American Television Industry Letter to the Speaker of the House and to the President of the Senate Transmitting a Report.

Dear Mr. Speaker: (Dear Mr. President:)

In accordance with Section 203 (b) (1) of the Trade Act of 1974, I am enclosing a report to the Congress setting forth the action I am taking on color television receivers pursuant to Section 203 (a) of the

Trade Act.

Sincerely,

JIMMY CARTER

IMPORT RELIEF FOR COLOR TELEVISION

INDUSTRY

As required by Section 203(b)(1) of the Trade Act of 1974, I am transmitting this report to the Congress setting forth my determination to provide import relief to the United States color television receiver industry covered by the affirmative injury determination of March 22, 1977 of the United States International Trade Commission (USITC) under Section 201 (d) (1) of the Trade Act. As my decision does not provide the import relief recommended by the Commission, I am setting forth the reasons why I have taken action different from that recommended by the USITC.

After considering the interests of both American consumers and producers, I have concluded that an orderly marketing agreement is the most effective remedy for the injury caused by increased imports to the color television receiver industry and its employees.

My decision was based upon my evaluation of the national economic interest. The remedy recommended by the USITC was the imposition of additional tariffs on color television receivers. The tariff increase recommended by the Commission was an additional 20 percentage points during the first year of import relief followed by 20, 15, 15 and 10 percentage point additional duties in the second through fifth years of the remedy. The existing duty is five percent.

Although a majority of the USITC Commissioners found injury to the domestic color television receiver industry, only three Commissioners found injury to the monochrome television industry. Since the Commission was evenly divided on the subject of injury to the monochrome television industry, I have determined, pursuant to Section 330(d) of the Tariff Act of 1930, to consider the vote of the three Commissioners determining no injury to the monochrome television receiver industry as the Commission determination. Consequently, no import relief is authorized under the Trade Act of 1974. I have, however, accepted the view of the three Commissioners determining serious injury to exist in the industry producing color television receiver subassemblies, certain ones of which I am including in my import relief determination.

To remedy the serious injury found by the USITC to exist in the domestic color television industry, I have determined to provide import relief in the form of an orderly marketing agreement with Japan, the major supplier to the U.S. market of color television receivers. Japan supplies over 80 percent of all imports into the United States of color television receivers. This agreement would be concluded solely with Japan. However, under the Trade Act, after negotiating an orderly marketing agreement, I have authority to take action against imports from other countries should those imports reach disruptive levels, interfering with the effectiveness of the orderly marketing agreement.

In determining not to take the advice of the USITC on the remedy for import relief in this case, I took account of several important considerations affecting the national economic interest, including the following:

First, by choosing to negotiate an orderly marketing agreement, it can be expected that increased production and employment will result in the domestic color television industry by both American companies and the U.S. subsidiaries of foreign companies. Expected higher sales and profits should encourage American companies to expand production here and to invest in the latest available machinery. The orderly marketing agreement will also encourage decisions to move foreign production into the United States or to expand existing production facilities here, thus improving the prospects for increased domestic employment in the domestic color television industry beyond the time frame of temporary relief under the escape clause.

In addition, since the reason for giving import relief is to assist the domestic industry in becoming more competitive with imports, it is important that the remedy achieve the maximum benefit for domestic producers or workers while having the minimum impact on consumers. Consumer costs for an across-the-board tariff increase are unacceptable at a time when covering the rate of inflation is essential. In the particular circumstances of the color television industry, this purpose is better achieved with an orderly marketing agreement than with tariffs.

A further problem is that nothing in the USITC remedy would have prevented circumvention of relief .by minor design changes in the television receivers. This problem is remedied in the agreement.

Another important consideration was the possible compensatory import concessions that would have to be made by the United States to affected exporting countries or the retaliation by those countries against U.S. exports. Such actions would have cost American jobs and could have damaged U.S. exports by exposing our industrial and agricultural trade to increased barriers in important overseas markets.

In addition, the higher tariff recommended by the USITC would have been applied across-the-board on all countries and would have affected countries not responsible for the rapid rise in imports.

An orderly marketing agreement with Japan will considerably moderate the significantly increased exports from Japan which occurred in 1976. Such an agreement will reduce exports to the United States in the first agreement year to a level at least 40 percent below the 1976 level of exports.