By  on February 15, 2005

WASHINGTON — The U.S. government’s China safeguard review has been on ice for six weeks, and the fallout from a federal court’s temporary injunction is still largely unknown.

Domestic textile producers are concerned the delay in the process has already allowed unrestrained imports from China to flood the market, while U.S. importers claim they have a little breathing room but are concerned about safeguard quotas in the second half of the year.

The industry’s anxiety stems from a legal battle over whether the government has the authority to impose limits on Chinese textile and apparel imports, which has prompted widespread speculation on how soon Chinese safeguards will be imposed.

Companies are planning their business strategies based on the assumption safeguards will be applied at some point this year. The only question is when they will be imposed, according to both opponents and supporters of the temporary quotas.

The big question fueling panic in industries from Guatemala to Lesotho this year is whether China will quickly move to dominate global textile and apparel trade, now that quotas have been lifted among all World Trade Organization member countries.

China agreed to the safeguard provision, or temporary quotas, when it joined the WTO. Under the agreement, an importing nation can impose one-year quotas on Chinese apparel and textile categories through 2008 when it determines they have caused or threaten to cause market disruption.

In the U.S., a coalition of textile, fiber and some apparel producers, as well as the union UNITE HERE, rushed to use the safeguard mechanism in October in advance of the elimination of the 30-year-old quota system and filed 12 petitions targeting some $1.9 billion in Chinese imports for further quota restraints.

The federal interagency Committee for the Implementation of Textile Agreements, which oversees the safeguard petitions, was set to make a final determination on the first of the 12 threat-based petitions on Feb. 1. If the government had approved the first China safeguard petition covering cotton trousers, quotas could have been imposed in February.

However, the U.S. Association of Importers of Textiles & Apparel thwarted the government’s safeguard review process when it filed the lawsuit and won a temporary injunction from the U.S. Court of International Trade at the end of December.

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