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Court lifts threat-based petitions

U.S. textile and apparel makers are applauding a U.S. Court of Appeals order lifting an injunction that barred the U.S. government from implementing so-called threat-based safeguard proceedings against Chinese imports.

The April 27 order by the U.S. Court of Appeals for the Federal Circuit in Washington appears to open the way for the U.S. Committee on the Implementation of Textile Agreements to accept or reject the threat-based safeguard petitions filed by textile and apparel manufacturing groups last November.

The petitions asked CITA to invoke the safeguard provisions of China's WTO accession agreement ahead of what the associations predicted would be a significant jump in China's textile and apparel shipments to the United States when worldwide textile import quotas expired last Jan. 1.

Attorneys for the United States Association of Importers of Textiles and Apparel sought an injunction blocking consideration of the threat-based petitions from the U.S. Court of International Trade in New York. That court issued the injunction on Dec. 23.

“This ruling vindicates the belief of the U.S. textile industry that the claims made by the textile and apparel importers were without merit,” said Auggie Tantillo, executive director of the American Manufacturing Trade Action Coalition, an umbrella group for a number of textile manufacturing and labor organizations.

“The U.S. government's release of the latest preliminary import data validates the claims made by the U.S. textile industry in its threat-based cases that China would surge into the U.S. market, causing irreparable damage.

While textile makers were obviously pleased by the decision, Tantillo said the industry paid a heavy price for the delays caused by the legal maneuvering.

Four-month delay

“The wrongly issued injunction prevented the U.S. government from considering our threat-based cases for four months, during which more than 17,000 U.S. textile and apparel manufacturing jobs and millions of dollars in business have been lost,” he said.

“Accordingly, it is imperative that the U.S. government stop the bleeding and approve our threat-based cases immediately.”

Tantillo said the organizations filing last year's threat-based petitions researched the new investments being made in China to expand its textile and apparel manufacturing capacity, Chinese production and export trends and Chinese productive capacity. They also looked at China's unfair trading practices and export performance.

“We also scrutinized independent studies on how the expiration of quotas on textile and apparel products will affect the U.S. market,” he noted. “The evidence collected led us to the conclusion that Chinese exports in the categories covered by the petitions would surge into the United States.”

Preliminary data compiled by the Commerce Department indicates that first quarter imports of Chinese-made cotton knit shirts and cotton and man-made fiber trousers rose 1,257 percent and 1,521 percent over the first quarter of 2004.

Imports in a number of other categories jumped from 120 percent to 331 percent, according to the figures.

“We are certainly disappointed by the appeals court's decision, but we knew going into this that it is very unusual for the courts to take the extreme step of stopping the government from proceeding while the merits of a lawsuit are still under consideration,” said Laura E. Jones, the U.S. Association of Importers of Textiles and Apparels' executive director.

“We have accomplished much already, demonstrating to the government that the importing and retailing community will stand up for its rights and will speak out when the administration tries to change the rules to suit political whims,” she said. “Our lawsuit continues. We have no doubt that we will prevail in the end and that the courts will rule that CITA has to follow its own rules and has to give importers and retailers a real opportunity to participate in the rulemaking process.”

AMTAC's Tantillo notes that it can take from 90 to 120 days for the Committee for the Implementation of Textile Agreements, an interagency group consisting of representatives from the Departments of State, Commerce, Labor and Treasury and the U.S. Trade Representative's office, to act on a safeguard petition unless CITA decides to expedite the proceedings.

Can cap growth

If the committee accepts a petition and is unable to resolve the issue with the Chinese government, it can cap the growth of Chinese imports in that category at 7.5 percent from the level of shipments in the previous year. The safeguard action expires one year after its implementation unless CITA agrees to extend it.

AMTAC and the other filers of the safeguard provisions are planning to ask the U.S. government to extend safeguards in five categories that expired last Dec. 24.

The Importers' Jones said that while the stay or lifting of the injunction was approved April 27, the appeals court is scheduled to hear the USA-ITA's case against threat-based petitions on May 5.

e-mail: [email protected]

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