 0.1

All other ................... 23,296 111 20 2.9 0.2 0.1

 Total, developed 

 countries ................. 429,602 22,256 1,421 54.3 33.0 5.9

Mexico .................... 74,179 27,925 14,649 9.4 41.4 61.1

Malaysia ................... 17,771 2,382 1,116 2.2 3.5 4.7

Dominican Republic .......... 3,582 2,104 1,365 0.5 3.1 5.7

Philippines ................. 8,174 1,805 773 1.0 2.7 3.2

Korea ..................... 22,532 1,787 653 2.9 2.6 2.7

China ..................... 51,209 1,153 145 6.5 1.7 0.6

Taiwan .................... 29,797 1,048 375 3.8 1.6 1.6

Honduras .................. 1,797 981 694 0.2 1.5 2.9

Singapore .................. 20,249 964 212 2.6 1.4 0.9

Thailand ................... 11,324 789 423 1.4 1.2 1.8

Costa Rica ................. 1,963 694 481 0.2 1.0 2.0

El Salvador ................. 974 605 344 0.1 0.9 1.4

Guatemala ................. 1,694 580 276 0.2 0.9 1.2

Hong Kong ................. 9,820 579 276 1.2 0.9 1.2

Indonesia .................. 8,079 546 94 1.0 0.8 0.4

Jamaica ................... 828 444 355 0.1 0.7 1.5

Colombia .................. 4,421 216 126 0.6 0.3 0.5

Brazil ...................... 8,871 144 12 1.1 0.2 0.1

Haiti ...................... 143 102 70 0.0 0.2 0.3

Hungary ................... 676 46 7 0.1 0.1 0.0

India ...................... 6,145 43 4 0.8 0.1 0.0

Sri Lanka .................. 1,392 38 2 0.2 0.1 0.0

All other ................... 75,247 285 91 9.5 0.4 0.4

Total, less developed 

countries ............... 360,868 45,258 22,544 45.7 67.0 94.1

Grand total ................ 790,470 67,514 23,965 100.0 100.0 100.0

Note.—Because of rounding, figures may not add to the totals shown.

Source: Compiled from official statistics of the U.S. Department of Commerce.
B-7

Table B-3

U.S. imports for consumption under the production-sharing provisions (PSP) of HTS Chapter 98, by commodity groups, 1993-96

(Thousand dollars)

1993 1994

)))))))))))))))))))))))))))))))))))))))))))))) ))))))))))))))))))))))))))))))))))))))))))))))))

Imports Imports

Commodity Total under U.S. Total under U.S.

group imports HTS PSP content imports HTS PSP content

Agricultural products ............................ 32,534,186 37,063 1,279 35,049,304 27,190 1,342

Forest products ................................ 21,393,721 65,613 31,942 24,037,462 86,122 45,343

Chemicals, coal, petroleum, natural gas and related

products:

Fabricated plastic and rubber products ............ 10,140,902 121,181 79,799 11,639,350 136,545 87,302

Other energy and chemical products .............. 83,553,368 175,964 156,794 89,387,538 53,961 38,048

Total ..................................... 93,694,269 297,146 236,593 101,026,888 190,506 125,351

Textiles, apparel, and footwear:

Textiles and textile products ..................... 8,502,227 261,986 149,958 9,352,247 283,998 150,171

Medical apparel .............................. 434,718 195,195 134,529 436,644 194,687 131,979

Mens' and boy’s suits and sports coats ............ 663,834 101,450 54,277 747,665 138,295 78,309

Mens' and boy’s coats and jackets ............... 1,562,679 51,444 22,499 1,772,918 55,894 28,291

Mens' and boy’s trousers ....................... 2,797,164 1,078,870 718,055 3,144,823 1,330,623 824,422

Women's and girls' trousers .................... 3,354,366 628,304 344,768 3,582,689 732,857 417,421

Shirts and blouses ............................ 10,041,821 889,550 542,384 10,839,910 1,134,936 731,314

Women's and girls' suits, skirts, and coats ......... 3,243,974 516,825 275,935 3,260,820 484,281 237,236

Women's and girls' dresses ..................... 1,081,726 89,084 41,453 1,259,893 117,475 52,882

Robes, nightwear, and underwear ................ 1,908,669 606,773 415,445 2,196,518 768,530 521,122

Hosiery ..................................... 230,548 98,185 92,060 291,268 137,960 129,088

Foundation garments .......................... 639,049 484,473 324,309 750,987 558,807 375,250

Gloves, including gloves for sports ............... 1,349,071 43,141 22,771 1,499,020 58,274 29,286

Headwear ................................... 778,419 28,082 15,947 821,213 40,360 20,623

Other wearing apparel and accessories ........... 6,040,443 236,380 131,982 6,494,941 277,392 161,854

Footwear and parts ........................... 11,105,366 1,134,499 193,746 11,713,987 1,142,819 167,580

Total ..................................... 53,734,076 6,444,242 3,480,117 58,165,542 7,457,189 4,056,829

Minerals and Metals:

Steel mill products ............................ 8,669,505 164,998 108,707 12,434,672 184,567 124,285

Copper and related products ................... 2,067,968 61,475 47,276 2,655,256 87,018 66,551

Aluminum mill products ........................ 1,095,666 246,042 201,433 1,446,111 50,432 37,534

Builders' hardware ............................ 645,832 45,209 28,152 708,643 85,409 47,617

Other metal products .......................... 33,766,764 436,649 193,035 39,533,681 526,814 266,941
B-8

Total ..................................... 46,245,736 954,373 578,602 56,778,363 934,241 542,928

See notes at end of table.
B-8

Table B-3—Continued

U.S. imports for consumption under the production-sharing provisions (PSP) of HTS Chapter 98, by commodity groups, 1993-96

(Thousand dollars)

1993 1994

)))))))))))))))))))))))))))))))))))))))))))))) ))))))))))))))))))))))))))))))))))))))))))))))))

Imports Imports

Commodity Total under U.S. Total under U.S.

group imports HTS PSP content imports HTS PSP content

Miscellaneous Manufactures

Luggage, handbags, and flat goods ................. 2,584,443 68,051 34,283 3,008,291 66,775 33,998

Jewelry ..................................... 3,775,881 71,597 61,343 4,091,534 85,868 76,058

Motor vehicle and other furniture ................. 6,298,062 120,557 64,900 7,637,556 640,127 170,452

Lamps and lighting fixtures ..................... 1,712,479 66,826 41,827 1,956,291 65,294 40,359

Other miscellaneous manufactured articles ......... 19,075,833 332,885 127,915 19,551,440 369,391 104,094

Total ..................................... 33,446,698 659,916 330,268 36,245,112 1,227,454 424,961

Machinery and equipment:

Air conditioning equipment ......................... 3,055,031 212,590 97,067 3,666,077 257,434 134,200

Commercial machinery ........................ 963,986 75,741 25,863 1,081,931 67,051 23,713

Household appliances, including heating and drying

equipment ................................. 3,570,430 374,072 187,993 3,858,075 414,122 197,017

Centrifuges, filtering and purifying equipment, and

pumps for liquids ........................... 2,183,827 87,940 42,967 2,844,277 359,270 270,912

Semiconductor equipment, robots, and other 

equipment ................................. 1,179,077 41,642 7,093 1,831,378 15,372 4,079

Taps, cocks, valves, and similar devices ........... 2,175,278 285,283 194,650 2,600,291 359,512 247,336

Electric motors, generators, and related equipment . . 2,973,568 586,345 333,990 3,457,321 717,143 426,336

Electrical transformers, static converters, and 

inductors .................................. 2,466,743 566,470 230,541 2,713,076 495,773 202,220

Powered handtools and parts thereof ............. 909,799 41,325 13,593 1,039,842 99,045 40,723

Flashlights and other similar electric lights, light bulbs

and fluorescent tubes; arc lights ............... 964,530 123,833 73,230 1,030,232 153,252 85,910

Wiring harnesses for motor vehicles and other insulated

electrical conduits ........................... 3,563,535 1,978,836 1,122,425 4,810,413 2,858,020 1,617,283

Miscellaneous machinery and equipment .......... 19,218,276 588,690 169,661 23,498,455 473,447 126,393

Total ..................................... 43,224,079 4,962,765 2,499,073 52,431,369 6,269,441 3,376,123

Transportation equipment:

Aircraft engines and gas turbines ................ 5,734,721 276,927 50,954 5,824,895 202,422 32,132

Internal combustion piston engines ............... 6,622,894 629,484 121,751 7,797,600 770,651 177,141

Construction, mining, and industrial vehicles ........ 3,027,120 359,319 65,623 4,425,332 348,484 54,033

Certain motor-vehicle parts ..................... 15,760,073 2,265,430 1,242,933 17,386,522 2,023,337 1,004,628

Primary cells and batteries, and electric storage
B-10

batteries .................................. 1,079,066 151,548 79,012 1,440,956 190,404 90,266

See notes at end of table.
B-9

Table B-3—Continued

U.S. imports for consumption under the production-sharing provisions (PSP) of HTS Chapter 98, by commodity groups, 1993-96

(Thousand dollars)

1993 1994

)))))))))))))))))))))))))))))))))))))))))))))) ))))))))))))))))))))))))))))))))))))))))))))))))

Imports Imports

Commodity Total under U.S. Total under U.S.

group imports HTS PSP content imports HTS PSP content

Transportation equipment—Continued

Ignition starting, lighting, and other electrical 

equipment ................................. 1,494,814 283,331 167,913 1,699,067 128,144 62,459

Rail locomotive and rolling stock ................. 728,936 63,621 27,401 1,161,012 222,656 74,501

Automobiles, trucks, buses, and bodies and chassis of

 the foregoing .............................. 68,607,283 25,337,208 2,330,576 79,240,132 23,095,296 2,233,981

 Aircraft, spacecraft, and related equipment, except

 engines .................................. 6,254,837 710,891 298,390 6,430,591 314,886 90,952

 Ships, tugs, pleasure boats, and similar vessels .... 1,019,201 84,400 10,128 653,064 65,175 12,481

 Motorcycles and miscellaneous vehicles and

 transportation related equipment .............. 2,352,355 97,874 53,967 2,394,652 132,896 76,919

 Total ..................................... 112,681,299 30,260,032 4,448,649 128,453,823 27,494,350 3,909,493

Electronic products:

Office machines .............................. 5,052,011 164,321 35,610 5,780,790 93,388 8,806

Telephone and telegraph apparatus, including optical

fiber ...................................... 6,232,535 166,378 71,621 7,552,039 294,810 110,532

Microphones, loudspeakers, audio amplifiers, and

combinations thereof ........................ 1,473,156 111,812 36,136 1,826,649 183,938 56,705

Tape recorders, tape players, video cassette recorders,

turntables, and compact disc players ............ 5,445,325 103,280 13,948 6,283,068 141,711 23,407

Records, tapes, compact discs, computer software,

and other media, whether or not recorded ....... 2,544,224 100,881 33,973 2,698,670 33,308 11,994

Radio transmission and reception apparatus,

navigational aid radar, and related apparatus ..... 6,828,611 513,920 129,176 8,201,980 456,410 151,156

Television receivers, video monitors, cathode ray tubes,

and other special purpose tubes ............... 4,600,118 2,256,761 701,197 5,537,557 2,606,391 849,904

Television apparatus (except receivers and monitors),

including cameras, camcorders, and cable 

apparatus ................................. 2,632,967 200,980 54,365 3,265,361 359,603 117,284

Electric sound and visual signaling apparatus, and other

miscellaneous electrical and electronic articles .... 2,248,188 164,431 54,677 2,713,469 230,506 82,951

Electrical circuit apparatus ...................... 7,434,845 1,508,351 922,367 8,854,642 1,984,795 1,218,641

Semiconductor devices ........................ 19,465,816 5,050,585 2,715,496 26,019,660 6,242,568 3,311,390

Computer hardware ........................... 37,905,881 1,693,052 451,696 46,160,941 1,306,873 390,196

Photographic equipment and supplies ............ 3,825,683 246,106 98,180 4,097,371 173,703 69,839
B-12

See notes at end of table.
B-10

Table B-3—Continued

U.S. imports for consumption under the production-sharing provisions (PSP) of HTS Chapter 98, by commodity groups, 1993-96

(Thousand dollars)

1993 1994

)))))))))))))))))))))))))))))))))))))))))))))) )))))))))))))))))))))))))))))))))))))))))))))))))))

Imports Imports

Commodity Total under U.S. Total under U.S.

group imports HTS PSP content imports HTS PSP content

Electronic products—Continued

Medical and optical goods, including ophthalmic 

goods .................................... 6,562,014 602,406 307,240 6,790,037 620,657 291,875

 Balances, surveying/navigational instruments, and

drawing/mathematical and calculating and

measuring instruments ....................... 748,724 54,951 11,416 820,077 125,113 21,090

Watches, clocks, and timing devices .............. 2,447,389 97,572 30,330 2,550,940 87,342 21,323

Measuring, testing, controlling, and analyzing

instruments ................................ 4,552,740 646,515 285,615 5,727,246 681,922 297,919

Total ..................................... 120,000,226 13,682,301 5,953,041 144,880,496 15,623,039 7,035,011

Special provisions .............................. 17,908,639 319 219 20,816,298 1,217 45

Grand Total ................................ 574,862,928 57,363,771 17,559,784 657,884,659 59,310,749 19,517,427

See notes at end of table.
B-11

Table B-3—Continued

U.S. imports for consumption under the production-sharing provisions (PSP) of HTS Chapter 98, by commodity groups, 1993-96

(Thousand dollars)

1995 1996

)))))))))))))))))))))))))))))))))))))))))))))) ))))))))))))))))))))))))))))))))))))))))))))))))

Imports Imports

Commodity Total under U.S. Total under U.S.

group imports HTS PSP content imports HTS PSP content

Agricultural products ............................ 37,806,506 7,503 1,637 41,526,077 2,560 1,171

Forest products ................................ 29,154,780 83,280 42,002 28,957,450 118,333 56,007

Chemical, coal, petroleum, natural gas, and related

products:

Fabricated plastic and rubber products ............ 12,955,349 157,175 85,854 13,383,416 183,169 95,504

