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DownPillow, Inc., a small U. manufacturer of down comforters and pillows, sells nationally through high-quality retailers. The company is known for...


DownPillow, Inc., a small U.S. manufacturer of down comforters and pillows, sells nationally through high-quality retailers. The company is known for its quality of materials and production. Its raw materials include cotton fabric, unfilled cotton shells, and down fills. These materials are not produced in the United States in sufficient quantities to meet the needs of the U.S. market. The HTS classification for unfilled comforter shells is 6307.90. The classification for finished down comforters is HTS 9404.90. For many years, DownPillow purchased materials from Europe and paid in foreign currency. Gradually, costs rose because European suppliers faced higher labor and overhead costs. A declining U.S. dollar made goods more costly, but as costs rose, the company could not pass them on in price increases. When the U.S. market became more competitive in the early 1990s, DownPillow looked to China for cheaper materials. China is the world's leading producer of cotton textiles and down fill. Chinese textiles enter the United States under strict quota limits, enforced by U.S. Customs. Quota category 362 includes unfilled shells, comforters, quilts, bed- spreads, and other top-of-the-bed products. DownPillow negotiated with a Chinese manufacturer for low-cost materials priced in dollars. The new products were introduced to U.S. customers in 1993 at competitive prices. The new lower-priced goods quickly became an important part of the company's line.



d) Every state requires that comforters may only be sold if they are manufactured or imported by licensed bedding manufacturers. Bedding manufacturers are subject to state health codes. Does NAFTA prohibit the application of state health codes to Canadian and Mexican companies or to products made by them?



e) The company also has had some interest from buyers in Mexico. Would any import duties apply on shipments of either its U.S.- or Canadian-made products to Mexico? What would the tariff rate be? What special textile labeling rules are applicable, and how would they affect the company's ability to market there?



f) Management is concerned about meeting foreign health standards applicable to a natural product like down and feathers. Where would they go for information on fore

Top Answer

1.NAFTA does not prohibit the application of state health codes to Canadian and Mexican companies this is based on the role... View the full answer

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