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Withdrawal/Redaction Sheet
Clinton Library
DOCUMENT NO.
AND TYPE
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SUBJECTffiTLE
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John Cobau to Troy H. Cribb through Eleanor Roberts Lewis re: CITA
Authority to Impose Quantitative Restrictions on Textile and Apparel
Imports from the CNMI (7 pages)
001. memo
DATE
02/26/99
RESTRICTION
PS
COLLECTION!
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Clinton Presidential Records
Intergovernm~ntal Affairs
Jeffrey Farrow
OA/Box Numbbr: 24092
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FOLDER TITLE:
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Commonwealth of Northern Mariana Islands (CNMI) I [1]
Richard Stalcup
2006-0167-F
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CLINTON LIBRARXPHQifrt! ttY
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UNrfED StATES DEPARTMENT OF COMMERCE
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MEMORANDUM FOR:
FEB 2 6 1999
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Troy H. Cribb
Deputy Assistant Secretary
for Textiles. Apparel and
Consumer Goods Industries ·
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. El~anor Roberts Lewi~'\
Chtef Counsel. · . ~~
for International Com
e
THROUGH:
FROMI:
John CobaUJC:Attomey-Adviser
SUBJECT:
CITA Authority to Impose Quantitative Restrictions on Textile and·
Apparel Imports from the CNMI
You have asked whether the Committee for the Implementation of Textile Agreements (CITA)
has the: authority to impose quantitative restrictions on textile and apparel imports from the
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Commonwealth ofthe Northern Mariana Islands (CNMI). !'
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D l§CUSSIOn
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LeKRI Relationship Betweem the United States aDd the CNMI
The CliiMl is part of the Trust Territo Of the Pacific Islands; whichlthe United Stales
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adniim~ ere as a ruted Nations Trusteeship fyom 1947-1986. Unitbd States v. Guerrero, 4 F.3d
749, 751 {91h Cir. 1993). In 1972, tile United States agreed to condudt negotiations with the
Nortbeb Mariana Islands separate from the rest of the Trust TerritoJ, and three years later the
two parties signed the Covenant to Establish a Commonwealth oftht Northern :Mariana Islands
in Political Union with the United States of A.Inerica (Covenant). Id.! In 1976, Congress enacted
the Co~enant into law. Jojnt Resolution ofMarch 24, 1976, Pub. L. No. 94-241, 90 Slat. 263,
reprint~d in 48 U.S.C. s 1681 note.
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be~;xnne
The clvenant provides that the CNMI will
a ..self-governing commonwealth ... in
politid.t union with and under the sovereignty of the United States.'' Section 101. Relations
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TJis issue was addressed in a previous memorandwn from this office dated March 2. 1989.
Since that time, several relevant court cases have been decided and t~is memorandum superccdes
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pre~lOUS
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n-lE CHIEF COUNSEL FDA INTERNATIONAL a:JMMERO:
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betweJ the CNMI and the United States are governed by the Covenant, which, ''together ith
those
of the Constitution, treaties and laws ofthe United S tates applicable to" the
CNMI, iare the "supreme law" ?f the CNMI. .s.ection 102. Accordin~ to the Covenant, the . .,_~_..
people of the CNMI have the nght to local self-goverrunent and govern themselves ·•with respect ·
to interkt affairs.. with a Constitution of their own adoption. Scctiorl 103. The CNMI has an
indeperldent government, comparable to that of a state. Section-By-Section Analysis ofthe
Covenaht, prepared by the Marianas Political Status Commission, Sebtion 103. On the other
hand, the United States has "complete responsibility" with respect to CNMI foreign affairs and
defense1 Section 104. The relationship has been described as ''temtdrial in nature with full
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soverei~ty vested in the United States." H. R. Rep. No. 94-433, p. 15 (1975).
p~visions
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CNMl is outside the c:ustonis territory of the United States. Covenant, Section 603(a). (b). The
United States can and does impose duties on products from the CNMI, though such products
receive[preferential treatrn.ent. Harmonized Tariff Schedule of the urlitedStates, U.S. Note 3(a).
The Clenant refeu: to such products as "Imports." Covenant, Sectidn 603(c).