Other energy and chemical products .............. 99,832,855 111,309 70,903 120,493,520 145,335 73,245

Total ..................................... 112,788,204 268,483 156,757 133,876,936 328,504 168,749

Textiles, apparel, and footwear:

Textiles and textile products ..................... 10,190,513 336,592 198,435 10,368,559 318,880 201,813

Medical apparel .............................. 475,512 223,342 157,601 456,032 196,442 146,675

Mens' and boy’s suits and sports coats ............ 850,473 146,899 76,715 924,183 161,855 85,856

Mens' and boy's coats and jackets ............... 1,692,303 75,786 44,226 1,783,145 77,763 44,667

Mens' and boy’s trousers ....................... 3,755,379 1,700,119 1,022,948 4,082,582 1,834,041 1,088,688

Women's and girls' trousers .................... 3,670,148 929,616 544,827 3,948,005 1,198,421 721,107

Shirts and blouses ............................ 11,986,425 1,692,681 1,095,159 12,376,939 2,057,892 1,428,466

Women's and girls’ suits, skirts, and coats ......... 3,547,993 600,374 279,104 3,857,068 721,348 333,636

Women's and girls' dresses .................... 1,442,954 181,836 75,730 1,573,759 215,351 90,210

Robes, nightwear, and underwear ................ 2,672,815 1,104,736 726,623 2,947,087 1,291,082 859,377

Hosiery ..................................... 362,928 163,666 153,279 404,282 165,279 151,802

Foundation garments .......................... 926,720 685,945 463,852 864,383 607,628 410,783

Gloves, including gloves for sports ............... 1,733,310 51,939 28,838 1,893,499 47,849 32,369

Headwear ................................... 842,213 40,626 22,420 883,070 39,438 24,755

Other wearing apparel and accessories ........... 5,924,113 384,186 230,982 5,905,356 426,803 254,408

Footwear and parts ........................... 12,095,267 1,397,721 158,191 12,708,385 1,678,736 191,716

Total ..................................... 62,169,069 9,716,063 5,278,930 64,976,333 11,038,807 6,066,327

Minerals and Metals:

Steel mill products ............................ 11,785,730 236,522 176,568 12,679,508 260,219 188,781

Copper and related products .................... 3,401,325 78,064 63,241 3,471,892 90,176 75,357

Aluminum mill products ........................ 2,048,034 14,617 9,738 1,737,499 19,336 11,894

Builders' hardware ............................ 762,571 96,896 51,044 865,975 119,942 61,687

Other metal products .......................... 45,026,110 576,302 251,071 47,437,590 706,060 318,977
B-15

Total ..................................... 63,023,770 1,002,402 551,663 66,192,464 1,195,733 656,696

See notes at end of table.
B-12

Table B-3—Continued

U.S. imports for consumption under the production-sharing provisions (PSP) of HTS Chapter 98, by commodity groups, 1993-96

(Thousand dollars)

1995 1996

)))))))))))))))))))))))))))))))))))))))))))))) ))))))))))))))))))))))))))))))))))))))))))))))))

Imports Imports

Commodity Total under U.S. Total under U.S.

group imports HTS PSP content imports HTS PSP content

Miscellaneous Manufactures:

Luggage, handbags, and flat goods .............. 3,332,378 81,133 45,293 3,511,861 122,234 65,986

Jewelry ..................................... 4,135,631 92,013 83,608 4,251,413 72,272 64,959

Motor vehicle and other furniture ................. 8,423,237 604,115 112,567 9,497,327 734,323 115,279

Lamps and lighting fixtures ..................... 2,198,137 93,921 59,401 2,422,026 110,518 76,092

Other miscellaneous manufactured articles ......... 21,277,482 386,473 94,991 22,831,912 383,190 112,255

Total ..................................... 39,366,865 1,257,655 395,860 42,514,539 1,422,538 434,572

Machinery and equipment:

Air conditioning equipment ..................... 4,129,220 293,680 140,329 4,576,021 414,210 179,092

Commercial machinery ........................ 1,191,025 55,527 20,064 1,223,091 53,746 20,729

Household appliances, including heating and

 drying equipment ........................... 4,073,901 433,448 206,527 4,261,106 455,846 217,648

Centrifuges, filtering and purifying equipment, 

and pumps for liquids ........................ 3,296,188 327,620 212,760 3,544,067 260,587 172,099

Semiconductor equipment, robots, and other 

equipment ................................. 2,053,256 15,404 3,993 2,185,993 4,561 1,014

Taps, cocks, valves, and similar devices ........... 2,931,255 386,309 260,472 3,127,789 406,872 277,048

Electric motors, generators, and related equipment . . 3,879,726 780,214 474,953 3,875,491 859,374 522,087

Electrical transformers, static converters, and 

inductors .................................. 3,537,228 590,903 233,561 3,631,103 603,013 288,330

Powered handtools and parts thereof ............. 1,142,444 135,973 50,436 1,291,244 205,270 69,669

Flashlights and other similar electric lights, light bulbs

and fluorescent tubes; arc lights ............... 1,097,119 188,194 88,791 1,153,410 153,020 80,033

Wiring harnesses for motor vehicles and other 

insulated electrical conduits ................... 5,398,336 3,079,857 1,842,862 5,934,544 3,332,141 2,038,045

Miscellaneous machinery and equipment .......... 27,478,044 565,059 142,613 28,436,643 606,520 171,684

Total ..................................... 60,207,742 6,852,189 3,677,361 63,240,503 7,355,158 4,037,477

Transportation equipment:

Aircraft engines and gas turbines ................ 5,285,140 295,031 78,105 6,241,224 281,525 72,819

Internal combustion piston engines ............... 8,863,010 858,442 272,099 9,914,116 318,270 72,870

Construction, mining, and industrial vehicles ........ 4,783,941 420,737 87,802 4,689,653 270,764 47,726

Certain motor-vehicle parts ..................... 17,818,184 1,807,615 824,647 18,392,963 1,874,944 904,683

Primary cells and batteries, and electric storage
B-17

batteries .................................. 1,636,963 230,107 83,545 1,709,778 230,915 83,348

See notes at end of table.
B-13

Table B-3—Continued

U.S. imports for consumption under the production-sharing provisions (PSP) of HTS Chapter 98, by commodity groups, 1993-96

(Thousand dollars)

1995 1996

)))))))))))))))))))))))))))))))))))))))))))))) ))))))))))))))))))))))))))))))))))))))))))))))))

Imports Imports

Commodity Total under U.S. Total under U.S.

group imports HTS PSP content imports HTS PSP content

Transportation equipment—Continued

Ignition starting, lighting, and other electrical 

equipment ................................. 1,832,824 184,406 107,985 2,032,462 331,830 162,101

Rail locomotive and rolling stock ................. 1,291,549 258,216 87,088 1,312,004 347,833 115,660

Automobiles, trucks, buses, and bodies and 

chassis of the foregoing ...................... 84,384,110 18,658,744 2,046,011 87,366,986 23,322,438 2,656,728

Aircraft, spacecraft, and related equipment, except

engines ................................... 6,135,254 75,289 23,285 7,352,988 26,937 17,010

Ships, tugs, pleasure boats, and similar vessels ..... 919,399 87,410 16,447 1,130,263 153,530 23,853

Motorcycles and miscellaneous vehicles and

transportation related equipment ............... 2,670,388 199,739 107,810 2,553,041 134,253 56,067

Total ..................................... 135,620,762 23,075,736 3,734,822 142,695,478 27,293,240 4,212,865

Electronic products:

Office machines .............................. 6,365,708 52,537 12,542 6,295,635 48,817 25,013

Telephone and telegraph apparatus, including optical

fiber ...................................... 7,896,564 194,800 102,835 8,417,670 213,463 114,543

Microphones, loudspeakers, audio amplifiers, and

combinations thereof ........................ 2,000,815 218,701 69,010 2,108,045 232,479 79,208

Tape recorders, tape players, video cassette recorders,

turntables, and compact disc players ............ 6,732,859 124,736 23,730 5,872,788 117,513 15,782

Records, tapes, compact discs, computer software,

and other media, whether or not recorded ....... 2,852,806 40,126 15,836 3,065,602 53,122 19,326

Radio transmission and reception apparatus,

navigational aid radar, and related apparatus ..... 9,050,516 706,735 167,581 8,664,984 798,563 126,937

Television receivers, video monitors, cathode ray

tubes, and other special purpose tubes .......... 5,930,226 2,510,787 835,294 5,737,668 2,624,920 1,031,259

Television apparatus (except receivers and monitors),

including cameras, camcorders, and cable

apparatus ................................. 3,881,372 505,761 157,606 4,352,576 655,836 177,800

Electric sound and visual signaling apparatus, and

other miscellaneous electrical and electronic

articles .................................... 3,211,070 271,453 89,553 3,355,050 285,473 86,860

Electrical circuit apparatus ...................... 10,407,171 2,088,683 1,285,230 10,520,206 2,055,643 1,245,151

Semiconductor devices ........................ 39,167,784 8,613,036 4,301,684 36,771,266 8,164,008 4,086,895

Computer hardware ........................... 56,308,251 1,372,105 404,800 61,457,046 1,296,559 317,787
B-19

Photographic equipment and supplies ............ 4,496,485 109,868 45,139 4,599,995 100,581 41,617

See notes at end of table.
B-14

Table B-3—Continued

U.S. imports for consumption under the production-sharing provisions (PSP) of HTS Chapter 98, by commodity groups, 1993-96

(Thousand dollars)

1995 1996

)))))))))))))))))))))))))))))))))))))))))))))) ))))))))))))))))))))))))))))))))))))))))))))))))

Imports Imports

Commodity Total under U.S. Total under U.S.

group imports HTS PSP content imports HTS PSP content

Electronic products—Continued

Medical and optical goods, including ophthalmic 

goods .................................... 7,771,407 836,709 433,022 8,481,793 1,051,585 566,138

Balances, surveying/navigational instruments, 

and drawing/mathematical and calculating and

measuring instruments ....................... 991,664 174,784 23,938 992,180 160,154 20,687

Watches, clocks, and timing devices .............. 2,672,551 83,216 20,150 2,714,633 85,720 22,683

Measuring, testing, controlling, and analyzing 

instruments ............................... 6,665,280 712,706 282,919 7,136,357 814,891 353,151

Total ..................................... 176,402,530 18,616,743 8,270,868 180,543,493 18,759,325 8,330,836

Special provisions .............................. 23,120,192 285 115 25,946,440 283 113

Grand Total ................................ 739,660,419 60,880,340 22,110,015 790,469,714 67,514,482 23,964,813

Note.—Because of rounding, figures may not add to the totals shown.

Source: Compiled from official statistics of the U.S. Department of Commerce.
B-21

Table B-4

U.S. imports for consumption under the production-sharing provisions (PSP) of HTS Chapter 98, by

principal sources, 1996

Total value Duty-free value

)))))))))))))))))))))))))))))) ))))))))))))))))))))))))))

Percentage Percentage

Sources Value of total Value of total

MiIllon dollars MiIllon dollars

Grand total ................................. 67,514 100.0 23,965 100.0

Top 10 sources, total ......................... 56,308 83.4 19,747 82.4

Mexico .................................. 27,925 41.4 14,649 61.1

Japan ................................... 7,797 11.5 265 1.1

Germany ................................. 7,414 11.0 153 0.6

Malaysia ................................. 2,382 3.5 1,116 4.7

Dominican Republic ........................ 2,104 3.1 1,365 5.7

Philippines ............................... 1,805 2.7 773 3.2

Korea ................................... 1,787 2.6 653 2.7

Sweden ................................. 1,758 2.6 23 0.1

United Kingdom ........................... 1,758 2.6 132 0.6

Canada .................................. 1,579 2.3 618 2.6

All other ................................... 11,207 16.6 4,218 17.6

Note.—Because of rounding, figures may not add to the totals shown.

Source: Compiled from official statistics of the U.S. Department of Commerce.
B-16

Table B-5

U.S. imports for consumption from Mexico under NAFTA and the production-sharing provisions (PSP) of HTS Chapter 98, by commodity

groups, 1996

(Thousand dollars)

Entered under

Commodity NAFTA and NAFTA HTS PSP All Total Total under HTS

group Total HTS PSP only only other NAFTA HTS PSP PSP

U.S. content

Agricultural products ...................... 4,392,311 590 2,983,846 812 1,407,062 2,984,437 1,403 792

Forest products .......................... 846,585 80,088 463,640 15,832 287,025 543,728 95,920 49,248

Chemicals, coal, petroleum natural

gas, and related products:

 Fabricated plastic and rubber products ...... 745,395 116,119 552,884 22,935 53,457 669,003 139,054 78,829

 Other energy and chemical products ........ 9,564,032 3,836 7,458,576 8,890 2,092,730 7,462,412 12,726 5,923

Total ............................... 10,309,427 119,955 8,011,460 31,825 2,146,186 8,131,416 151,780 84,752

Textiles, apparel, and footwear:

 Textiles and textile products ............... 932,846 142,071 650,062 109,409 31,305 792,133 251,479 174,776

 Medical apparel ....................... 205,439 27,779 18,876 158,682 102 46,654 186,461 139,752

 Mens' and boy's suits and 

sports coats ......................... 66,306 12,176 50,176 3,618 336 62,352 15,794 10,948

Mens' and boy's coats and jackets .......... 26,700 13,985 3,636 8,924 154 17,622 22,910 16,267

Mens' and boy's trousers ................. 895,902 92,064 61,344 741,781 714 153,408 833,844 515,270

Women's and girls' trousers ............... 648,825 111,836 35,797 499,591 1,601 147,633 611,427 422,145

Shirts and blouses ....................... 980,153 119,792 211,970 645,402 2,988 331,762 765,195 613,515

Women's and girls' suits, 

 skirts, and coats ...................... 123,891 36,296 8,245 75,226 4,124 44,541 111,522 70,677

Women's and girls' dresses ............... 98,148 16,108 7,105 64,086 10,850 23,212 80,193 45,262

Robes, nightwear, and underwear .......... 262,072 53,233 46,225 161,354 1,259 99,458 214,588 156,510

