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Legal Authority and Procedures

The International Trade Commission is conducting this investigation under Section 203 of the Trade Act of 1974. This is the provision for extending quotas applied originally under Sec. 201 of the same act.

To recommend an extension under Section 203, the Commission must find that relaxing or eliminating the quotas would result in substantial injury to the industry, and that the injury to consumers would be minimal.

Dumping is not an issue in this proceeding.

After reviewing data submitted at the hearing, the ITC will make a recommendation to the President, who will presumably act before the current quota expires in February. The President is advised on these matters by Mr. Brock, the Special Trade Representative. The current deadline for reporting to the President is December 7, 1981.

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The Current Quota

In 1978, the U.S. International Trade Commission conducted two investigations of clothespin imports and their effect on the domestic industry.

At that time, imports had risen significantly, and U.S. output was falling. Capacity utilization and profits of U.S. manufacturers were very poor. In 1977, imported clothespins held 46% of the U.S. market. After examining a large record of data, the Commission found that the U.S. clothespin industry had suffered substantial injury:

"clothespins....are being imported in such

increased quantities as to be a substantial

cause of serious injury to the domestic

industry...(p.3).

The Commission recommended a five-year quota that would set separate limits by price classes of wood and plastic spring clothespins. The President, early in 1979, adopted a three-year quota, and retained a tariff rate that had previously been in effect.

The quota is for wood and plastic clothespins together, as follows:

The intent of the quota is to limit annual imports to two million

gross in the price levels below $1.70 per gross. (Table 1).

Since the quota was established, the People's Republic of China has virtually ceased supplying the U.S. market. Major suppliers continue to be Poland, Taiwan, and the Federal Republic of Germany.

Source: U.S. Department of Commerce, Foreign Trade Division, U.S.

Imports for Consumption CY1980. These are Tariff Code Series 790.05. Miscellaneous types of clothespins not listed in this table totalled 229,000 gross.

Prior to 1978, break downs by price and plastic and wood were not given.

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Beneficial Impacts of Quota

During the quota period, a number of significant benefits accrued to

the Maine industry and local Maine communities:

- Maine clothespin production has risen, from 4.4 million to an

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annual rate in the first half of 1981 that would exceed five million

for the year.

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Imports have declined notably from 3.5 million in 1977 to 2.1

million gross by 1980, a cut of 40%.

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As a result, company rates of capacity utilization have risen. Employment has risen somewhat, to more than 400 jobs in Maine in the first half of 1981. The quality of employment has risen, since the producers have been able to switch from month-to-month on-and-off employment to steady year-round employment and working more shifts per day. This substantial improvement is of critical importance and is not adequately measured by the raw statistics on the number of persons employed.

· During the quota period, wages paid rose from $2.8 million in 1978 to $3.6 million in 1980. In the first half of 1981, they are 23% ahead (at 2.1 million) of the same period in 1980.

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The quota has enabled the industry to undertake modernizations that will improve its competitive position in the long run.

The clothespin industry, employing about 500 people in northern New

England, is much more important to local communities than this figure indicates. The extreme case may be Mattawamkeag, Maine. In this rural community, the clothespin activities of Forster Manufacturing are

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responsible for more than half of the total manufacturing employment in the town. Though Mattawamkeag is near the manufacturing town of Lincoln, the importance of jobs in clothespins is clear.

In these uncertain times, the State is opposed to any Federal policy changes that would reverse the progress that has benefitted this industry, its employees, and dependent communities.

For several years it as been State policy to encourage secondary wood processing as a means of promoting more employment based on Maine's greatest renewable resource. We think that an extension of existing quota protection will help make this policy a success for clothespins.

The clothespin industry consumes a relatively small volume of wood, but pays good prices. The aggregate payments to stumpage owners for maple and beech-used in clothespins are on the order of $400,000 per year. Though a small portion of the State's annual stumpage harvest, this represents a valuable log market in the local areas affected.