THE MINISTER OF FINANCE
REQUEST FOR TARIFF RELIEF BY
JONES APPAREL GROUP CANADA INC.
CERTAIN ACETATE OR TRIACETATE FABRICS
DECEMBER 19, 1997
TABLE OF CONTENTS
Request No.: TR-97-001
Tribunal Members: Arthur B. Trudeau, Presiding Member
Raynald Guay, Member
Charles A. Gracey, Member
Research Director: Réal E. Roy
Research Manager: Ken Campbell
Counsel for the Tribunal: Gerry Stobo
Distribution Officer: Claudette Friesen
Address all communications to:
Canadian International Trade Tribunal
Standard Life Centre
333 Laurier Avenue West
On July 14, 1994, the Canadian International Trade Tribunal (the
Tribunal) received terms of reference  from the Minister of Finance (the Minister)
pursuant to section 19 of the Canadian International Trade
Tribunal Act. 
The Minister directed the Tribunal to investigate requests from
domestic producers for tariff relief on imported textile inputs for
use in their manufacturing operations and to make recommendations
in respect of those requests to the Minister.
Pursuant to the Minister’s reference, on May 1, 1997, the
Tribunal received a request from Jones Apparel Group Canada Inc.
(Jones Apparel) of Downsview, Ontario, for the removal, for an
indeterminate period of time, of the customs duty on importations
from all countries of certain acetate or triacetate fabrics for use
in the manufacture of women’s jackets, blazers, dresses, skirts,
trousers or waistcoats (the subject fabrics).
On August 22, 1997, the Tribunal, being satisfied that the
request was properly documented, issued a notice of commencement of
investigation, which was distributed and published in the August
30, 1997, edition of the Canada Gazette, Part I. 
As part of the investigation, the Tribunal’s research staff sent
a questionnaire to potential producers of identical or
substitutable fabrics. A questionnaire was also sent to firms
identified as potential importers and users of the subject fabrics.
A letter was sent to the Department of National Revenue (Revenue
Canada) requesting information on the tariff classification of the
subject fabrics, and samples were provided for laboratory analysis.
Letters were also sent to a number of other government departments
for information and advice.
A staff investigation report, summarizing the information
received from these government departments, Jones Apparel and
Consoltex Inc. (Consoltex), was provided to interested parties that
had filed notices of appearance for this investigation. These
parties are Jones Apparel and the Canadian Textiles Institute
Although the CTI did not file a preliminary or final submission
with regard to the investigation, Consoltex, a member of the CTI,
filed a preliminary submission. A public hearing was not held for
In the notice of commencement of investigation, the subject
fabrics were described as woven fabrics, of subheading Nos.
5407.91, 5407.92, 5407.93, 5408.21, 5408.22, 5408.23, 5408.31,
5408.32 and 5408.33, containing 35 percent or more by weight of
cellulose acetate or cellulose triacetate filaments mixed with
polyester filaments or with viscose rayon filaments, containing not
more than 5 percent by weight of any other fibre, with an average
yarn twist of 500 turns per metre in the warp and/or the weft, of a
weight of 100 g/m2 or more but not exceeding 310
g/m2, for use in the manufacture of women’s jackets,
blazers, dresses, skirts, trousers or waistcoats.
Revenue Canada analyzed samples of the subject fabrics and
determined that there was a discrepancy in a number of the tariff
subheadings reported by Jones Apparel. Prior to the commencement of
the investigation, Jones Apparel was advised of Revenue Canada’s
analysis and concurred with the revised tariff classifications.
Revenue Canada also determined that one of the samples had a yarn
twist of less than 500 turns per metre and, therefore, proposed the
above product description, which would cover all the subject
fabrics. Jones Apparel agreed with this proposed description.
Revenue Canada advised the Tribunal that, in 1997, the subject
fabrics are dutiable at 17.5 percent ad valorem under the
MFN tariff; at 2.5 percent ad valorem under the US tariff;
and at 15.0 percent ad valorem under the Mexico tariff. In
addition, Revenue Canada advised that expanding Code 4218, as
suggested by Jones Apparel, would complicate the current wording of
that code. Therefore, Revenue Canada suggested that, should the
Tribunal make a recommendation for tariff relief, a new code should
be created for the subject fabrics.
The Tribunal’s research staff sent questionnaires to selected
potential importers of the subject fabrics, as well as to potential
domestic producers of identical or substitutable fabrics. Since no
responses to these questionnaires were received, the Tribunal’s
staff was unable to estimate the volume or value of imports or to
estimate the size of the domestic market for the subject
Jones Apparel’s request is for the permanent removal of the
customs duty on importations of the subject fabrics. In addition,
it requested that the tariff relief be retroactive to May 1, 1997,
the date on which the request was received by the Tribunal.