Hosiery ............................... 80,105 23,734 46,827 9,393 151 70,560 33,127 28,157

Foundation garments .................... 187,551 77,046 18,369 91,985 152 95,415 169,031 122,861

Gloves, including gloves for sports .......... 49,126 11,254 30,749 6,099 1,025 42,003 17,352 14,247

Headwear ............................. 50,047 21,155 15,313 13,111 468 36,469 34,266 21,370

Other wearing apparel and accessories ...... 194,389 44,014 62,240 79,573 8,561 106,255 123,588 83,257

Footwear and parts ...................... 306,378 47,457 211,063 36,362 11,496 258,520 83,820 66,051

Total ............................... 5,107,878 850,000 1,477,997 2,704,596 75,285 2,327,997 3,554,596 2,501,065

See notes at end of table.
B-17

Table B-5—Continued

U.S. imports for consumption from Mexico under NAFTA and the production-sharing provisions (PSP) of HTS Chapter 98, by commodity

groups, 1996

(Thousand dollars)

Entered under

Commodity NAFTA and NAFTA All Total Total under HTS

group Total HTS PSP only other NAFTA HTS PSP PSP

HTS PSP

only

U.S. content

Minerals and Metals:

Steel mill products ....................... 1,028,519 66,211 889,836 40 72,433 956,047 66,250 50,038

Copper and related products .............. 402,556 48 284,479 1,187 116,842 284,527 1,236 502

Aluminum mill products .................. 34,262 3,305 30,760 1 196 34,064 3,306 2,583

Builders' hardware ...................... 157,481 117,207 23,075 2,735 14,463 140,283 119,942 61,687

Other metal products .................... 3,046,237 541,759 1,626,511 14,436 863,531 2,168,270 556,195 270,809

Total ............................... 4,669,055 728,530 2,854,661 18,399 1,067,465 3,583,191 746,929 385,620

Miscellaneous manufactures:

Luggage, handbags, and flat goods ........ 119,027 18,974 19,294 73,925 6,834 38,268 92,899 57,053

Jewelry ............................... 136,844 16,675 117,716 9 2,445 134,391 16,684 14,760

Motor vehicle and other furniture ........... 1,524,772 702,156 790,859 23,122 8,635 1,493,015 725,277 113,761

Lamps and lighting fixtures ................ 253,130 101,728 147,882 1,531 1,989 249,610 103,260 73,610

Other miscellaneous manufactured 

 articles .............................. 1,000,079 104,496 357,095 76,621 461,868 461,590 181,116 71,961

Total ............................... 3,033,852 944,029 1,432,845 175,207 481,771 2,376,874 1,119,236 331,146

Machinery and equipment:

 Air conditioning equipment ................ 800,817 355,927 368,132 29,103 47,655 724,059 385,030 172,391

Commercial machinery ................... 157,576 33,293 122,037 1,010 1,237 155,330 34,302 17,116

 Household appliances, including heating 

 and drying equipment ................... 703,186 279,933 366,815 11,703 44,734 646,748 291,636 189,061

 Centrifuges, filtering and purifying 

 equipment, and pumps for liquids .......... 356,345 216,219 117,063 582 22,481 333,282 216,801 158,710

Semiconductor equipment, robots, and 

other equipment ...................... 4,287 101 2,901 0 1,284 3,002 101 62

Taps, cocks, valves, and similar devices ..... 491,764 318,884 132,918 28,588 11,374 451,802 347,472 252,240

Electric motors, generators, and related

equipment ........................... 1,016,896 737,865 164,158 65,188 49,686 902,022 803,053 506,011

Electrical transformers, static converters, 

and inductors ........................ 1,051,867 366,720 462,131 140,263 82,753 828,851 506,982 267,489

Powered handtools and parts thereof ....... 174,953 121,992 18,286 13,387 21,288 140,278 135,379 63,062

Flashlights and other similar electric 

lights, light bulbs and fluorescent 

tubes; arc lights ....................... 171,944 112,936 29,041 20,442 9,525 141,977 133,378 74,079

Wiring harnesses for motor vehicles and 

other insulated electrical conduits ........ 3,761,247 2,564,469 590,577 469,302 136,898 3,155,047 3,033,772 1,969,396

Miscellaneous machinery and equipment .... 601,318 219,559 244,033 39,209 98,518 463,591 258,768 118,510

 

Total ................................. 9,292,201 5,327,898 2,618,093 818,776 527,434 7,945,991 6,146,674 3,788,127

See notes at end of table.
Table B-5—Continued

U.S. imports for consumption from Mexico under NAFTA and the production-sharing provisions (PSP) of HTS Chapter 98, by commodity

groups, 1996

(Thousand dollars)

Entered under

Commodity NAFTA and NAFTA All Total Total under HTS

group Total HTS PSP only other NAFTA HTS PSP PSP

HTS PSP

only

U.S. content

B-18

Transportation equipment:

Aircraft engines and gas turbines .......... 68,346 31,395 4,625 2,512 29,814 36,020 33,908 28,804

Internal combustion piston engines ......... 1,712,861 69,667 1,274,668 34,092 334,434 1,344,335 103,759 55,092

Construction, mining, and industrial 

vehicles ............................. 181,471 0 155,474 0 25,996 155,474 0 0

Certain motor-vehicle parts ............... 2,532,645 1,382,085 908,828 140,630 101,102 2,290,913 1,522,715 886,697

Primary cells and batteries, and electric 

storage batteries ...................... 339,652 134,198 89,853 77,361 38,239 224,051 211,560 77,728

Ignition starting, lighting, and other 

 electrical equipment ................... 392,971 216,178 46,542 76,618 53,632 262,720 292,796 147,854

Rail locomotive and rolling stock ........... 130,611 24 38,174 0 92,414 38,197 24 16

Automobiles, trucks, buses, and bodies 

and chassis of the foregoing ............ 11,714,324 4,421,645 6,883,384 117,751 291,544 11,305,029 4,539,396 2,309,875

Aircraft, spacecraft, and related 

equipment, except engines ............ 23,520 0 265 9,231 14,023 265 9,231 4,808

Ships, tugs, pleasure boats, and similar 

vessels ............................ 5,197 57 4,928 0 212 4,985 57 43

Motorcycles and miscellaneous vehicles 

and transportation related equipment ..... 168,618 99,029 32,877 745 35,967 131,906 99,774 45,738

 Total ................................ 17,270,214 6,354,278 9,439,618 458,942 1,017,377 15,793,896 6,813,218 3,556,655

Electronic products:

Office machines ......................... 233,009 16,648 89,366 12,805 114,190 106,014 29,453 21,217

Telephone and telegraph apparatus, 

including optical fiber .................. 754,956 89,798 634,824 16,323 14,011 724,622 106,121 48,274

Microphones, loudspeakers, audio 

amplifiers, and combinations thereof ...... 365,195 95,894 134,870 121,567 12,864 230,764 217,460 75,451

Tape recorders, tape players, video 

cassette recorders, turntables, and 

compact disc players .................. 367,881 55,472 213,309 61,865 37,234 268,782 117,337 15,648

Records, tapes, compact discs, computer

software, and other media, whether or 

not recorded ......................... 307,136 10,994 229,543 31,754 34,844 240,537 42,748 18,114

See notes at end of table.
Table B-5—Continued

U.S. imports for consumption from Mexico under NAFTA and the production-sharing provisions (PSP) of HTS Chapter 98, by commodity

groups, 1996

(Thousand dollars)

Entered under

Commodity NAFTA and NAFTA All Total Total under HTS

group Total HTS PSP only other NAFTA HTS PSP PSP

HTS PSP

only

U.S. content

B-19

Electronics—Continued

Radio transmission and reception 

apparatus, navigational aid radar, and 

related apparatus ..................... 1,375,130 232,096 544,996 537,764 60,273 777,092 769,860 122,179

Television receivers, video monitors, 

cathode ray tubes, and other special 

purpose tubes ........................ 3,466,065 2,335,096 859,487 219,757 51,724 3,194,583 2,554,854 1,014,600

Television apparatus (except receivers 

and monitors), including cameras, 

camcorders, and cable apparatus ........ 1,081,663 469,176 573,337 36,016 3,134 1,042,513 505,192 157,640

Electric sound and visual signaling 

apparatus, and other miscellaneous 

electrical and electronic articles .......... 308,087 190,012 79,979 29,367 8,728 269,991 219,379 74,127

Electrical circuit apparatus ................ 2,146,591 1,447,863 277,468 337,948 83,312 1,725,331 1,785,811 1,118,810

Semiconductor devices .................. 797,855 4,351 498 584,809 208,198 4,848 589,159 352,002

Computer hardware ..................... 3,060,554 181,447 1,100,520 822,276 956,312 1,281,967 1,003,723 250,585

Photographic equipment and supplies ...... 165,694 1,401 160,155 621 3,517 161,557 2,022 453

 Medical and optical goods, including 

ophthalmic goods ..................... 719,492 502,170 94,760 68,643 53,919 596,930 570,813 325,076

Balances, surveying/navigational 

instruments, and 

drawing/mathematical and calculating 

and measuring instruments ............. 33,333 10,815 3,221 375 18,922 14,036 11,189 5,471

Watches, clocks, and timing devices ......... 28,013 20,191 4,874 1,596 1,352 25,065 21,787 15,776

Measuring, testing, controlling, and 

analyzing Instruments .................. 1,291,328 319,732 261,542 428,172 281,882 581,274 747,905 336,254

Special provisions ........................ 2,755,615 0 142,477 109 2,613,029 142,477 109 74

 Total ................................ 19,257,597 5,983,157 5,405,228 3,311,766 4,557,446 11,388,384 9,294,923 3,951,752

 Grand total ........................... 74,179,119 20,388,525 34,687,388 7,536,155 11,567,051 55,075,913 27,924,680 14,649,157

Note.—Because of rounding, figures may not add to the totals shown.

Source: Compiled from official statistics of the U.S. Department of Commerce.
B-26

Table B-6

U.S. imports for consumption from Japan, total and under the production-sharing

provisions (PSP) of HTS Chapter 98, by commodity groups, 1996

(Thousand dollars)

Commodity Total Total under U.S. 

group Imports HTS PSP content

Agricultural products ................................... 375,568 ( ) ( )

1 1

Forest products ....................................... 420,391 231 53

Chemicals, coal, petroleum, natural gas, and related products:

Fabricated plastic and rubber products .................. 2,059,928 1 0

Other energy and chemical products .................... 5,863,887 ( ) ( )

1 1

Total ............................................ 7,923,815 1 0

Textiles, apparel, and footwear:

Textiles and textile products ........................... 486,142 294 183

Medical apparel .................................... 62,788 ( ) ( )

1 1

Mens' and boy's suits and sports coats .................. 1,036 ( ) ( )

1 1

Mens' and boy's coats and jackets ..................... 906 ( ) ( )

1 1

Mens' and boy's trousers ............................. 1,552 ( ) ( )

1 1

Women's and girls' trousers ........................... 11,456 ( ) ( )

1 1

Shirts and blouses .................................. 2,332 ( ) ( )

1 1

Women's and girls' suits, skirts, and coats ............... 14,578 ( ) ( )

1 1

Women's and girls' dresses ........................... 1,354 ( ) ( )

1 1

Robes, nightwear, and underwear ...................... 1,180 ( ) ( )

1 1

Hosiery ........................................... 8,030 ( ) ( )

1 1

Foundation garments ................................ 24 ( ) ( )

1 1

Gloves, including gloves for sports ..................... 5,616 ( ) ( )

1 1

Headwear ......................................... 21,227 ( ) ( )

1 1

Other wearing apparel and accessories ................. 19,371 ( ) ( )

1 1

Footwear and parts ................................. 2,373 17 0

Total ............................................ 639,965 311 183

Minerals and metals:

Steel mill products .................................. 1,378,829 12 11

Copper and related products .......................... 147,492 28,619 19,278

Aluminum mill products .............................. 87,721 11,028 5,801

Builders' hardware .................................. 39,369 ( ) ( )

1 1

Other metal products ................................ 3,255,801 2,465 74

Total ............................................ 4,909,211 42,124 25,165

Miscellaneous manufactures:

Luggage, handbags, and flat goods .................... 5,666 12 9

Jewelry ........................................... 13,524 ( ) ( )

1 1

Motor vehicle and other furniture ....................... 136,071 ( ) ( )

1 1

Lamps and lighting fixtures ........................... 24,301 ( ) ( )

1 1

Other miscellaneous manufactured articles ............... 2,578,747 3,518 344

Total ............................................ 2,758,309 3,530 353

Machinery and equipment:

Air conditioning equipment ........................... 855,433 ( ) ( )

1 1

Commercial machinery .............................. 121,027 79 36

Household appliances, including heating and drying 276,288 79 36

equipment ...........................................

