Historically, the U.S. textile and apparel (clothing) industries, including yarn, fabric, apparel, and a variety of home furnishings and industrial products, have faced intense competition in the U.S. marketplace from countries with low labor costs. Textile and apparel imports represented 7 percent of total U.S. imports in 1994. In that same year, there was a $34-billion trade deficit in textile and apparel products. (See app. I for data concerning the U.S. textile and apparel industries.) CITA is chaired by the Department of Commerce and composed of representatives from the Departments of State, Labor, and the Treasury; and the Office of the U.S. Trade Representative (USTR). CITA was established in 1972 to supervise the implementation of all U.S. international textile agreements. (See app. II for a discussion of CITA’s role.) One of CITA’s main functions is to decide whether and when to impose quotas on textile and apparel products. Because these products have historically been vulnerable to low-priced imports, textile and apparel trade has not been subject to General Agreement on Tariffs and Trade (GATT) disciplines (practices). Rather, textile trade has been primarily governed by successive multilateral agreements that set forth a separate framework of rules, including the authority to impose quotas. From 1974 though 1994, CITA supervised the U.S. implementation of MFA, which governed worldwide textile trade and sought to provide for its sustained, orderly expansion. Among other things, under MFA, the United States entered into a number of bilateral agreements containing negotiated textile import quota levels. MFA also contained a “safeguard” provision, which allowed importing countries to impose unilateral quotas when it determined that imports were causing actual or threatened serious damage to the U.S. domestic market based on factors specified in MFA. CITA is now responsible for supervising the U.S. implementation of ATC. Along with continuing its role of implementing textile agreements, under ATC, CITA is to supervise a 10-year phaseout of textile and apparel quotas in four stages ending in 2005. ATC will have a major long-term impact on the U.S. textile and apparel industry by integrating all textile products into GATT rules and disciplines. During the first stage (1995-97), virtually no products currently under quota are to be integrated into GATT trade rules by any of the major importing countries. That is, the products integrated in the first stage are products that have never been under quota. The U.S. Statement of Administrative Action (SAA) accompanying the Uruguay Round implementing legislation provided that CITA would ensure that integration of the most sensitive products would be deferred until the end of the 10-year period. In fact, under the U.S. integration schedule, 89 percent of all U.S. apparel products (apparel products are considered sensitive), 47 percent of all textile products (textile products are considered less sensitive), and 67 percent of textile and apparel products combined, under quota in 1990, will not be integrated until the final stage in 2005. Importer and retailer representatives have referred to the final stage as “the cliff,” because of the potential shock to the U.S. domestic market when a majority of textile and apparel quotas will be lifted at one time. During the 10-year transition period, the United States may impose a temporary quota on another World Trade Organization (WTO) member country under ATC only through the use of a “transitional safeguard.” This safeguard applies to products not yet integrated into GATT rules. After determining that imports of a particular product are causing “serious damage or actual threat thereof” to domestic producers, CITA issues a “call,” or a request for consultations to discuss the matter with an exporting country believed to be causing the damage. Following the consultations, CITA may impose a quota—with or without the agreement of the exporting country. (See app. III for detailed information on ATC and MFA.) As of May 1996, CITA had 884 quotas in place on individual textile and apparel categories. These quotas covered 44 countries and 123 out of 148 CITA categories. CITA has broad authority to carry out its main function of regulating textile imports on behalf of the United States through implementing textile agreements, including determining the existence of serious damage to support a safeguard action. This mandate remains the same under ATC as it was under MFA. The U.S. Constitution vests in Congress the power to regulate commerce between the United States and foreign nations. In the case of textiles and apparel, Congress has granted to the President extraordinary discretion to regulate U.S. imports. The President, in turn, has delegated authority for implementing textile agreements to CITA. Neither Congress, nor the President since 1989, has provided procedural requirements to guide CITA in making its safeguard determinations. Moreover, CITA’s decisions are conclusive and are not reviewed or approved by other executive branch officials. Finally, given that CITA has been allowed significant discretion to regulate textile imports, courts have held that CITA’s serious damage determinations and the underlying reasoning for those determinations are not subject to judicial scrutiny. According to CITA officials, CITA’s primary function under ATC is to “ensure that there is a gradual and orderly liberalization of trade which will allow U.S. companies sufficient time to further modernize and prepare for greater international competition.” During the 10-year transition period, CITA can issue calls under the ATC transitional safeguard mechanism. Bilateral agreements in place with WTO members under MFA are now folded into ATC, obviating the need for CITA to renegotiate these agreements. CITA is expected also to continue performing many other pre-ATC functions. The committee will continue to participate in negotiations (led by USTR) for bilateral quota agreements with non-WTO member countries. It also has a role in efforts aimed at preventing the illegal routing of textile and apparel imports through third countries (transshipment violations) and commenting on regulations concerning the origin of textile and apparel products. CITA has no budget of its own, but portions of the individual budgets of the five principal agencies related to CITA functions added up to $3.6 million in fiscal year 1995. The Department of Commerce’s Office of Textiles and Apparel (OTEXA) has a staff of 41, 33 of whom support CITA’s operations, monitoring and analyzing textile trade and production data. About 17 percent (or $2.8 million) of OTEXA’s budget supports CITA operations.OTEXA’s resources and costs remained constant between fiscal years 1994 and 1995, the first year of ATC. CITA does not expect to undergo any significant reduction in its work load in the near term due specifically to the 10-year quota phaseout, according to representatives of the five CITA agencies. CITA is proactive in determining whether to impose a quota, relying heavily on OTEXA’s continuous monitoring and analysis of trade and economic data as a source for its information. OTEXA’s data monitoring generally provides the impetus for CITA to issue a call. Although OTEXA considers an array of data, it focuses primarily on two factors: a surge in imports and a decline in domestic production. OTEXA also examines some other economic factors listed in ATC, including domestic employment, prices, and market share. Under U.S. law, CITA does not have procedural requirements it must follow to determine whether to make a call. To date, CITA has not published guidelines or documented procedures that describe its decision-making process for imposing quotas. Once OTEXA’s analysis identifies a potential case of serious damage, OTEXA may contact domestic producers to obtain additional information on the effect of imports on the domestic industry. OTEXA then prepares a proposal (also known as a “statement of serious damage or actual threat thereof” and referred to hereafter as a “market statement”) for CITA to request consultations with an exporting country. The proposal serves as the basis for CITA to vote on whether to request consultations with a foreign government. According to CITA officials, the committee currently uses majority voting to make decisions on calls. Generally speaking, each CITA agency considers the need for import restraints while taking into account the concerns of U.S. industry, workers, importers and retailers, consumers. However, each agency brings a unique perspective to the decision process. Commerce and Labor consider the interests of textile and apparel producers and workers, State evaluates U.S. foreign policy concerns, and the Treasury analyzes the net economic benefit to consumers, producers, and importers and retailers. (The Treasury is also concerned with the appropriateness and enforceability of CITA recommendations and directives.) Some balancing of views is provided by USTR. In theory, if CITA decided by consensus, one CITA principal would have the ability to block a request for consultation. For example, CITA principals did not reach consensus on 64, or about 30 percent, of the 204 votes taken on whether to impose a quota from 1990 through 1995, since these votes were not unanimous. CITA is not required to publish its voting records or minutes of its monthly meetings, and it does not do so. If CITA votes in favor of issuing a call, the committee requests consultations with the exporting country through diplomatic note to impose a quota. Under ATC, once the exporting country receives the note, the two governments have 60 days to consult. No quota is put in place during the consultation period.