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Section ZfM
ne~otiate
.Sectioj 204 of the Agriculture Act of 1956 authorizes the President "to
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represehtatives of foreign governments'' to obtain agreements limitink exports oTtcxtile products
"from ~uch countnes'' and to issue regulations goveming the entry oflsuch products to carry out
any such agreement. Section 204 also authorizes the President to ••issue~ in order to cany out
[the A~ree:rnent Qn Textiles and Clothing (ATC)];Y regulations goveirung the entry'" of textile
products "which are the products of countries not parties b:t the agreeinent." 2' As Section 204
address~s negotiati.ons with ''foreign govemments" and regulations g&verning entry of imports
from "dountries" not parties to the agreement~ a ptimazy question is J,hether Section 204 permits
the Pre~ident to entet into agreement with, and issue regulations regakting imports from, the
CNMtlmore specifically, whether the CNMI is a .. foreign country" ~d a "foreign government"
for. purposes of Section 204. ·
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Generally, in reviewing an agency's construction of a statute which it administers, courts
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Th~ ATC is one of the trade agreements resulting from the Urugt;tay Round of multilateral
negotia~ions. and was approved by Congress in Section 101 of the Ufuguay ROund Agreements
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Act. PJb. L. No. 103-465, 108 Stat. 4809 (1994).
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ExLutive Order 116Sl delegates to the Chainnan ofCITA the aulhurity to «take such
actions as may be necessacy to implement" textile agreements.
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examinb whether the. intent of Congress is clear; if it is not,. courts consider whether the a geney·s
interprdtation is a reasonable one in the context ofthe particular progt.am. CheV!Qn v. Natural
Resourbes Defense Council, 467 U.S. 837, 845 (1984). The agency·~ interpretation does not
have toibe the only permissible one, or even the reading the court wo~ld have reached if the
question had initially arisen in a judicial proceeding. ld, at 843, n. 11. ln reviewing an exercise
of authbrity under Section 204, the Court of International Trade~
stated that. in the absence
of a co~trary legislative intent, statutory terms are interpreted according to their ..common
meanink." .Ma!!it Industries v. Regan, 596 F. Supp. 1567, 1575 (CIT l984}.
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~~broader
In rcViLng action by CITA under Section 204, courts appear to
discretion than
that grJ..ted under Chevron. The Federal Circuit has held that all that is required under Section
204 is
actions taken by the President "be relevant to the enforceritent of some existing textile
ag.reembnt.'' American Association of Exporters and Inmortcrs:... Te~tile
A;gparel Group V.
United States. 751 F.2d 1239, 1247 (Fed. Cir; 1985} Courts have foond that Section 204 grants
the PreJident broad atlthority, authority augmented by the President·~ coustjtutional power in the
international arena. Target Sportswear V; United States. 70 F.3rd 604, 607 (Fed. Cir. 1995). ·
that
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CNMI las a Foreign Country. With these siandards in niind, it pjssible let consider whether
CNMI ban be treated as a "foreign country,. under Section 204. Y Nd cot~.rt has reviewed the
· meanink of this term in Section zo4. and the legislative history does ~ot address this issue. In
interpr~ting the Foreign Tort Claims Act, the Supreme Court has statfl that the "commonsense
meanink of the Lerm.. foreign colintry is "a region or tract of land." Smith v_ United States, 507
~.S. 19~-' 199 (1993) (citations omitted). The ~I wo~ld.clea.rly within this definitio". In
mterp:rebng tha.t sazne statute, that Court stated tn an earher case that "[w ]e know of no more
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Court of International Trade has exclusive jurisdiction over any matter arising out of any
U.S. la.Jv providing for embargoes or other quantitative restrictions the administration or
enforcclnent ofslich matters. 28 U.S.C. s l58l{i) (1998).
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a~pears that the same analysis would apply in determining whether the CNMT is either a
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~·roreip government" or a "foreign country,. for purposes of Section.~04. The first sentence of
Sectionj204 allows the President to negotiate agreements with "forei~ governments·~ for
purposes of obtaining limits on the exports from ''such countries." The second sentence allows
the PreJident to regulate imports from "countries'' that are not parties! to a multilateral agreement.
The statute· thus logically distinguishes between "foreign governments,·· with which the President
can ne~otiate agreements, and foreign ..countries," which can be subjbct to limits, and the first
sentencb equates the two terms. For purposes of determining whethe~ the CNMI may be
negotiated with, or may be subject to limits. the terms appear interch~ngeable.
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jaccurate phr. m common Engl"sh usage th an •.t: • country ' to d enote terntory' .sub' t ,.,the
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sovereiknty of another nation ... United States v. Spelar, 338 U.S. 21 ~· 219 (1949).. As the CNMI=- -.
is "imdbr the sovereignty of the United States," it is arguably not witliin this definition of
"foreig» country... ~ In detennining whether a territory is a .. foreign bountry• for pUiposes of a
particular statute, the Supreme Court has hel4 that courts should ex~ine the purpose of the
statute ~tissue. ''The term "foreign country' is not a. technical or artificial one, and the sense in
which is used in a statute must be determined by reference to the ptirpose of the legislation_;.