Centrifuges, filtering and purifying equipment, and pumps for 

liquids ........................................... 574,231 11 11

Semiconductor equipment, robots, and other equipment .... 1,195,495 516 270

Taps, cocks, valves, and similar devices ................. 460,906 41 25

Electric motors, generators, and related equipment ........ 826,321 448 180

Electrical transformers, static converters, and inductors ..... 460,720 ( ) ( )

1 1

See notes at end of table.
B-27

Table B-6—Continued

U.S. imports for consumption from Japan, total and under the production-sharing

provisions (PSP) of HTS Chapter 98, by commodity groups, 1996

(Thousand dollars)

Commodity Total Total under U.S. 

group Imports HTS PSP content

Machinery and equipment—Continued

Powered handtools and parts thereof ................... 257,203 468 51

Flashlights and other similar electric lights, light bulbs and 

fluorescent tubes; arc lights .......................... 189,743 ( ) ( )

1 1

Wiring harnesses for motor vehicles and other insulated 

electrical conduits .................................. 238,336 20 2

Miscellaneous machinery and equipment ................ 6,507,428 25,240 2,728

Total ............................................ 11,963,132 26,900 3,338

Transportation equipment:

Aircraft engines and gas turbines ...................... 294,425 39 24

Internal combustion piston engines ..................... 3,135,804 38,249 4,400

Construction, mining, and industrial vehicles .............. 1,285,078 112,729 25,136

Certain motor-vehicle parts ........................... 4,332,867 6,885 978

Primary cells and batteries, and electric storage batteries .... 790,936 9,287 940

Ignition starting, lighting, and other electrical equipment ..... 745,843 ( ) ( )

1 1

Rail locomotives and rolling stock ...................... 71,525 59,203 7,819

Automobiles, trucks, buses, and bodies and chassis of the 

foregoing ......................................... 26,861,622 7,193,343 109,087

Aircraft, spacecraft, and related equipment, except engines . 750,582 9 7

Ships, tugs, pleasure boats, and similar vessels .......... 81,913 ( ) ( )

1 1

Motorcycles and miscellaneous vehicles and transportation 

related equipment .................................. 1,294,298 367 1

Total ......................................... 39,644,892 7,420,110 148,393

Electronic products:

Office machines .................................... 3,054,899 14 7

Telephone and telegraph apparatus, including optical fiber . . 1,494,323 9,913 2,272

Microphones, loudspeakers, audio amplifiers, and 

combinations thereof ............................... 251,484 104 35

Tape recorders, tape players, video cassette recorders, 

turntables, and compact disc players ................... 1,753,541 ( ) ( )

1 1

Records, tapes, compact discs, computer software, and 

other media, whether or not recorded .................. 1,061,819 ( ) ( )

1 1

Radio transmission and reception apparatus, navigational aid 

radar, and related apparatus ......................... 1,105,072 3,478 36

Television receivers, video monitors, cathode ray tubes, and 

other special purpose tubes .......................... 989,281 ( ) ( )

1 1

Television apparatus (except receivers and monitors), 

including cameras, camcorders, and cable apparatus ..... 2,311,447 57,689 5,990

Electric sound and visual signaling apparatus, and other 

miscellaneous electrical and electronic articles ........... 721,378 ( ) ( )

1 1

Electrical circuit apparatus ............................ 2,515,056 5,911 949

Semiconductor devices .............................. 8,631,175 142,004 69,932

Computer hardware ................................. 13,918,576 37,799 2,383

Photographic equipment and supplies .................. 1,751,736 ( ) ( )

1 1

Medical and optical goods, including ophthalmic goods ..... 1,881,167 34,835 1,930

Balances, surveying/navigational instruments, and drawing/ 

mathematical and calculating and measuring instruments . . 185,561 5,393 3,190

Watches, clocks, and timing devices .................... 768,453 1,530 257

Measuring, testing, controlling, and analyzing instruments ... 1,568,647 4,691 441

Total ............................................ 43,963,615 303,363 87,423

Special provisions ..................................... 2,163,358 ( ) ( )

1 1

Grand total ....................................... 114,762,256 7,796,570 264,908

 Less than $500. 1 

Note.—Because of rounding, figures may not add to the totals shown.

Source: Compiled from official statistics of the U.S. Department of Commerce.
B-28

Table B-7

U.S. imports for consumption from Germany, total and under the production-sharing provisions

(PSP) of HTS Chapter 98, by commodity groups, 1996

(Thousand dollars)

Commodity Total Total under U.S. 

group Imports HTS PSP content

Agricultural products ................................. 786,836 ( ) ( )

1 1

Forest products ..................................... 560,109 ( ) ( )

1 1

Chemicals, coal, petroleum, natural gas, and related products:

Fabricated plastic and rubber products ................. 735,246 ( ) ( )

1 1

Other energy and chemical products ................... 4,959,784 21,892 11,282

Total .......................................... 5,695,031 21,892 11,282

Textiles, apparel, and footwear:

Textiles and textile products .......................... 387,586 68 33

Medical apparel ................................... 15,955 ( ) ( )

1 1

Mens' and boy's suits and sports coats ................. 6,383 ( ) ( )

1 1

Mens' and boy's coats and jackets .................... 1,566 1 0

Mens' and boy's trousers ............................ 1,756 1 0

Women's and girls' trousers .......................... 8,068 ( ) ( )

1 1

Shirts and blouses ................................. 11,719 59 54

Women's and girls' suits, skirts, and coats .............. 44,402 ( ) ( )

1 1

Women's and girls' dresses .......................... 7,047 ( ) ( )

1 1

Robes, nightwear, and underwear ..................... 1,354 ( ) ( )

1 1

Hosiery .......................................... 4,730 ( ) ( )

1 1

Foundation garments ............................... 234 ( ) ( )

1 1

Gloves, including gloves for sports .................... 3,165 ( ) ( )

1 1

Headwear ........................................ 2,825 ( ) ( )

1 1

Other wearing apparel and accessories ................ 18,223 ( ) ( )

1 1

Footwear and parts ................................ 67,734 161 10

Total .......................................... 582,747 ?? ??

Minerals and metals:

Steel mill products ................................. 1,169,162 ( ) ( )

1 1

Copper and related products ......................... 188,814 ( ) ( )

1 1

Aluminum mill products ............................. 191,854 ( ) ( )

1 1

Builders' hardware ................................. 46,956 ( ) ( )

1 1

Other metal products ............................... 1,701,579 7,093 2,732

Total .......................................... 3,298,366 7,093 2,732

Miscellaneous manufactures:

Luggage, handbags, and flat goods ................... 17,343 ( ) ( )

1 1

Jewelry .......................................... 29,605 ( ) ( )

1 1

Motor vehicle and other furniture ...................... 130,964 ( ) ( )

1 1

Lamps and lighting fixtures .......................... 42,314 4 4

Other miscellaneous manufactured articles .............. 625,793 1,378 380

Total .......................................... 846,019 1,382 384

Machinery and equipment:

Air conditioning equipment .......................... 318,048 2,261 85

Commercial machinery ............................. 118,861 ( ) ( )

1 1

Household appliances, including heating and drying 

 equipment ...................................... 269,215 4,235 551

Centrifuges, filtering and purifying equipment, and pumps 

 for liquids ........................................ 659,953 120 54

Semiconductor equipment, robots, and other equipment ... 290,299 ( ) ( )

1 1

Taps, cocks, valves, and similar devices ................ 375,347 41 13

Electric motors, generators, and related equipment ....... 318,665 ( ) ( )

1 1

Electrical transformers, static converters, and inductors .... 157,582 ( ) ( )

1 1

See notes at end of table.

Table B-7—Continued

U.S. imports for consumption from Germany, total and under the production-sharing provisions

(PSP) of HTS Chapter 98, by commodity groups, 1996
B-29

(Thousand dollars)

Commodity Total Total under U.S. 

group Imports HTS PSP content

Machinery and equipment—Continued

Powered handtools and parts thereof .................. 149,242 ( ) ( )

1 1

Flashlights and other similar electric lights, light bulbs and 

fluorescent tubes; arc lights ........................ 94,200 ( ) ( )

1 1

Wiring harnesses for motor vehicles and other insulated 

electrical conduits ................................ 89,893 18 5

Miscellaneous machinery and equipment ............... 5,625,716 56,220 4,609

Total .......................................... 8,467,021 ?? ??

Transportation equipment:

Aircraft engines and gas turbines ..................... 685,755 33 2

Internal combustion piston engines .................... 786,447 161,922 11,630

Construction, mining, and industrial vehicles ............. 496,458 ( ) ( )

1 1

Certain motor-vehicle parts .......................... 1,047,114 4,635 1,466

Primary cells and batteries, and electric storage batteries ... 22,861 ( ) ( )

1 1

Ignition starting, lighting, and other electrical equipment .... 207,275 24,147 9,781

Rail locomotive and rolling stock ...................... 34,770 ( ) ( )

1 1

Automobiles, trucks, buses, and bodies and chassis of the 

foregoing ....................................... 8,347,245 7,102,444 105,505

Aircraft, spacecraft, and related equipment, except engines 202,822 ( ) ( )

1 1

Ships, tugs, pleasure boats, and similar vessels ......... 10,253 ( ) ( )

1 1

Motorcycles and miscellaneous vehicles and transportation 

related equipment ................................ 161,119 164 37

Total ........................................ 12,002,118 7,293,346 128,421

Electronic products:

Office machines ................................... 103,967 ( ) ( )

1 1

Telephone and telegraph apparatus, including optical fiber . 87,093 2,287 860

Microphones, loudspeakers, audio amplifiers, and 

combinations thereof ............................. 35,035 ( ) ( )

1 1

Tape recorders, tape players, video cassette recorders, 

turntables, and compact disc players ................. 32,156 ( ) ( )

1 1

Records, tapes, compact discs, computer software, and 

other media, whether or not recorded ................ 181,460 13 1

Radio transmission and reception apparatus, navigational 

aid radar, and related apparatus .................... 54,529 ( ) ( )

1 1

Television receivers, video monitors, cathode ray tubes, 

and other special purpose tubes .................... 72,369 ( ) ( )

1 1

Television apparatus (except receivers and monitors), 

including cameras, camcorders, and cable apparatus ... 8,235 ( ) ( )

1 1

Electric sound and visual signaling apparatus, and other 

miscellaneous electrical and electronic articles ......... 92,201 321 91

Electrical circuit apparatus ........................... 811,078 135 31

Semiconductor devices ............................. 585,113 52 29

Computer hardware ................................ 650,235 226 163

Photographic equipment and supplies ................. 293,698 464 71

Medical and optical goods, including ophthalmic goods .... 1,272,129 20,245 2,798

Balances, surveying/navigational instruments, and drawing/ 

mathematical and calculating and measuring 

 instruments ....................................

52,171 ( ) ( )

1 1

Watches, clocks, and timing devices ................... 59,780 0 0

Measuring, testing, controlling, and analyzing instruments . . 948,815 3,603 689

Total .......................................... 5,340,063 27,346 4,734

Special provisions ................................... 1,636,378 ( ) ( )

1 1

Grand total ..................................... 39,214,688 7,414,243 152,966

Less than $500. 1 

Note.—Because of rounding, figures may not add to the totals shown.

Source: Compiled from official statistics of the U.S. Department of Commerce.
B-30

Table B-8

U.S. imports for consumption from Malaysia, total and under the production-sharing provisions

(PSP) of HTS Chapter 98, by commodity groups, 1996

(Thousand dollars)

Commodity Total Total under U.S. 

group Imports HTS PSP content

Agricultural products ...................................... 200,879 ( ) ( )

1 1

Forest products .......................................... 238,445 ( ) ( )

1 1

Chemicals, coal, petroleum, natural gas, and related products:

Fabricated plastic and rubber products ...................... 72,414 ( ) ( )

1 1

Other energy and chemical products ........................ 585,291 ( ) ( )

1 1

Total .............................................. 657,705 0 0

Textiles, apparel, and footwear:

Textiles and textile products ............................... 60,457 ( ) ( )

1 1

Medical apparel ........................................

Mens' and boy's suits and sports coats ......................

Mens' and boy's coats and jackets ......................... 75,018 568 9

Mens' and boy's trousers ................................. 60,260 2,072 33

Women's and girls' trousers ............................... 45,482 165 1

Shirts and blouses ...................................... 301,026 11,981 610

Women's and girls' suits, skirts, and coats ................... 47,267 181 4

Women's and girls' dresses ............................... 36,858 ( ) ( )

1 1

Robes, nightwear, and underwear .......................... 20,800 ( ) ( )

1 1

Hosiery ............................................... 4 ( ) ( )

1 1

Foundation garments .................................... 2,058 ( ) ( )

1 1

Gloves, including gloves for sports ......................... 594,091 ( ) ( )

1 1

Headwear ............................................. 5,435 ( ) ( )

1 1

Other wearing apparel and accessories ..................... 53,825 15 1

Footwear and parts ..................................... 2,688 141 24

Total ............................................... 1,305,270 15,122 681

Minerals and metals:

Steel mill products ...................................... 26,411 ( ) ( )

1 1

Copper and related products .............................. 21,169 ( ) ( )

1 1

Aluminum mill products .................................. 552 ( ) ( )

1 1

Builders' hardware ...................................... 5,587 ( ) ( )

1 1

Other metal products .................................... 211,767 2 2

Total ............................................... 265,486 2 2

Miscellaneous manufactures:

Luggage, handbags, and flat goods ........................ 10,534 ( ) ( )

1 1

Jewelry ............................................... 37,936 ( ) ( )

1 1

Motor vehicle and other furniture ........................... 395,599 ( ) ( )

1 1

Lamps and lighting fixtures ............................... 20,190 ( ) ( )

1 1

Other miscellaneous manufactured articles ................... 385,181 ( ) ( )

1 1

Total ............................................... 849,440 (1) ( )

1

Machinery and equipment:

Air conditioning equipment ............................... 91,467 ( ) ( )

1 1

Commercial machinery .................................. 3,392 ( ) ( )

1 1

Household appliances, including heating and drying equipment . . 99,739 ( ) ( )

1 1

Centrifuges, filtering and purifying equipment, and pumps for 

liquids .............................................. 2,973 ( ) ( )

1 1

Semiconductor equipment, robots, and other equipment ........ 4,730 ( ) ( )

1 1

Taps, cocks, valves, and similar devices ..................... 2,620 ( ) ( )

1 1

Electric motors, generators, and related equipment ............ 21,900 280 119

Electrical transformers, static converters, and inductors ......... 106,178 5,038 814

Powered handtools and parts thereof ....................... 954 ( ) ( )

1 1

See notes at end of table.

Table B-8—Continued

U.S. imports for consumption from Malaysia, total and under the production-sharing provisions

(PSP) of HTS Chapter 98, by commodity groups, 1996
B-31

(Thousand dollars)

Commodity Total Total under U.S. 

group Imports HTS PSP content

Machinery and equipment—Continued

Flashlights and other similar electric lights, light bulbs and 

fluorescent tubes; arc lights ............................. 2,006 94 47

Wiring harnesses for motor vehicles and other insulated electrical 

conduits ............................................ 32,774 12 11

Miscellaneous machinery and equipment .................... 11,008 ( ) ( )

1 1

Total ............................................... 379,741 5,423 991

Transportation equipment:

Aircraft engines and gas turbines .......................... 11,461 ( ) ( )

1 1

Internal combustion piston engines ......................... 1,031 ( ) ( )

1 1

Construction, mining, and industrial vehicles .................. 230 ( ) ( )

1 1

Certain motor-vehicle parts ............................... 5,688 12 10

Primary cells and batteries, and electric storage batteries ........ 11,497 ( ) ( )

1 1

Ignition starting, lighting, and other electrical equipment ......... 1,593 779 627

Rail locomotive and rolling stock ........................... 3,473 ( ) ( )

1 1

Automobiles, trucks, buses, and bodies and chassis of the 

foregoing ............................................

