Memorandum of Disapproval of a Bill To Exempt Apparel Items From Tariff Reductions

I have decided not to sign into law H.R. 9937. This bill is an amendment to the Bank Holding Company Act which would authorize the General Services Administration to sell certain silver dollar coins at negotiated prices. I have determined that this legislation would not be in the national interest because of an unrelated amendment which exempts all textile and apparel items from any tariff reductions in the Multilateral Trade Negotiations (MTN) now underway in Geneva.

I am determined to assist the beleaguered textile industry. We are committed to a healthy and growing textile and apparel industry. This legislation would not advance that cause, and could even harm the entire U.S. economy.

This bill would not address the real causes of the industry's difficulties. In return for any transient benefits, the bill would prompt our trading partners to retaliate by withdrawing offers in areas where our need for export markets is the greatest—products such as tobacco, grains, citrus, raw cotton, paper, machinery, poultry, and textile-related areas such as mill products and fashion clothing. The loss of these export areas is too high a price for our Nation to pay.

The cost of this bill might be even higher; at best, it would cost us many opportunities for export; at worst, it could cause the collapse of the trade talks and further restrict the growth of the world economy. If the two and a quarter million workers in the textile and apparel industry are to survive in their jobs, we must work to keep the world economy strong and international trade free.

Just within the last year we have taken a number of steps to improve the condition of the U.S. textile and apparel industry:

—We negotiated a renewal of the International Multifiber Arrangement through 1981, providing more responsive controls over disruptive imports.

—We have negotiated 15 new bilateral export restraint agreements which are firmer and fairer than earlier versions, covering 80 percent of all imports from low-cost suppliers. And we are negotiating more.

—We have improved our monitoring of imports and implementation of restraints, through steps such as the new legislative initiatives I have approved.

—We have, despite the proposed small reduction in tariffs, the highest textile and apparel tariffs in the developed world.

—We have begun discussions with exporting countries not now under restraint to seek appropriate levels for their shipments.

—We have established a pilot program to improve productivity in the men's tailored clothing industry, and we have begun an export promotion program for the entire textile and apparel complex.

—And we have begun a review of existing and proposed Federal regulations affecting this industry to assess their impact.

This, however, is not enough. I pledge that we will do more:

—We will intensify our review of existing bilateral restraint agreements to be sure they really work, and if there are harmful surges we will work promptly to remedy them.

—We will not allow the effectiveness of our restraint agreements to be undermined by significant increases in shipments from uncontrolled suppliers, and we will maintain a world-wide evaluation of the imports of textile and apparel into the U.S. and seek appropriate action, country-by-country, where warranted.

—We will be prepared to expand the pilot project underway in the men's tailored clothing industry so that other sectors may benefit from that experience, and we will speed proposals for a similar program in the ladies apparel industry.

—We will negotiate strenuously for removal of non-tariff barriers to U.S. textile and apparel exports, including restrictive "rules of origin."

—The Office of the Special Representative for Trade Negotiations will begin a new policy review and report to me quarterly on developments in the domestic textile and apparel industry, with special emphasis on imports and exports, so that appropriate actions can be taken more promptly.

These steps, like those of the past year, will not be the limit of our assistance to this vital industry. But each step that we take must be directed toward the longterm health of this industry and the United States economy as a whole—unlike H.R. 9937 which on balance is detrimental to the textile industry, to its two million workers, and to the Nation as a whole.

JIMMY CARTER

The White House,

November 10, 1978.