Burnet V. Chit;ago Portrait Co., 285 U.S. 1, 5, (1932).
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n~ted
It sccmi that there is no "common meaning'' of foreign country. However, as
above, the::
commoh mearring should be interpreted in light of Congressional inteht. "The-congressional
policy Jxpressed in Section 204 is the limitation of imports oftextiieJ and agricultural
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coromo~ities into the United States." Ma~t lndu~tries v. ¥-eagan. 5961F.Supp. 1567, 1575 (CIT .
1984). !Products from the CNMI are cons1dered Imports mto the United States. Based on the
am.bigubus meaning of"foreign country"' and the Congressional inteJt to limit imports, it appears
that it J.ould be reasonable for CITAto consider CNMI a "foreign cohnti'y'' for pmposes of
Sectionl204.
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Moreo~er. the trnpos1hon of bm1ts here would be 'irelevanr• to the enforcement of textile
agreements. As noted above, the purpose of these agreements is to lifuit imports so as to protect
c~stoms territory, and is not
part of the ' United States" for purposes of Section 204.11 so limits onl CNMI imporls would
protect fue U.S. textile and apparel industry. In Target Spotl§wear v. :united States. the Court of
Internaflonal Trade considered whether Section 204 grants the Presidbnt the authority to issue
rules o~ ~rigin for textile ~d apparc:t products pro~essed in a foreign ?ountry and subsequently
substantaa1Jy transformed m a U.S. msular possesston. 875 F. Supp, 835 (CIT 1995), l!.fLd, 70
F.3d 60~. 607 (Fed. Cir. 1995). The court held that the President
have this authority or
"soon e~ery insular possession would be used as a platfor:ln for importing textiles into the United
States in order to evade quantitative restrictions ... [blunting] the corhmon purpose of Sectic;m
the u.s[ tex:tile and apparel industry. The CNMI is outside the U.S.
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also Mount Washington Tanker v. United States, 665 F.2d 340 (Ct. Cust. Pat. App.
1981) (~xamining Congressional intent to detennine meaning of"forcHgn country" and
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concluding that the high seas were a "foreign country" for purposes of a provision requiring the
paymerlt of duty on vessel repairs perfonned in a ..foreign country'').
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Office of the Solicitor of the Department of the Interior, The Application of Federal
Laws American Samoa. Guam. the Northern Mariana Islands, the t!J.S. Virgin Islands.
Memorlmdam No. 7-4, p. 87 (1993).
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204,
thl [Multllateral Fibre Arrangement, the predecessor
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to the ATa] and the [bilateral textile
~greem 1bnts] ... to. limit imports o~te~tiles in~o the Uni_ted States s~ af to protect the domestic
mdustry." 875 F. Supp. at 842 (cttatJons• omitted). Thts case prov1dcs strong support for the
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proposition that limits on imports from the CNMI would be "relevant.. to the enforcement of .
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textile ~greements, as it woulc;l prevent the CNMI from being used as a 04platform" for imports
into thri United States.
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rel~vant
.HowevL. it could be argued that any action taken under Section 204 must both be
to a
textile ~grecment and affect goods that have a "nexus" with a foreigd country. In Iawt
Sportsvlrear v. United States, the Federal Circuit, after reaffirming thd ..rclcvancyn test, addressed
appeJJaht•s argument that Section 204 grants authority to regulate ex~orts from foreign countries,
not exp:orts from an in~ulai possession. 70 F. 3d 604, 607 (Fed. Cir. l995) (affinning the
previously discussed Court oflntemati.onal Trade decision). The coJrtdisagreed, noting that
there Jas ''no persuasive evidence ... establishing that Congress intJnded to grant the President
this brdad authority, but at the same time to withhold from him the pbwcr to promulgate ... a
coun~ of origin rule that differs from the customary test..~ The coux!t also found that the
regulation at issue did not "improperly impact insular possessions.. a~ the goods ''must have been
advancbd in value or similarly processed in a foreign country." and t&at ''this nexus between the
produc' and the foreign country brings the interim regulations squarc1y within the scope of the
statute. j' l!l. Thus, here it could be argued that any limit on imports, from the CNMI would
''improperly impact.. the CNMI as there is no nexus between the product and a foreign country.
w~
HowevL, the nexus test
apparently a secondary rationale underlJing the court's decision in
Iargetjand the court's primary rationale was the •'relevancy.. teat. Moreover, it has been Dlleged
that the goods at issue here were manufactured using foreign fabric ~d temporary foreign labor,
and in ~extile plants often owned by foreign nationals; in effect, the qNMI content is arguably
small. fhis may be a sufficient ''nexus.. to meet the test put forward in Target, in the event it
applies.