Aircraft, spacecraft, and related equipment, except engines ..... 302 ( ) ( )

1 1

Ships, tugs, pleasure boats, and similar vessels .............. 5,188 4,153 773

Motorcycles and miscellaneous vehicles and transportation 

related equipment ..................................... 9,251 ( ) ( )

1 1

Total ............................................... 49,715 4,944 1,410

Electronic products:

Office machines ........................................ 148,693 ( ) ( )

1 1

Telephone and telegraph apparatus, including optical fiber ...... 769,363 21 5

Microphones, loudspeakers, audio amplifiers, and combinations 

thereof .............................................. 142,056 ( ) ( )

1 1

Tape recorders, tape players, video cassette recorders, 

turntables, and compact disc players ...................... 1,373,052 ( ) ( )

1 1

Records, tapes, compact discs, computer software, and other 

media, whether or not recorded .......................... 71,111 2,626 378

Radio transmission and reception apparatus, navigational aid 

radar, and related apparatus ............................ 1,341,612 21 16

Television receivers, video monitors, cathode ray tubes, and 

other special purpose tubes ............................. 240,285 ( ) ( )

1 1

Television apparatus (except receivers and monitors), including 

cameras, camcorders, and cable apparatus ................ 70,932 ( ) ( )

1 1

Electric sound and visual signaling apparatus, and other 

miscellaneous electrical and electronic articles .............. 137,118 31,661 4,918

Electrical circuit apparatus ................................ 148,948 1,430 770

Semiconductor devices .................................. 5,134,972 2,316,764 1,104,437

Computer hardware ..................................... 3,700,638 1,439 768

Photographic equipment and supplies ...................... 181,967 ( ) ( )

1 1

Medical and optical goods, including ophthalmic goods ......... 31,806 346 226

Balances, surveying/navigational instruments, and drawing/ 

mathematical and calculating and measuring instruments ..... 1,717 ( ) ( )

1 1

Watches, clocks, and timing devices ........................ 24,232 ( ) ( )

1 1

Measuring, testing, controlling, and analyzing instruments ....... 58,296 2,011 1,048

Total ............................................... 13,576,798 2,356,320 1,112,567

Special provisions ........................................ 247,336 ( ) ( )

1 1

Grand total .......................................... 17,770,816 2,383,194 1,116,035

Less than $500. 1 

Note.—Because of rounding, figures may not add to the totals shown.

Source: Compiled from official statistics of the U.S. Department of Commerce.
B-32

Table B-9

U.S. imports for consumption from Dominican Republic, total and under the production-sharing

provisions (PSP) of HTS Chapter 98, by commodity groups, 1996

(Thousand dollars)

Commodity Total Total under U.S. 

group imports HTS PSP content

Agricultural products ......................................... 492,750 16 8

Forest products ............................................. 4,489 ( ) ( )

1 1

Chemicals, coal, petroleum, natural gas, and related products:

Fabricated plastic and rubber products ......................... 37,111 94 41

Other energy and chemical products .......................... 6,825 172 111

Total ................................................. 43,936 266 153

Textiles, apparel, and footwear:

Textiles and textile products .................................. 34,352 17,421 13,067

Medical apparel ........................................... 10,247 267 24

Mens' and boy's suits and sports coats ......................... 86,058 74,318 54,562

Mens' and boy's coats and jackets ............................ 15,319 11,327 6,320

Mens' and boy's trousers .................................... 459,586 453,278 245,762

Women's and girls' trousers .................................. 196,442 192,601 114,298

Shirts and blouses ......................................... 249,960 187,710 137,215

Women's and girls' suits, skirts, and coats ...................... 183,536 176,765 111,383

Women's and girls' dresses .................................. 7,519 6,563 4,111

Robes, nightwear, and underwear ............................. 273,749 264,066 166,520

Hosiery .................................................. 4 ( ) ( )

1 1

Foundation garments ....................................... 153,464 152,708 109,702

Gloves, including gloves for sports ............................ 13 10 7

Headwear ................................................ 48,641 1,671 1,026

Other wearing apparel and accessories ........................ 88,004 79,644 57,959

Footwear and parts ........................................ 253,911 72,244 49,740

Total .................................................. 2,060,806 1,690,593 1,071,697

Minerals and metals:

Steel mill products ......................................... 622 ( ) ( )

1 1

Copper and related products ................................. 5,164 ( ) ( )

1 1

Aluminum mill products ..................................... 15 ( ) ( )

1 1

Builders' hardware ......................................... 7,832 ( ) ( )

1 1

Other metal products ....................................... 159,361 6,826 5,330

Total .................................................. 172,994 6,826 5,330

Miscellaneous manufactures:

Luggage, handbags, and flat goods ........................... 29,082 1,323 944

Jewelry .................................................. 114,407 24,698 22,808

Motor vehicle and other furniture .............................. 5,413 ( ) ( )

1 1

Lamps and lighting fixtures .................................. 37 ( ) ( )

1 1

Other miscellaneous manufactured articles ...................... 22,380 6,906 2,971

Total .................................................. 171,319 32,927 26,722

Machinery and equipment:

Air conditioning equipment .................................. 20 ( ) ( )

1 1

Commercial machinery ..................................... 434 ( ) ( )

1 1

Household appliances, including heating and drying equipment ..... 45 ( ) ( )

1 1

Centrifuges, filtering and purifying equipment, and pumps for 

liquids ................................................. 4 ( ) ( )

1 1

Semiconductor equipment, robots, and other equipment ........... 10 ( ) ( )

1 1

Taps, cocks, valves, and similar devices ........................ 9 ( ) ( )

1 1

Electric motors, generators, and related equipment ............... 574 558 257

See notes at end of table.

Table B-9—Continued

U.S. imports for consumption from Dominican Republic, total and under the production-sharing

provisions (PSP) of HTS Chapter 98, by commodity groups, 1996
B-33

(Thousand dollars)

Commodity Total Total under U.S. 

group Imports HTS PSP content

Machinery and equipment—Continued

Electrical transformers, static converters, and inductors ............ 17,737 16,011 10,245

Flashlights and other similar electric lights, light bulbs and 

 fluorescent tubes; arc lights ................................ 4 ( ) ( )

1 1

Wiring harnesses for motor vehicles and other insulated electrical 8,078 2,660 2,175

conduits ...............................................

Miscellaneous machinery and equipment ....................... 509 ( ) ( )

1 1

Total .................................................. 27,424 19,229 12,677

Transportation equipment:

Aircraft engines and gas turbines ............................. 5 ( ) ( )

1 1

Internal combustion piston engines ............................ 6 ( ) ( )

1 1

Construction, mining, and industrial vehicles ..................... 3 ( ) ( )

1 1

Certain motor-vehicle parts .................................. 8 ( ) ( )

1 1

Primary cells and batteries, and electric storage batteries ........... 21 ( ) ( )

1 1

Ignition starting, lighting, and other electrical equipment ............ 4,572 ( ) ( )

1 1

Aircraft, spacecraft, and related equipment, except engines ........ ( ) ( ) ( )

1 1 1

Ships, tugs, pleasure boats, and similar vessels ................. ( ) ( ) ( )

1 1 1

Motorcycles and miscellaneous vehicles and transportation 

related equipment ........................................ 0 ( ) ( )

1 1

Total .................................................. 4,616 0 0

Electronic products:

Office machines ........................................... 48 ( ) ( )

1 1

Telephone and telegraph apparatus, including optical fiber ......... 4,031 11 9

Microphones, loudspeakers, audio amplifiers, and combinations 

thereof ................................................. 3 ( ) ( )

1 1

Tape recorders, tape players, video cassette recorders, 

turntables, and compact disc players ......................... 35 ( ) ( )

1 1

Records, tapes, compact discs, computer software, and other 

media, whether or not recorded ............................. 20 ( ) ( )

1 1

Radio transmission and reception apparatus, navigational aid 

radar, and related apparatus ............................... 393 92 62

Television receivers, video monitors, cathode ray tubes, and 

other special purpose tubes ................................ ( ) ( ) ( )

1 1 1

Television apparatus (except receivers and monitors), including 

cameras, camcorders, and cable apparatus ................... 5 3 2

Electric sound and visual signaling apparatus, and other 

miscellaneous electrical and electronic articles ................. 47,577 3,254 1,743

Electrical circuit apparatus ................................... 163,966 94,682 60,234

Semiconductor devices ..................................... 781 164 57

Computer hardware ........................................ 543 9 4

Photographic equipment and supplies ......................... 27 ( ) ( )

1 1

Medical and optical goods, including ophthalmic goods ............ 295,726 248,106 185,071

Balances, surveying/navigational instruments, and drawing/ 

mathematical and calculating and measuring instruments ........ 15 5 2

Watches, clocks, and timing devices ........................... 4 ( ) ( )

1 1

Measuring, testing, controlling, and analyzing instruments .......... 8,537 8,003 1,551

Total .................................................. 521,713 354,328 248,736

Special provisions ........................................... 81,546 ( ) ( )

1 1

Grand total ............................................... 3,581,593 2,104,185 1,365,313

Less than $500. 1 

Note—Because of rounding, figures may not add to the totals shown.

Source: Compiled from official statistics of the U.S. Department of Commerce.
B-34

Table B-10

U.S. imports for consumption from the Philippines, total and under the production-sharing

provisions (PSP) of HTS Chapter 98, by commodity groups, 1996

(Thousand dollars)

Commodity Total Total under U.S.

group imports HTS PSP content

Agricultural products ........................................ 706,439 ( ) ( )

1 1

Forest products ............................................ 106,736 11 1

Chemicals, coal, petroleum, natural gas, and related products:

Fabricated plastic and rubber products ........................ 42,199 ( ) ( )

1 1

Other energy and chemical products .......................... 31,157 ( ) ( )

1 1

Total ................................................. 73,356 0 0

Textiles, apparel, and footwear:

Textiles and textile products ................................. 80,787 1,618 546

Medical apparel .......................................... 558 ( ) ( )

1 1

Mens' and boy's suits and sports coats ........................ 16,362 0 0

Mens' and boy's coats and jackets ........................... 94,419 560 16

Mens' and boy's trousers ................................... 125,751 1,919 54

Women's and girls' trousers ................................. 101,894 873 15

Shirts and blouses ........................................ 371,492 1,351 24

Women's and girls' suits, skirts, and coats ..................... 170,784 2,317 77

Women's and girls' dresses ................................. 143,180 2,993 96

Robes, nightwear, and underwear ............................ 75,313 10,616 622

Hosiery ................................................. 3,291 ( ) ( )

1 1

Foundation garments ...................................... 66,159 40,317 15,996

Gloves, including gloves for sports ........................... 80,076 3,743 428

Headwear ............................................... 51,480 6 0

Other wearing apparel and accessories ....................... 268,048 17,722 349

Footwear and parts ....................................... 83,789 47 0

Total ................................................. 1,733,381 84,082 18,224

Minerals and metals:

Steel mill products ........................................ 2,096 ( ) ( )

1 1

Copper and related products ................................ 273 ( ) ( )

1 1

Aluminum mill products .................................... ( ) ( ) ( )

1 1 1

Builders' hardware ........................................ 1,208 ( ) ( )

1 1

Other metal products ...................................... 84,443 ( ) ( )

1 1

Total ................................................. 88,020 0 0

Miscellaneous manufactures:

Luggage, handbags, and flat goods .......................... 153,858 4 1

Jewelry ................................................. 6,298 ( ) ( )

1 1

Motor vehicle and other furniture ............................. 168,918 ( ) ( )

1 1

Lamps and lighting fixtures ................................. 38,209 ( ) ( )

1 1

Other miscellaneous manufactured articles ..................... 131,673 193 95

Total ................................................. 498,957 198 96

Machinery and equipment:

Air conditioning equipment ................................. 2,441 ( ) ( )

1 1

Commercial machinery .................................... 119 ( ) ( )

1 1

Household appliances, including heating and drying equipment .... 1,094 69 17

Centrifuges, filtering and purifying equipment, and pumps for

liquids ................................................ 978 ( ) ( )

1 1

Semiconductor equipment, robots, and other equipment .......... 219 ( ) ( )

1 1

Taps, cocks, valves, and similar devices ....................... 6,733 ( ) ( )

1 1

Electric motors, generators, and related equipment .............. 1,155 ( ) ( )

1 1

Electrical transformers, static converters, and inductors ........... 19,444 59 2

Powered handtools and parts thereof ......................... 407 ( ) ( )

1 1

See notes at end of table.
B-35

Table B-10—Continued

U.S. imports for consumption from the Philippines, total and under the production-sharing

provisions (PSP) of HTS Chapter 98, by commodity groups, 1996

(Thousand dollars)

Commodity Total Total under U.S.

group imports HTS PSP content

Machinery and equipment—Continued

Flashlights and other similar electric lights, light bulbs and

fluorescent tubes; arc lights ............................... 15,757 ( ) ( )

1 1

Wiring harnesses for motor vehicles and other insulated electrical

conduits .............................................. 233,679 103,487 32,867

Miscellaneous machinery and equipment ...................... 2,124 ( ) ( )

1 1

Total ................................................. 284,150 103,615 32,886

Transportation equipment:

Aircraft engines and gas turbines ............................ 7,756 ( ) ( )

1 1

Internal combustion piston engines ........................... 376 ( ) ( )

1 1

Construction, mining, and industrial vehicles .................... 554 ( ) ( )

1 1

Certain motor-vehicle parts ................................. 16,040 2 2

Primary cells and batteries, and electric storage batteries .......... 6,861 ( ) ( )

1 1

Ignition starting, lighting, and other electrical equipment ........... 124 ( ) ( )

1 1

Rail locomotive and rolling stock ............................. 5 ( ) ( )

