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CITA accepts more safeguard petitions, China calls action ‘unfair’

The Committee for the Implementation of Textile Agreements added four more categories of textile and apparel products to the list of safeguard cases it has accepted involving Chinese textile imports.

The four new cases covering man-made fiber shirts, non-knit (woven) shirts, man-made fiber trousers and combed cotton yarn brings to seven the number now being pursued by CITA, an interagency group with members from the U.S. Departments of Commerce, State, Labor and Treasury and the U.S. Trade Representative’s office.

“It is important to note that the cases approved today (May 20) were filed as threat-based cases in October 2004,” said Auggie Tantillo, executive director of the American Manufacturing Trade Action Coalition, one of the filers of the safeguard cases.

“Today’s approvals validates the U.S. textile industry’s prediction that China would surge into the market in a disruptive way.”

Under China’s WTO accession agreement, the United States has the right to limit the growth of Chinese imports if those imports threaten the economic viability of a U.S. manufacturing sector that the government believes should be safeguarded.

The U.S. government must first consult with the People’s Republic of China to determine if China will voluntarily limit its exports. If those consultations fail, the United States can restrict the growth in specific categories of textiles and apparel to 7.5 percent of the total for the previous year.

Through April 2005, the volume of U.S. imports from China has risen:

-- 364 percent in MMF shirts

-- 293 percent in non-knit shirts

-- 287 percent in MMF trousers

-- 78 percent in combed cotton yarn

The figures, compiled by the U.S. Office of Textiles and Apparel, show China’s impact on the U.S. retail market since worldwide textile quotas expired on Jan. 1 of this year.

Tantillo said Chinese manufacturers obviously benefit from China’s extremely low wage rates, but that those don’t tell the whole story of why China’s textile and apparel exports have gained a 70 percent share of the market in some categories.

“Unfair trade practices like export tax rebates, non-performing loans, currency manipulation and other subsidies fuels China's export surge,” he said. “Failure by the U.S. government to discourage these practices would make a mockery of America's free markets.”

The four latest cases to be accepted by CITA were part of 12 filed by the U.S. textile industry between October and December of last year. In late December, the U.S. Court of International Trade granted an injunction sought by the U.S. Association of Importers of Textiles and Apparel barring CITA from taking any further action on the so-called threat-based cases.

The Federal Court of Appeals in late April ruled that the CITA could resume its consideration of the filings. On May 13, CITA accepted the first three of the threat-based cases filed last fall, cases covering cotton knit shirts, cotton trousers and cotton and man-made fiber underwear.

The U.S. textile industry has six other safeguard cases pending, and Tantillo said more could be filed in coming weeks.

“The U.S. textile industry has been reviewing the data of U.S. imports from China in other categories,” he said. “Several of them are ripe for safeguard filings and the U.S. textile industry will act soon.”

In terms of volume through April, the latest safeguard petitions approved by CITA cover:

-- 1.1 percent of total U.S. textile and apparel imports from the world;

-- 4.1 percent of total U.S. textile and apparel imports from China;

-- 12.8 percent of U.S. imports from the world in the categories affected.

In terms of value through the first quarter of 2005, the latest safeguards cover:

-- 0.095 percent of the $380.85 billion in total U.S. imports;

-- 0.7 percent of the $51.03 billion in total imports from China;

-- 1.7 percent of the $21.05 billion in total U.S. textile and apparel imports;

-- 13.9 percent of the $2.6 billion in total imports in the individual categories affected;

-- 7.6 percent of the $4.77 billion in total U.S. textile and apparel imports from China, and;

-- $362 million in textile and apparel imports from China.

In 1995, the WTO began implementing a ten-year phase out of worldwide quotas on textile and apparel products. When China joined the WTO in 2002, it was allowed to join the quota phase out in lockstep, giving it a three-year transition period compared to 10 years for the rest of the world.

“China agreed to be subject to textile and clothing safeguards through the end of 2008 in return for receiving the reduced transition period,” said Tantillo. But Chinese officials have chastised U.S. and European officials for imposing limits on textile imports, calling the actions to slow the flood of cheap garments “unfair.”

China’s Commerce Minister Bo Xilai said the jump in Chinese shipments in the first four months of 2005 occurred because the United States and Europe were slow in lifting quotas prior to the expiration of all quotas in January. He accused the United States and the European Union of reneging on their agreements to phase out quotas.

“Once an agreement is reached everybody has to abide by their commitment; otherwise there is no point in negotiating rules,” he was quoted by the Associated Press as saying.


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