By  on March 17, 2005

WASHINGTON — The U.S. Justice Department cited new apparel and textile import statistics from China showing explosive growth in January in arguing for dismissal of a lawsuit and a temporary injunction barring it from reviewing, accepting or self-initiating China safeguard cases based on the threat of market disruption.

Government lawyers, who filed a reply in the U.S. Court of Appeals for the Federal Circuit Tuesday night, asked the court to dismiss a lawsuit, originally filed by importers in the U.S. Court of International Trade in Manhattan.

It was the government’s latest step in a legal drama playing out in courtrooms in Washington and New York stemming from the suit brought by the U.S. Association of Importers of Textiles & Apparel. The suit alleged that the government violated its own published regulations, as well as the Administrative Procedures Act, when it agreed to accept safeguard petitions based on the threat of market disruption as opposed to actual market disruption.

The CIT subsequently issued a preliminary injunction barring the government from considering threat-based safeguard petitions or self-initiating threat-based cases. The appeals court has scheduled oral arguments in the case for the week of May 2. A motion has been filed by the government to stay the injunction pending the appeal.

China agreed to a safeguard mechanism when it joined the World Trade Organization. The provision allows an importing nation to impose one-year quotas when it determines Chinese textiles and apparel exports are threatening to cause or are causing market disruption.

In the U.S., a coalition of U.S. textile, fiber, apparel and labor groups filed 12 safeguard petitions in October to preempt what they asserted would be surges in imports in the U.S. once quotas were lifted on Jan. 1. However, those petitions and the government’s review process have been halted by the preliminary injunction for the past two-and-a-half months.

In the meantime, apparel and textile exports from China flooded the U.S. market in January, prompting the coalition to ratchet up the pressure on the Bush administration this week to self-initiate on actual market disruption cases. U.S. textile groups, now poised to file actual market disruption cases with actual data, claim the fastest way to get relief is still with the 12 threat-based petitions, most of which had 30 to 45 days left in the review process before a final determination.In their brief, government lawyers pointed to the recent January import data released last week that revealed an increase of 47 percent in apparel imports from China, as compared with January 2004, including a 1,000 percent increase for two categories of cotton trousers.

“The official data shows an increase of over 500 percent for nine textile and apparel categories for which China is a major shipper, and an increase of over 100 percent for more than 30 percent of the 136 apparel categories,” lawyers said in their legal brief.

They also noted preliminary data from the Labor Department reflects “a significant loss of textile jobs during the first two months of 2005.”

“Accordingly, the data now available support the representation made by our declarants as to the nature of harms that the preliminary injunction would likely cause the United States and third parties such as domestic textile producers and textile workers,” the government said. “Absent the injunction, [the Committee for the Implementation of Textile Agreements] would have been able to continue to consider information as it became available and the threat-based requests might have evolved into actual market disruption situations, in which case CITA could have rendered a determination based upon either actual or threat.”

Government lawyers also argued strongly against the scope of the injunction, which prohibits the government from self-initiating cases, and claimed USA-ITA did not request such relief in the lawsuit. They also claimed USA-ITA’s argument that self-initiation is unlawful “lacks merit.”

In response to USA-ITA’s recent request to have declarations by senior administration officials stricken from the record, the government argued the declarations were “indisputably part of the trial court record” and “are properly before this Court.”

The government reiterated the argument made in its appeal that the trial court “erred” in its rulings in several areas, including barring the U.S. from self-initiating safeguards because USA-ITA did not request such relief, failing to provide notice to the government that the injunction might go beyond the scope of the lawsuit, failing to determine that USA-ITA was likely to succeed on the merits and providing “fundamentally flawed” analysis of irreparable harm and balance of harms.

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