1 1

Automobiles, trucks, buses, and bodies and chassis of the

foregoing .............................................. 48 ( ) ( )

1 1

Aircraft, spacecraft, and related equipment, except engines ....... 2,917 571 158

Ships, tugs, pleasure boats, and similar vessels ................. 285 280 31

Motorcycles and miscellaneous vehicles and transportation

related equipment ....................................... 1,742 ( ) ( )

1 1

Total ................................................. 36,709 854 191

Electronic products:

Office machines .......................................... 11,193 ( ) ( )

1 1

Telephone and telegraph apparatus, including optical fiber ........ 401,652 ( ) ( )

1 1

Microphones, loudspeakers, audio amplifiers, and combinations

thereof ................................................ 36,528 23 15

Tape recorders, tape players, video cassette recorders,

turntables, and compact disc players ........................ 4,224 ( ) (I) 1

Records, tapes, compact discs, computer software, and other

media, whether or not recorded ............................ 944 ( ) ( )

1 1

Radio transmission and reception apparatus, navigational aid

radar, and related apparatus .............................. 173,566 1,640 1,548

Television receivers, video monitors, cathode ray tubes, and

other special purpose tubes ............................... 5,911 ( ) ( )

1 1

Television apparatus (except receivers and monitors), including

cameras, camcorders, and cable apparatus .................. 65,599 ( ) ( )

1 1

Electric sound and visual signaling apparatus, and other

miscellaneous electrical and electronic articles ................ 92,909 7,799 970

Electrical circuit apparatus .................................. 42,088 160 2

Semiconductor devices .................................... 2,506,605 1,540,642 712,302

Computer hardware ....................................... 925,775 6,263 416

Photographic equipment and supplies ........................ 57,816 22 21

Medical and optical goods, including ophthalmic goods ........... 28,093 ( ) ( )

1 1

Balances, surveying/navigational instruments, and drawing/

mathematical and calculating and measuring instruments ....... 502 ( ) ( )

1 1

Watches, clocks, and timing devices .......................... 166,288 59,215 5,912

Measuring, testing, controlling, and analyzing instruments ......... 36,310 187 110

Total ................................................. 4,556,003 1,615,950 721,296

Special provisions .......................................... 90 103 ( ) ( )

1 1

Grand total ............................................ 8,173,855 1,804,709 772,694

 Less than $500.00 1
B-36

Note.—Because of rounding, figures may not add to the totals shown.

Source: Compiled from official statistics of the U.S. Department of Commerce.
B-37

Table B-11

U.S. imports for consumption from Korea, total and under the production-sharing provisions (PSP)

of HTS Chapter 98, by commodity groups, 1996

(Thousand dollars)

Commodity Total Total under U.S.

group imports HTS PSP content

Agricultural products ........................................ 183,740 ( ) ( )

1 1

Forest products ............................................ 132,638 132 0

Chemicals, coal, petroleum, natural gas, and related products:

Fabricated plastic and rubber products ........................ 519,425 7 3

Other energy and chemical products .......................... 436,358 120 6

Total ................................................. 955,783 127 10

Textiles, apparel, and footwear:

Textiles and textile products ................................. 777,349 885 89

Medical apparel .......................................... 798 ( ) ( )

1 1

Mens' and boy's suits and sports coats ........................ 16,630 159 2

Mens' and boy's coats and jackets ........................... 204,748 369 11

Mens' and boy's trousers ................................... 35,661 9 0

Women's and girls' trousers ................................. 84,373 10,265 49

Shirts and blouses ........................................ 553,617 3,300 50

Women's and girls' suits, skirts, and coats ..................... 215,294 38,651 2,091

Women's and girls' dresses ................................. 66,131 10,632 355

Robes, nightwear, and underwear ............................ 25,826 ( ) ( )

1 1

Hosiery ................................................. 34,507 ( ) ( )

1 1

Foundation garments ...................................... 2,350 ( ) ( )

1 1

Gloves, including gloves for sports ........................... 22,816 ( ) ( )

1 1

Headwear ............................................... 45,671 ( ) ( )

1 1

Other wearing apparel and accessories ....................... 225,066 2,671 41

Footwear and parts ....................................... 339,980 183,174 10,190

Total ................................................. 2,650,815 250,115 12,878

Minerals and metals:

Steel mill products ........................................ 570,972 32 27

Copper and related products ................................ 15,735 17 0

Aluminum mill products .................................... 3,458 ( ) ( )

1 1

Builders' hardware ........................................ 24,045 ( ) ( )

1 1

Other metal products ...................................... 604,036 1,276 176

Total ................................................. 1,218,245 1,325 203

Miscellaneous manufactures:

Luggage, handbags, and flat goods .......................... 197,200 8,648 8

Jewelry ................................................. 148,627 85 26

Motor vehicle and other furniture ............................. 46,624 ( ) ( )

1 1

Lamps and lighting fixtures ................................. 30,367 ( ) ( )

1 1

Other miscellaneous manufactured articles ..................... 572,304 2,350 376

Total ................................................. 995,122 11,083 410

Machinery and equipment:

Air conditioning equipment ................................. 173,170 ( ) ( )

1 1

Commercial machinery .................................... 18,471 ( ) ( )

1 1

Household appliances, including heating and drying equipment .... 437,601 ( ) ( )

1 1

Centrifuges, filtering and purifying equipment, and pumps for

liquids ................................................ 39,575 15,009 5,727

Semiconductor equipment, robots, and other equipment .......... 4,705 ( ) ( )

1 1

Taps, cocks, valves, and similar devices ....................... 80,928 ( ) ( )

1 1

Electric motors, generators, and related equipment .............. 60,743 ( ) ( )

1 1

Electrical transformers, static converters, and inductors ........... 114,360 217 41

Powered handtools and parts thereof ......................... 2,495 ( ) ( )

1 1

See notes at end of table.
B-38

Table B-11—Continued

U.S. imports for consumption from Korea, total and under the production-sharing provisions (PSP)

of HTS Chapter 98, by commodity groups, 1996

(Thousand dollars)

Commodity Total Total under U.S.

group imports HTS PSP content

Machinery and equipment—Continued

Flashlights and other similar electric lights, light bulbs and

fluorescent tubes; arc lights ................................ 70,319 3,712 903

Wiring harnesses for motor vehicles and other insulated electrical

conduits ............................................... 13,522 ( ) ( )

1 1

Miscellaneous machinery and equipment ....................... 305,422 2,621 384

Total .................................................. 1,321,312 21,559 7,055

Transportation equipment:

Aircraft engines and gas turbines ............................. 38,739 ( ) ( )

1 1

Internal combustion piston engines ............................ 15,622 ( ) ( )

1 1

Construction, mining, and industrial vehicles ..................... 252,763 89 11

Certain motor-vehicle parts .................................. 163,792 ( ) ( )

1 1

Primary cells and batteries, and electric storage batteries ........... 33,297 ( ) ( )

1 1

Ignition starting, lighting, and other electrical equipment ............ 37,878 287 33

Rail locomotive and rolling stock .............................. 6,565 ( ) ( )

1 1

Automobiles, trucks, buses, and bodies and chassis of the

foregoing ............................................... 1,847,132 380,399 10,491

Aircraft, spacecraft, and related equipment, except engines ........ 58,351 ( ) ( )

1 1

Ships, tugs, pleasure boats, and similar vessels .................. 3,857 ( ) ( )

1 1

Motorcycles and miscellaneous vehicles and transportation

related equipment ........................................ 20,307 ( ) ( )

1 1

Total .................................................. 2,478,304 380,776 10,534

Electronic products:

Office machines ........................................... 57,282 ( ) ( )

1 1

Telephone and telegraph apparatus, including optical fiber ......... 227,741 563 88

Microphones, loudspeakers, audio amplifiers, and combinations

thereof ................................................. 143,008 406 204

Tape recorders, tape players, video cassette recorders,

turntables, and compact disc players ......................... 336,623 171 130

Records, tapes, compact discs, computer software, and other

media, whether or not recorded ............................. 253,423 ( ) ( )

1 1

Radio transmission and reception apparatus, navigational aid

radar, and related apparatus ............................... 245,015 54 38

Television receivers, video monitors, cathode ray tubes, and

other special purpose tubes ................................ 80,226 ( ) ( )

1 1

Television apparatus (except receivers and monitors), including

cameras, camcorders, and cable apparatus ................... 121,088 ( ) ( )

1 1

Electric sound and visual signaling apparatus, and other

miscellaneous electrical and electronic articles ................. 122,324 ( ) ( )

1 1

Electrical circuit apparatus ................................... 210,885 10 6

Semiconductor devices ..................................... 6,227,651 1,109,724 613,762

Computer hardware ........................................ 3,856,388 10,674 7,868

Photographic equipment and supplies ......................... 49,998 17 17

Medical and optical goods, including ophthalmic goods ............ 147,173 ( ) ( )

1 1

Balances, surveying/navigational instruments, and drawing/

mathematical and calculating and measuring instruments ........ 7,215 ( ) ( )

1 1

Watches, clocks, and timing devices ........................... 22,943 16 0

Measuring, testing, controlling, and analyzing instruments .......... 43,852 43 35

Total .................................................. 12,152,835 1,121,679 622,149

Special provisions ........................................... 442,802 62 0

Grand Total ............................................. 22,531,596 1,786,858 653,238

 Less than $500. 1 

Note.—Because of rounding, figures may not add to the totals shown.

Source: Compiled from official statistics of the U.S. Department of Commerce.
B-39

Table B-12

U.S. imports for consumption from United Kingdom, total and under the production-sharing

provisions (PSP) of HTS Chapter 98, by commodity groups, 1996

(Thousand dollars)

Commodity Total Total under U.S.

group imports HTS PSP content

Agricultural products ........................................ 1,033,322 ( ) ( )

1 1

Forest products ............................................ 701,600 63 29

Chemicals, coal, petroleum, natural gas, and related products:

Fabricated pIastic and rubber products ........................ 448,538 262 35

Other energy and chemical products .......................... 6,573,266 34,251 26,733

Total ................................................. 7,021,804 34,514 26,768

Textiles, apparel, and footwear:

Textiles and textile products ................................. 341,177 267 85

Medical apparel .......................................... 7,309 ( ) ( )

1 1

Mens' and boy's suits and sports coats ........................ 9,420 ( ) ( )

1 1

Mens' and boy's coats and jackets ........................... 11,606 ( ) ( )

1 1

Mens' and boy's trousers ................................... 1,919 ( ) ( )

1 1

Women's and girls' trousers ................................. 5,206 ( ) ( )

1 1

Shirts and blouses ........................................ 33,107 152 1

Women's and girls' suits, skirts, and coats ..................... 20,060 ( ) ( )

1 1

Women's and girls' dresses ................................. 11,077 3 0

Robes, nightwear, and underwear ............................ 11,300 ( ) ( )

1 1

Hosiery ................................................. 6,904 ( ) ( )

1 1

Foundation garments ...................................... 2,824 ( ) ( )

1 1

Gloves, including gloves for sports ........................... 2,353 9 0

Headwear ............................................... 8,128 4 0

Other wearing apparel and accessories ....................... 78,613 67 0

Footwear and parts ....................................... 152,670 20 2

Total ................................................. 703,673 522 88

Minerals and metals:

Steel mill products ........................................ 455,791 75 34

Copper and related products ................................ 56,047 2 0

Aluminum mill products .................................... 79,107 ( ) ( )

1 1

Builders' hardware ........................................ 13,213 ( ) ( )

1 1

Other metal products ...................................... 1,484,899 1,682 988

Total ................................................. 2,089,056 1,759 1,022

Miscellaneous manufactures:

Luggage, handbags, and flat goods .......................... 6,736 ( ) ( )

1 1

Jewelry ................................................. 25,658 54 13

Motor vehicle and other furniture ............................. 167,087 ( ) ( )

1 1

Lamps and lighting fixtures ................................. 14,076 200 140

Other miscellaneous manufactured articles ..................... 1,066,081 11,721 10,194

Total ................................................. 1,279,639 11,974 10,346

Machinery and equipment:

Air conditioning equipment ................................. 239,850 2,604 835

Commercial machinery .................................... 41,159 ( ) ( )

1 1

Household appliances, including heating and drying equipment .... 66,674 ( ) ( )

1 1

Centrifuges, filtering and purifying equipment, and pumps for

liquids ................................................ 258,038 9,521 3,020

Semiconductor equipment, robots, and other equipment .......... 110,744 99 15

Taps, cocks, valves, and similar devices ....................... 195,226 157 136

Electric motors, generators, and related equipment .............. 197,429 25,208 4,614

Electrical transformers, static converters, and inductors ........... 106,235 995 444

Powered handtools and parts thereof ......................... 58,313 ( ) ( )

1 1

See notes at end of table.
B-40

Table B-12—Continued

U.S. imports for consumption from United Kingdom, total and under the production-sharing

provisions (PSP) of HTS Chapter 98, by commodity groups, 1996

(Thousand dollars)

Commodity Total Total under U.S.

group imports HTS PSP content

Machinery and equipment—Continued

Flashlights and other similar electric lights, light bulbs and

fluorescent tubes; arc lights ............................... 21,487 ( ) ( )

1 1

Wiring harnesses for motor vehicles and other insulated

electrical conduits ....................................... 47,568 1,019 88

Miscellaneous machinery and equipment ...................... 1,627,016 61,256 10,677

Total ................................................. 2,969,740 100,858 19,830

Transportation equipment:

Aircraft engines and gas turbines ............................ 1,632,226 1,126 421

Internal combustion piston engines ........................... 398,806 8 6

Construction, mining, and industrial vehicles .................... 447,441 3,289 719

Certain motor-vehicle parts ................................. 348,576 27,437 1,504

Primary cells and batteries, and electric storage batteries .......... 30,343 ( ) ( )

1 1

Ignition starting, lighting, and other electrical equipment ........... 46,176 ( ) ( )

1 1

Rail locomotive and rolling stock ............................. 9,205 ( ) ( )

1 1

Automobiles, trucks, buses, and bodies and chassis of the

foregoing .............................................. 1,690,211 1,506,271 51,028