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Concljsjoa. While the matter is not free from doubt, a strong argument could be made that
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Sectiod 204 permits the imposition ofJirnits on imports from the CNMI.
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slion 603(c) of the Covenant
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issue is whether the imposition of limits on
from the CNMI violates the
Covenin.t. The Covenant provides: "Imports from the Northern M~riana Islands int~ the ·
custom~ territory of the United States will be subject to the same tre~tm~nt as imports from .
Guam into the customs territory of the United States." Section 603(J). Based on this provision,
.it could be· argued that the Covenant prohibits li.mits on imports frorri the CNMI unless the same
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ltmtts are a so Imposed on Imports fro.m Guam.
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Co~enont'
CO~en--an-t-=-
The lebslative hisloly of the
s implementation into U.S. law. stales that the
was i~tendedto become part of the law ofthe United States and
the Covenant was being
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enacte(i into the statutory law of the United States. S. Rep. No. 94·433, at 91 {1975); H.R. Rep.
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No. 94·364, at 17 (1974). It appears that if the Covenant precludes the imposition of limits on
imports from the CNMI without imposing similar limits on Guam, the President would be
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withoJt authority to impose limits only on imports from the CNMI. ~s the later-in-time Covenant
would govern. rather than Section 204. !J!
that!
One response is that imports from the CNMI and imports from Guam are being treated in the
same kanner. Here, there has been a dramatic increase in imports from the CNMI. If a similar \
increa~e in imports from Gua.rri occUITed, a. limit would be placed oJ these imports as well. Thus.
imports from both Guam a11d the CNMI are being treated iri the sam~ mannei with respect to the
proces s for the imposition of quotas. An analogy to the antidumpin~ context makes this point
clear; ~f the United States were to impose antidumping duties on certain merchandise from the
CNMJi in response to a finding that this kind of merchandise is being sold in the United States at
less thlm fair value and that the U.S. industry is materially injured, the United States would not
be obligated to impose the same duties on imports from Guam.
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In
of.this distinction, note that CITA has already tr>:ated Gu'l"' and the CNMI differently
for pu~oses of quantitative restrictions. In _1985, CI~A imposed a trmit on s~eaters exported
the Umted States that were products of foreign countnes and were assembled m Guam of
160,000 dozen while at the same time imposing a limit of70.000 do~en on such sweaters
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assembled in the CNMI. 50 Fed. Reg. 8649·50 (Man::h 4, 1985). 21 Similarly. in 1990. the
Department of Commerce issued an antidumping order on imports df sweaters from Hong Kong,
KorcJ and Taiwan; that order specifically ~xcluded sweaters assem&led in Guam produced from
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~ T~e Covenant was enacted subsequent to the original enactment of Section 204 in 1956 and
subse<iuent to the amendment to Se(;tion 204 permitting the Presiderlt to limit the entry of textile
products which are the product of countries not parties to a multilatdral textile agreement in
1962.1 While Section 204 wu.s amended in 1994 (Uruguay Round A~eements Act, Pub. L. No.
103-465,108 Stat. 4809), those amendments did not affect the tenns relevant here. Thus,. the
Coveriant, as the later in time statute, would prevail in the event of~ inconsistency.
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.Jis action was upheld by the Court of International Trade. YJi Fashions Co, v. United
StatesJ 632 F. Supp. 41 (CIT 1986); !fr!l804 F.2d 1246 (Fal. Cir. l986); cert. denied, 481 U.S.
1004 ~1987).
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knit-tojshape component parts knit in and imported fronl Taiwan but applied to such sweatero,_
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from ilie CNMI. 55 Fed. Reg. 39033 (September 24, 1990).
We hale discussed this issue with a Department of Justice experl on insular possession law. He
expresJed concern about the consistency of Seciion 204 limits with ~ection 603(c), and ·
suggested that a singl~ limit be imposed on both Guam and the CNMI. or that a single limit be
imposdd on aU insular possessions.
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Concllsioli. It could be argued that any limit on imports under Section 204 that was not also
impos~d on imports from Guam is inconsistent with the Covenant an d is therefore not within the
Presiddnt's authority. On the other hand, a strong argument could bcl made that if the same
criteriJ are used in applying Section 204 to both Guam and the
atiy such limit. would be
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consistbnt with the Covenant.
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