Jones Apparel has been operating in Canada for the past 14 years
and has been purchasing the subject fabrics primarily from Japanese
suppliers. It cuts the subject fabrics in its Downsview facility
and contracts the sewing to companies in Toronto, Ontario. It also
supplements its domestic production with imports of women’s
coordinates, blouses and sweaters. As well, Jones Apparel claims
that it is the largest ladies’ wear customer of domestic fabric
weavers in Canada.
Jones Apparel submitted that tariff relief should be granted on
the grounds that there is no domestic production of identical or
substitutable fabrics. Jones Apparel claims that, as a result of
tariff relief which was provided for specific high-twist
triacetate/polyester fabrics in a 70/30 blend in Code 4218,
 Louben Sportswear
Inc. and other manufacturers now have a competitive advantage.
While triacetate/polyester fabrics in a 70/30 blend do not cover
many of Jones Apparel’s requirements in the same fabric class, it
nonetheless requires similar duty-free fabrics in order to compete
with manufacturers that are able to source fabrics that precisely
meet the requirements of Code 4218.
Jones Apparel submitted that the removal of the customs duty on
the subject fabrics will result in cost savings and, thereby,
ensure that Canadian production and employment are maintained and
continue to grow. Such cost savings would allow Jones Apparel to
reduce suggested retail selling prices on coordinates. Moreover, if
the duty is removed, it submitted that there is a strong
possibility that its parent company, Jones New York, will grant
Jones Apparel a North American mandate to manufacture
triacetate/polyester coordinates in Canada, which would result in a
significant benefit to Canadian production and employment.
Jones Apparel rejects the proposal by Consoltex that Code 4218
be changed by adjusting the triacetate threshold percentage from 70
to 50 percent. Jones Apparel notes that, as one of Canada’s largest
apparel manufacturers, it is a significant purchaser of domestic
fabrics and will always attempt to source its unique fabrics from
Canadian textile manufacturers. It states that identical or
substitutable fabrics are not manufactured in Canada and,
therefore, that it is in the interest of the industry as a whole
that the subject fabrics enter duty-free. This would ensure that
one apparel company does not achieve a competitive advantage over
another by gaining duty-free access for a proprietary fabric blend
or construction. Moreover, Jones Apparel claims that fashion
requires that there be variety and difference supplied by the
various high-twist triacetate and acetate blends under
consideration. Granting tariff relief, it argues, will give the
fashion industry the flexibility that it needs to remain
competitive from season to season.
Consoltex submitted that it still does not produce the
triacetate/polyester fabrics which were granted duty-free entry
following the creation of Code 4218. However, although Consoltex
would like to accommodate Jones Apparel’s request, it claims to be
under significant pressure and has been harmed by the granting of
tariff relief on other fabrics, including “fashion” fabrics and
fabrics covered in Request No. TR-95-011.
Consoltex claims that any expansion of Code 4218 to accommodate
Jones Apparel will inspire others to make similar claims of
competitive disadvantage in the future. Accordingly, Consoltex
requests that the scope of a code be minimized so that problems
already created by earlier cases not be compounded. To accommodate
Jones Apparel, Consoltex would not object to a change in the
threshold percentage of triacetate in Code 4218, from 70 to 50
percent, until the tariff relief order expires. Consoltex, however,
is opposed to any other change which would broaden the scope of
The Department of Foreign Affairs and International Trade
(Foreign Affairs and International Trade) informed the Tribunal
that Canada currently maintains quota restraints on polyester
filament fabric, including any fabric mixed mainly or solely with
polyester filaments (category 35.0), imported from Poland, the
Republic of Korea and Taiwan. As such, this coverage includes the
subject fabrics of subheading Nos. 5407.91, 5407.92, 5407.93,
5408.31, 5408.32 and 5408.33. Bilateral agreements, which provide
for these restrictions, between the Government of Canada and the
Government of the Republic of Korea and the Taiwan Textile
Federation, have been in place since 1978. The bilateral agreement
between the Government of Canada and the Government of the Republic
of Poland has been in place since 1979.
Foreign Affairs and International Trade also informed the
Tribunal that Canada does not maintain quota restraints on the
subject fabrics classified in subheading Nos. 5408.21, 5408.22 and
5408.23. Therefore, these fabrics are not subject to any
quantitative import restrictions.
Foreign Affairs and International Trade indicated that it will
consider requests for ex-quota entry on textile inputs where
recommendation has been made by the Tribunal to remove the customs
duty on the basis of non-availability.