Aircraft, spacecraft, and related equipment, except engines ....... 934,936 9 7

Ships, tugs, pleasure boats, and similar vessels ................. 53,097 11,441 1,659

Motorcycles and miscellaneous vehicles and transportation

related equipment ....................................... 38,138 243 15

Total ................................................. 5,629,154 1,549,824 55,359

Electronic products:

Office machines .......................................... 241,428 ( ) ( )

1 1

Telephone and telegraph apparatus, including optical fiber ........ 133,765 1,101 440

Microphones, loudspeakers, audio amplifiers, and combinations

thereof ................................................ 82,683 8 7

Tape recorders, tape players, video cassette recorders,

turntables, and compact disc players ........................ 38,331 ( ) ( )

1 1

Records, tapes, compact discs, computer software, and other

media, whether or not recorded ............................ 110,835 ( ) ( )

1 1

Radio transmission and reception apparatus, navigational aid

radar, and related apparatus .............................. 143,435 490 56

Television receivers, video monitors, cathode ray tubes, and

other special purpose tubes ............................... 71,561 3,814 833

Television apparatus (except receivers and monitors), including

cameras, camcorders, and cable apparatus .................. 27,720 2,248 700

Electric sound and visual signaling apparatus, and other

miscellaneous electrical and electronic articles ................ 289,363 128 47

Electrical circuit apparatus .................................. 251,283 529 162

Semiconductor devices .................................... 482,389 761 242

Computer hardware ....................................... 1,945,721 12,675 1,413

Photographic equipment and supplies ........................ 292,636 30,076 13,919

Medical and optical goods, including ophthalmic goods ........... 334,772 54 27

Balances, surveying/navigational instruments, and drawing/

mathematical and calculating and measuring instruments ....... 160,612 537 48

Watches, clocks, and timing devices .......................... 9,992 ( ) ( )

1 1

Measuring, testing, controlling, and analyzing instruments ......... 727,197 5,822 1,161

Total ................................................. 5,343,723 58,245 19,055

Special provisions .......................................... 1,802,154 ( ) ( )

1 1

Grand Total ............................................ 28,573,866 1,757,758 132,497

 Less than $500. 1 

Note.—Because of rounding, figures may not add to the totals shown.

Source: Compiled from official statistics of the U.S. Department of Commerce.
B-41

Table B-13

U.S. imports for consumption from Sweden, total and under the production-sharing provisions

(PSP) of HTS Chapter 98, by commodity groups, 1996

(Thousand dollars)

Commodity Total Total under U.S.

group imports HTS PSP content

Agricultural products ........................................ 232,254 ( ) ( )

1 1

Forest products ............................................ 200,500 ( ) ( )

1 1

Chemicals, coal, petroleum, natural gas, and related products:

Fabricated plastic and rubber products ........................ 67,366 ( ) ( )

1 1

Other energy and chemical products .......................... 477,022 ( ) ( )

1 1

Total ................................................. 544,388 0 110

Textiles, apparel, and footwear:

Textiles and textile products ................................. 18,891 ( ) ( )

1 1

Medical apparel .......................................... 1,241 ( ) ( )

1 1

Mens' and boy's suits and sports coats ........................ 10 ( ) ( )

1 1

Mens' and boy's coats and jackets ........................... 39 ( ) ( )

1 1

Mens' and boy's trousers ................................... 96 ( ) ( )

1 1

Women's and girls' trousers ................................. 128 ( ) ( )

1 1

Shirts and blouses ........................................ 432 ( ) ( )

1 1

Women's and girls' suits, skirts, and coats ..................... 109 ( ) ( )

1 1

Women's and girls' dresses ................................. 205 ( ) ( )

1 1

Robes, nightwear, and underwear ............................ 739 ( ) ( )

1 1

Hosiery ................................................. 448 ( ) ( )

1 1

Foundation garments ...................................... 94 ( ) ( )

1 1

Gloves, including gloves for sports ........................... 107 ( ) ( )

1 1

Headwear ............................................... 5,145 ( ) ( )

1 1

Other wearing apparel and accessories ....................... 3,181 ( ) ( )

1 1

Footwear and parts ....................................... 1,861 ( ) ( )

1 1

Total ................................................. 32,724 0 0

Minerals and metals:

Steel mill products ........................................ 331,589 ( ) ( )

1 1

Copper and related products ................................ 52,741 ( ) ( )

1 1

Aluminum mill products .................................... 27,512 ( ) ( )

1 1

Builders' hardware ........................................ 5,702 ( ) ( )

1 1

Other metal products ...................................... 276,777 ( ) ( )

1 1

 Total ................................................. 694,322 0 0

Miscellaneous manufactures:

Luggage, handbags, and flat goods .......................... 465 ( ) ( )

1 1

Jewelry ................................................. 182 ( ) ( )

1 1

Motor vehicle and other furniture ............................. 61,888 ( ) ( )

1 1

Lamps and lighting fixtures ................................. 4,096 ( ) ( )

1 1

Other miscellaneous manufactured articles ..................... 61,707 1,616 196

Total ................................................. 128,338 1,616 196

Machinery and equipment:

Air conditioning equipment ................................. 25,277 ( ) ( )

1 1

Commercial machinery .................................... 18,080 ( ) ( )

1 1

Household appliances, including heating and drying equipment .... 149,698 ( ) ( )

1 1

Centrifuges, filtering and purifying equipment, and pumps for

liquids ................................................ 111,815 ( ) ( )

1 1

Semiconductor equipment, robots, and other equipment .......... 49,069 ( ) ( )

1 1

Taps, cocks, valves, and similar devices ....................... 28,578 ( ) ( )

1 1

Electric motors, generators, and related equipment .............. 26,195 ( ) ( )

1 1

Electrical transformers, static converters, and inductors ........... 29,697 ( ) ( )

1 1

Powered handtools and parts thereof ......................... 104,707 (1) (1)

See notes at end of table.
B-42

Table B-13—Continued

U.S. imports for consumption from Sweden, total and under the production-sharing provisions

(PSP) of HTS Chapter 98, by commodity groups, 1996

(Thousand dollars)

Commodity Total Total under U.S.

group imports HTS PSP content

Machinery and equipment—Continued

Flashlights and other similar electric lights, light bulbs and

fluorescent tubes; arc lights ............................... 420 ( ) ( )

1 1

Wiring harnesses for motor vehicles and other insulated electrical

conduits .............................................. 31,668 7 4

Miscellaneous machinery and equipment ...................... 562,441 307 21

Total ................................................. 1,137,645 314 25

Transportation equipment:

Aircraft engines and gas turbines ............................ 106,286 ( ) ( )

1 1

Internal combustion piston engines ........................... 114,693 ( ) ( )

1 1

Construction, mining, and industrial vehicles .................... 170,534 36,747 440

Certain motor-vehicle parts ................................. 228,686 44,135 103

Primary cells and batteries, and electric storage batteries .......... 14,195 ( ) ( )

1 1

Ignition starting, lighting, and other electrical equipment ........... 4,678 ( ) ( )

1 1

Rail locomotive and rolling stock ............................. 42,328 27,177 1,738

Automobiles, trucks, buses, and bodies and chassis of the

foregoing .............................................. 1,948,590 1,647,216 20,197

Aircraft, spacecraft, and related equipment, except engines ....... 244,406 ( ) ( )

1 1

Ships, tugs, pleasure boats, and similar vessels ................. 4,471 ( ) ( )

1 1

Motorcycles and miscellaneous vehicles and transportation

related equipment ....................................... 8,992 ( ) ( )

1 1

Total ................................................. 2,887,860 1,755,274 22,479

Electronic products:

Office machines .......................................... 27,448 ( ) ( )

1 1

Telephone and telegraph apparatus, including optical fiber ........ 90,131 ( ) ( )

1 1

Microphones, loudspeakers, audio amplifiers, and combinations

thereof ................................................ 4,488 ( ) ( )

1 1

Tape recorders, tape players, video cassette recorders,

turntables, and compact disc players ........................ 3,145 ( ) ( )

1 1

Records, tapes, compact discs, computer software, and other

media, whether or not recorded ............................ 9,682 ( ) ( )

1 1

Radio transmission and reception apparatus, navigational aid

radar, and related apparatus .............................. 217,605 595 42

Television receivers, video monitors, cathode ray tubes, and

other special purpose tubes ............................... 3,151 ( ) ( )

1 1

Television apparatus (except receivers and monitors), including

cameras, camcorders, and cable apparatus .................. 693 ( ) ( )

1 1

Electric sound and visual signaling apparatus, and other

miscellaneous electrical and electronic articles ................ 8,092 ( ) ( )

1 1

Electrical circuit apparatus .................................. 94,115 ( ) ( )

1 1

Semiconductor devices .................................... 63,522 ( ) ( )

1 1

Computer hardware ....................................... 155,864 ( ) ( )

1 1

Photographic equipment and supplies ........................ 28,082 ( ) ( )

1 1

Medical and optical goods, including ophthalmic goods ........... 90,698 ( ) ( )

1 1

Balances, surveying/navigational instruments, and drawing/

mathematical and calculating and measuring instruments ....... 12,614 ( ) ( )

1 1

Watches, clocks, and timing devices .......................... 626 ( ) ( )

1 1

Measuring, testing, controlling, and analyzing instruments ......... 109,784 ( ) ( )

1 1

Total ................................................. 919,739 595 42

Special provisions .......................................... 340,057 ( ) ( )

1 1

Grand Total ............................................ 7,117,826 1,757,800 22,742

 Less than $500. 1

Note.—Because of rounding, figures may not add to the totals shown.

Source: Compiled from official statistics of the U.S. Department of Commerce.
B-43

Table B-14

U.S. imports for consumption from Canada, total and under the production-sharing provisions

(PSP) of HTS Chapter 98, by commodity groups, 1996

(Thousand dollars)

Commodity Total Total under U.S.

group imports HTS PSP content

Agricultural products ......................................... 8,465,940 732 331

Forest products ............................................. 19,944,005 21,800 6,574

Chemicals, coal, petroleum, natural gas, and related products:

Fabricated plastic and rubber products ......................... 3,660,938 30,558 9,586

Other energy and chemical products ........................... 24,870,355 46,072 18,347

Total .................................................. 28,531,292 76,630 27,933

Textiles, apparel, and footwear:

Textiles and textile products .................................. 1,291,329 13,806 3,446

Medical apparel ........................................... 41,257 271 259

Mens' and boy's suits and sports coats ......................... 176,566 44 28

Mens' and boy's coats and jackets ............................ 25,443 114 66

Mens' and boy's trousers .................................... 98,766 123 88

Women's and girls' trousers .................................. 103,567 39 24

Shirts and blouses ......................................... 222,653 167 113

Women's and girls' suits, skirts, and coats ...................... 79,283 1,853 278

Women's and girls' dresses .................................. 34,830 26 16

Robes, nightwear, and underwear ............................. 38,516 36 26

Hosiery .................................................. 35,693 ( ) ( )

1 1

Foundation garments ....................................... 4,169 141 70

Gloves, including gloves for sports ............................ 16,914 ( ) ( )

1 1

Headwear ................................................ 31,517 ( ) ( )

1 1

Other wearing apparel and accessories ........................ 217,431 4,269 2,281

Footwear and parts ........................................ 102,253 277 18

Total .................................................. 2,520,187 21,166 6,712

Minerals and metals:

Steel mill products ......................................... 2,530,479 190,426 136,367

Copper and related products ................................. 1,412,704 59,593 55,157

Aluminum mill pm ducts ..................................... 888,158 4,943 3,470

Builders' hardware ......................................... 101,531 ( ) ( )

1 1

Other metal products ....................................... 10,885,077 93,519 27,141

Total .................................................. 15,817,950 348,481 222,136

Miscellaneous manufactures:

Luggage, handbags, and flat goods ........................... 30,665 4,874 191

Jewelry .................................................. 114,770 ( ) ( )

1 1

Motor vehicle and other furniture .............................. 2,902,587 1,137 770

Lamps and lighting fixtures .................................. 116,241 6,518 2,287

Other miscellaneous manufactured articles ...................... 722,662 9,002 1,267

Total .................................................. 3,886,925 21,532 4,514

Machinery and equipment:

Air conditioning equipment .................................. 262,770 9,025 2,218

Commercial machinery ..................................... 236,222 13,825 3,198

Household appliances, including heating and drying equipment ..... 349,667 90,293 20,916

Centrifuges, filtering and purifying equipment, and pumps for

liquids ................................................. 639,787 11,293 3,989

Semiconductor equipment, robots, and other equipment ........... 118,394 557 266

Taps, cocks, valves, and similar devices ........................ 308,382 2,169 1,398

Electric motors, generators, and related equipment ............... 420,240 3,233 554

Electrical transformers, static converters, and inductors ............ 289,755 108 43

See notes at end of table.
B-44

Table B-14—Continued

U.S. imports for consumption from Canada, total and under the production-sharing provisions

(PSP) of HTS Chapter 98, by commodity groups, 1996

(Thousand dollars)

Commodity Total Total under U.S.

group imports HTS PSP content

Machinery and equipment-Continued

Powered handtools and parts thereof .......................... 35,722 1,202 51

Flashlights and other similar electric lights, light bulbs and

fluorescent tubes; arc lights ................................ 108,859 15,465 4,854

Wiring harnesses for motor vehicles and other insulated electrical

conduits ............................................... 433,256 5,608 3,396

Miscellaneous machinery and equipment ....................... 4,793,435 1,100,461 22,583

Total .................................................. 7,996,488 253,238 163,467

Transportation equipment:

Aircraft engines and gas turbines ............................. 1,153,026 241,423 39,784

Internal combustion piston engines ............................ 2,572,125 954 417

Construction, mining, and industrial vehicles ..................... 636,414 13,906 5,861

Certain motor-vehicle parts .................................. 6,916,715 33,822 8,245

Primary cells and batteries, and electric storage batteries ........... 35,997 6,108 2,399

Ignition starting, lighting, and other electrical equipment ............ 174,543 40 30

Rail locomotive and rolling stock .............................. 907,611 250,922 103,258

Automobiles, trucks, buses, and bodies and chassis of the

foregoing ............................................... 33,727,331 40,483 23,055

Aircraft, spacecraft, and related equipment, except engines ........ 2,190,944 3,957 2,375

Ships, tugs, pleasure boats, and similar vessels .................. 635,613 37,561 7,192

Motorcycles and miscellaneous vehicles and transportation related

equipment .............................................. 550,262 31,872 10,010

Total .................................................. 49,500,581 661,049 202,627

Electronic products:

Office machines ........................................... 183,259 2,694 153

Telephone and telegraph apparatus, including optical fiber ......... 1,839,789 81,219 54,208

Microphones, loudspeakers, audio amplifiers, and combinations

thereof ................................................. 68,106 14,043 3,369

Tape recorders, tape players, video cassette recorders,

turntables, and compact disc players ......................... 5,392 2 1

Records, tapes, compact discs, computer software, and other

media, whether or not recorded ............................. 337,242 36 30

Radio transmission and reception apparatus, navigational aid radar,

and related apparatus ..................................... 770,859 445 379

Television receivers, video monitors, cathode ray tubes, and other

special purpose tubes .................................... 116,936 650 366

Television apparatus (except receivers and monitors), including

cameras, camcorders, and cable apparatus ................... 73,905 ( ) ( )

1 1

Electric sound and visual signaling apparatus, and other

miscellaneous electrical and electronic articles ................. 300,782 3,595 864

Electrical circuit apparatus ................................... 966,879 38,961 13,514

Semiconductor devices ..................................... 2,104,160 741 326

Computer hardware ........................................ 3,450,359 5,391 969

Photographic equipment and supplies ......................... 273,921 142 77

Medical and optical goods, including ophthalmic goods ............ 243,824 15,299 6,330

Balances, surveying/navigational instruments, and drawing/

mathematical and calculating and measuring instruments ........ 100,798 6,439 1,347

Watches, clocks, and timing devices ........................... 13,050 815 202

Measuring, testing, controlling, and analyzing instruments .......... 814,098 3,902 1,397

Total .................................................. 11,663,359 174,374 83,533

Special provisions ........................................... 7,971,875 ( ) ( )

1 1

Grand Total ............................................. 156,298,602 1,579,002 617,828

 Less than $500. 1 

Note.—Because of rounding, figures may not add to the totals shown.
B-45

Source: Compiled from official statistics of the U.S. Department of Commerce.
B-46

Table B-15

U.S. imports for consumption under HTS heading 9802.00.60, by country and commodity, 1996

(Thousand dollars)

Monitoring Group Canada Mexico Japan Germany Netherlands All other Total

Steel mill products ............... 181,961 66,122 12 ( ) ( ) 3,504 251,599 1 1

Copper and related products ....... 58,157 ( ) 28,619 ( ) 593 87,369 1 1

Other metal products ............. 4,881 2,905 ( ) 6,989 2,293 8,545 25,613 1

Other miscellaneous manufactured

articles ...................... 25 32,545 ( ) ( ) ( ) 2,267 34,838 1 1 1

Certain motor-vehicle parts ........ 873 37,412 ( ) 23 ( ) 80 38,389 1 1

All other ....................... 14,557 55,003 11,399 21,172 3,542 6,107 111,781

Total ........................ 260,455 193,987 40,030 28,184 6,428 20,504 549,588

 Less than $500. 1

Note.—Because of rounding figures may not add to the totals shown.

Source: Compiled from official statistics of the U.S. Department of Commerce.
B-47

Table B-16

U.S. imports for consumption under HTS heading 9802.00.90 from Mexico, by commodity, 1995 and

1996

(Thousand dollars)

Monitoring Group 1995 1996

Chemicals, coal, petroleum, natural gas, and related products:

Fabricated plastic and rubber products .................................... 1,112,339 708

Other energy and chemical products ...................................... ( ) 10 1

Textiles, apparel, and footwear:

Textiles and textile products ............................................. 108,855 96,936

Medical apparel ...................................................... 211,104 176,420

Mens' and boy's suits and sports coats .................................... 2,255 9,412

Mens' and boy's coats and jackets ....................................... 19,386 15,487

Mens' and boy's trousers ............................................... 652,009 806,111

Women's and girls' trousers ............................................. 385,486 542,143

Shirts and blouses .................................................... 554,894 722,011

Women's and girls' suits, skirts, and coats ................................. 54,907 91,168

Women's and girls' dresses ............................................. 27,315 39,096

Robes, nightwear, and underwear ........................................ 168,928 156,690

Hosiery ............................................................. 1,193 33,117

Foundation garments .................................................. 127,531 99,775

Gloves, including gloves for sports ....................................... 5,334 6,872

Headwear ........................................................... 16,057 14,639

Other wearing apparel and accessories ................................... 95,940 89,308

Miscellaneous manufactures:

Luggage, handbags, and flat goods ...................................... 42,272 68,472

Motor vehicle and other furniture ......................................... 7,016 7,358

Other miscellaneous manufactured articles ................................. 58 10

Machinery and equipment:

Taps, cocks, valves, and similar devices ................................... ( ) 9

1

Transportation equipment:

Certain motor-vehicle parts ............................................. ( ) 23,901 1

Primary cells and batteries, and electric storage batteries ...................... ( ) 28 1

Electronic products:

Medical and optical goods, including ophthalmic goods ....................... 58 5,750

Measuring, testing, controlling, and analyzing instruments ..................... ( ) 4

1

Special provisions ...................................................... 25 30

Total ............................................................... 2,482,961 3,005,465

 Less than $500. 1

Note.—Because of rounding, figures may not add to the totals shown.

Source: Compiled from official statistics of the U.S. Department of Commerce.
B-40

Table B-17

Duty savings from use of the production-sharing provisions (PSP) of HTS Chapter 98, by monitoring groups, 1996

Percent Nominal Effective

Monitoring group Total value U.S. content dutiable rate rate Duty savings 1 2

Thousand

))))))) Thousand dollars ))))))) )))))))))))))) Percent)))))))))))) dollars

Agricultural products ................................... 2,560 1,171 54 5 4 44

Forest products ....................................... 118,333 56,007 53 4 2 2,168

Fabricated plastic and rubber products ..................... 183,169 95,504 48 4 2 4,087

Other energy and chemical products ...................... 145,335 73,245 50 3 2 2,318

Textiles and textile products .............................. 318,880 201,813 37 6 2 12,386

Medical apparel ....................................... 196,442 146,675 25 5 1 7,514

Men’s and boys’ suits and sports coats ..................... 161,855 85,856 47 23 10 21,435

Men’s and boys’ coats and jackets ........................ 77,763 44,667 43 19 7 9,170

Men’s and boys’ trousers ................................ 1,834,041 1,088,688 41 19 8 216,087

Women’s and girls’ trousers ............................. 1,198,421 721,107 40 20 7 146,712

Shirts and blouses ..................................... 2,057,892 1,428,466 31 24 7 354,376

Women’s and girls’ suits, skirts, and coats .................. 721,348 333,636 54 19 10 67,558

Women’s and girls’ dresses .............................. 215,351 90,210 58 15 9 13,738

Robes, nightwear, and underwear ........................ 1,291,082 859,377 33 13 4 121,318

Hosiery .............................................. 165,279 151,802 8 17 1 25,375

Foundation garments ................................... 607,628 410,783 32 18 6 75,050

Gloves, including gloves for sports ........................ 47,849 32,369 32 18 5 6,137

Headwear ............................................ 39,438 24,755 37 7 3 1,549

Other wearing apparel and accessories .................... 426,803 254,408 40 15 6 41,341

Footwear and parts .................................... 1,678,736 191,716 89 15 12 37,575

Steel mill products ..................................... 260,219 188,781 27 6 1 10,573

Copper and related products ............................. 90,176 75,357 16 4 1 2,694

Aluminum mill products ................................. 19,336 11,894 38 4 2 483

Builders' hardware ..................................... 119,942 61,687 49 5 3 3,211

Other metal products ................................... 706,060 318,977 55 4 2 13,251

Luggage handbags and flat goods ........................ 122,234 65,986 46 17 8 11,259

Jewelry .............................................. 72,272 64,959 10 8 1 4,867

Motor vehicle and other furniture .......................... 734,323 115,279 84 2 2 2,824

Lamps and lighting fixtures .............................. 110,518 76,092 31 7 2 5,495

Other miscellaneous manufactured articles ................. 383,190 112,255 71 5 4 5,004

Air conditioning equipment .............................. 414,210 179,092 57 2 1 3,826

Commercial machinery ................................. 53,746 20,729 61 3 1 556

Household appliances including heating and drying 

equipment .......................................... 455,846 217,648 52 3 2 6,773

See notes at end of table.
B-41

Table B-17—Continued

Duty savings from use of production-sharing provisions (PSP) of HTS Chapter 98, by monitoring groups, 1996

Percent Nonimal Effective

Monitoring group Total value U.S. content dutiable rate rate Duty savings 1 2

Thousand

))))))) Thousand dollars ))))))) )))))))))))))) Percent)))))))))))) dollars

Centrifuges, filtering and purifying equipment, and pumps 

for liquids .......................................... 260,587 172,099 34 2 1 3,912

Semiconductor equipment, robots, and other equipment ...... 4,561 1,014 78 3 2 28

Taps, cocks, valves, and similar devices .................... 406,872 277,048 32 3 1 9,311

Electric motors, generators, and related equipment ........... 859,374 522,087 39 4 2 21,326

Electrical transformers, static converters, and inductors ........ 603,013 288,330 52 3 1 8,867

Powered handtools and parts thereof ...................... 205,270 69,669 66 2 1 1,068

Flashlights and other similar electric lights, light bulbs 

and fluorescent tubes; arc lights ........................ 153,020 80,033 48 4 2 2,571

Wiring harnesses for motor vehicles and other insulated 

electrical conduits .................................... 3,332,141 2,038,045 39 5 2 99,662

Miscellaneous machinery and equipment ................... 606,520 171,684 72 3 2 3,636

Aircraft engines and gas turbines ......................... 281,525 72,819 74 4 3 2,498

Internal combustion piston engines (other than aircraft) 

and other miscellaneous motors and engines .............. 318,270 72,870 77 2 2 1,734

Construction, mining, and industrial vehicles ................ 270,764 47,726 82 1 1 606

Certain motor-vehicle parts .............................. 1,874,944 904,683 52 3 2 26,308

Primary cells and batteries, and electric storage 

batteries ........................................... 230,915 83,348 64 4 3 3,432

Ignition starting, lighting, and other electrical equipment ........ 331,830 162,101 51 3 1 4,435

Rail locomotive and rolling stock .......................... 347,833 115,660 67 13 8 17,292

Automobiles, trucks, buses, and bodies and chassis of the 

foregoing .......................................... 23,322,438 2,656,728 89 6 4 467,918

Aircraft, spacecraft, and related equipment, except 

engines ............................................ 26,937 17,010 37 2 ( ) 359 3

Ships, tugs, pleasure boats, and similar vessels ............. 153,530 23,853 84 1 1 357

Motorcycles and miscellaneous vehicles and 1,089

transportation related equipment ........................ 134,253 56,067 58 2 1

Office machines ....................................... 48,817 25,013 49 3 1 735

Telephone and telegraph apparatus, including optical 

fiber ............................................... 213,463 114,543 46 8 4 8,823

Microphones, loudspeakers, audio amplifiers, and 

combinations thereof ................................. 232,479 79,208 66 5 3 3,881

Tape recorders, tape players, video cassette recorders, 

turntables, and compact disc players .................... 117,513 15,782 87 3 2 548

See notes at end of table.
Table B-17—Continued

Duty savings from use of production-sharing provisions (PSP) of HTS Chapter 98, by monitoring groups, 1996

Percent Nonimal Effective

Monitoring group Total value U.S. content dutiable rate rate Duty savings 1 2

Thousand

))))))) Thousand dollars ))))))) )))))))))))))) Percent)))))))))))) dollars

B-50

B-42

Records, tapes, compact discs, computer software, and 

other media, whether or not recorded .................... 53,122 19,326 64 2 2 474

Radio transmission and reception apparatus, navigational 

aid radar, and related apparatus ........................ 798,563 126,937 84 3 3 4,492

Television receivers, video monitors, cathode ray tubes, 

and other special purpose tubes ........................ 2,624,920 1,031,259 61 5 3 51,745

Television apparatus (except receivers and monitors), 

including cameras, camcorders, and cable apparatus ....... 655,836 177,800 73 3 2 5,193

Electric sound and visual signaling apparatus, and other 285,473 86,860 70

miscellaneous electrical and electronic articles ............. 3 2 2,295

Electric capacitors and resistors and electrical circuit 63,189

apparatus .......................................... 2,055,643 1,245,151 39 5 2

Semiconductor devices ................................. 8,164,008 4,086,895 50 ( ) ( ) 36 3 3

Computer hardware .................................... 1,296,559 317,787 75 1 1 3,437

Photographic equipment and supplies ..................... 100,581 41,617 59 3 2 1,321

Medical and optical goods, including ophthalmic goods ........ 1,051,585 566,138 46 3 1 21,530

Balances, surveying/navigational instruments and 

drawing/mathematical and calculating and measuring 

instruments ......................................... 160,154 20,687 87 5 4 874

Watches, clocks, and timing devices ...................... 85,720 22,683 74 8 6 1,978

Measuring, testing, controlling and analyzing 

instruments ......................................... 814,891 353,151 57 3 2 9,512

Special Provisions ..................................... 283 113 60 ( ) ( ) 0

3 3

Totals ............................................. 67,514,482 23,964,813 65 6 3 2,093,226

Trade-weighted average rate of duty applicable to the products imported under HTS 9802.00.80 for each monitoring group. This is the rate that is applied to the 1

dutiable portion of such imports.

Trade-weighted average rate of duty after accounting for the duty-free U.S.-origin content of imports under provision 9802.00.80. 2

Less than 0.5 percent. 3

Note.—Because of rounding figures may not add to the totals shown.

Source: Compiled from official statistics of the U.S. Department of Commerce.
C-1

APPENDIX C

FEDERAL REGISTER NOTICE REQUESTING

COMMENTS
C-2
C-3