Revenue Canada indicated that there would be no additional
costs, over and above those already incurred by it, to administer
the tariff relief, should it be granted.
The terms of reference direct the Tribunal to evaluate the
economic impact that reducing or removing a tariff would have on
domestic textile producers and downstream producers and, in so
doing, to consider all relevant factors, such as the
substitutability of the subject fabrics with domestic fabrics, the
ability of domestic fabric producers to serve the Canadian
downstream industries and the competitiveness of those industries
at home and abroad. Consequently, the Tribunal’s decision to
recommend tariff relief is based on the extent to which it
considers that such tariff relief would provide net economic gains
The Tribunal notes that tariff relief has been granted for
fabrics similar to the subject fabrics. However, the tariff relief
granted following the Tribunal’s recommendation in Request No.
TR-95-011, provides for the duty-free entry of woven fabrics
containing 70 percent or more by weight of cellulose triacetate
filaments. Code 4218, although used by Jones Apparel to import 20
percent of its triacetate fabric requirements, clearly limits its
competitive position vis-à-vis other apparel manufacturers that are
able to import a much larger percentage of their fabric
requirements duty-free under this code.
The Tribunal also notes that, as was the case in Request No.
TR-95-011, there does not appear to be any domestic production of
fabrics identical to or substitutable for the subject fabrics.
Although Consoltex objects to the expansion of Code 4218 to an
extent which would completely accommodate Jones Apparel’s request,
Consoltex readily admits that it does not produce identical fabrics
and provided no evidence that it produces substitutable fabrics.
Moreover, although Consoltex did provide value data with respect to
domestic and export sales of various “fashion group” fabrics, it
did not quantify any costs, should tariff relief be granted.
Therefore, other than the corresponding duty revenues foregone by
the government, the Tribunal does not believe that there will be
any direct commercial costs associated with the removal of the
customs duty on importations of the subject fabrics.
It is estimated that the net economic benefits of granting the
tariff relief to Jones Apparel would have been somewhat less than
$200,000 in 1996, based on the actual amount of duties paid in that
year. On the basis of projected imports in 1997, it is estimated
that the benefits of tariff relief in the current year would be
around $200,000. In addition, should tariff relief be granted, cost
reductions accruing from duty removal would ensure that Canadian
production and employment are maintained. Moreover, removal of the
duties could result in a North American mandate for manufacturing
triacetate/polyester coordinates which could result in a
significant benefit to Canadian production and employment. In
summary, the Tribunal finds that the net economic benefits of
granting the tariff relief would be positive.
With respect to the request for retroactive tariff relief to May
1, 1997, the Tribunal does not believe that there are extraordinary
competitive circumstances in the domestic market that warrant such
In light of the foregoing, the Tribunal hereby recommends to the
Minister that tariff relief be granted, for an indeterminate period
of time, on importations from all countries of woven fabrics, of
subheading Nos. 5407.91, 5407.92, 5407.93, 5408.21, 5408.22,
5408.23, 5408.31, 5408.32 and 5408.33, containing 35 percent or
more by weight of cellulose acetate or cellulose triacetate
filaments mixed with polyester filaments or with viscose rayon
filaments, containing not more than 5 percent by weight of any
other fibre, with an average yarn twist of 500 turns per metre in
the warp and/or the weft, of a weight of 100 g/m2 or
more but not exceeding 310 g/m2, for use in the
manufacture of women’s jackets, blazers, dresses, skirts, trousers
Arthur B. Trudeau
Arthur B. Trudeau
Charles A. Gracey
Charles A. Gracey
1. On March 20 and
July 24, 1996, and on November 26, 1997, the Minister of Finance
revised the terms of reference.
2. R.S.C. 1985, c. 47
3. Vol. 131, No. 35 at
4. Code 4218, which
was created following the Tribunal’s recommendation in Report to
the Minister of Finance: Request for Tariff Relief by Louben
Sportswear Inc. Regarding Dyed Woven Fabrics, Request No.
TR-95-011, March 21, 1996, provides duty-free entry under the MFN
tariff for woven fabrics, of cellulose triacetate filaments mixed
solely with polyester filaments, containing 70 percent or more by
weight of cellulose triacetate filaments, with a yarn twist of 900
or more turns per metre, of a weight of 165 g/m2 or more but not
exceeding 310 g/m2, of subheading No. 5408.31 or 5408.32, for use
in the manufacture of women’s jackets, blazers, dresses, skirts,
trousers or waistcoats (vests).
[Table of Contents
Initial publication: December 18, 1997