WASHINGTON — The Bush administration is walking a fine line between China and U.S. industry groups, and the next step it takes could define trade relations for years to come.

All eyes are on a multiagency group that could determine as early as mid-November whether the U.S. government will place quotas on Chinese imports of bras, robes, dressing gowns and knit fabrics. Opponents and advocates of what would be an unprecedented action against China reached an important deadline last week as the period for public comment came to a close.

The Chinese government, U.S. trade associations and individual textile mills staked out their positions on the public record, and now the U.S. must review the comments and decide whether it will invoke a special textile safeguard against China. A coalition of textile and fiber groups filed the safeguard petitions in an effort to pressure the Bush administration to curb imports from China and live up to its commitments to minimize the impact of future trade deals on the textile industry.

This is uncharted territory for the U.S., which negotiated a special deal for China’s entry into the World Trade Organization. Under the textile safeguard, if the U.S. determines there has been market disruption, it must consult with China and can place quotas on an import category for up to a year. The quota will expire in a year unless it is renewed.

The decision also comes at a time when the U.S. and China are touting strong trade and political ties, and a move on the part of the U.S. to protect any industry could strain relations. Foreign policy matters could also come into play, as the U.S. weighs whether it will risk damaging relations with China as it tries to find allies in dealing with North Korea, which is pursuing a nuclear weapons program.

However, the Bush administration is also under pressure from within its own party to deploy emergency quotas on the three Chinese import categories, the first of what’s expected to be many requests from domestic mills. GOP lawmakers from textile-producing states in the South have made the safeguard issue a litmus test for the President’s commitment to the flagging textile sector.

Sen. Lindsey Graham (R., S.C.), said he plans to give the administration until year’s end to act before deciding whether the White House is being textile industry friendly. “I hope the administration will respond before it’s too late,” Graham said Tuesday in the Capitol.China has already voiced strong opposition to the textile safeguard petitions in its comments filed with the Committee for the Implementation of Textile Agreements — the multiagency group charged with action on the safeguards.

“If the export of Chinese textile products to the U.S. is to be subject again to import restrictions, it will be a heavy blow on the Chinese textile industry and its related industries and tens of millions of people will lose the means to make the ends meet,” stated the Chinese Ministry of Commerce in its public comments. “Any measure meant to restrict imports of Chinese textile products will only serve to impair the smooth development of Sino-U.S. and economic relations and the growth of bilateral trade.”

The Chinese government also said the petitions fail to demonstrate the causal link between injury of the U.S. domestic industry and imports from China, and do not distinguish the difference between the impact of Chinese imports and the impact of imports from other countries on the U.S. industry.

On the other hand, Augustine Tantillo, Washington coordinator of the American Manufacturing Trade Action Coalition, which did not file a public comment, said, “We are in a deflationary cycle because of the predatory practices of China, and other countries are participating in that. As the quotas come off, China recognizes that a market can go to whoever will squeeze a competitor, whether it is a U.S. producer or other foreign producer, out of business.”

Importers and retailers filed lengthy public comments opposing safeguard actions on bras and robes and dressing gowns. The U.S. Association of Importers of Textiles & Apparel argued in its comments that the domestic industry has not proven market disruption or the connection between imports from China and the “alleged harm in the U.S. or Western Hemisphere.”

“To the contrary, the trends present since 1995 simply have continued,” the USA-ITA stated.

The thrust of the USA-ITA’s argument centers on the premise that many factors have contributed to the decline in U.S. textile jobs and production. For example, USA-ITA claimed domestic production of bras was on the decline long before quotas were lifted on China. In addition, a shift in bra production to the Caribbean and Central America under a new U.S. trade pact offering preferential benefits also eroded U.S. production.“At the end of the day, companies made a conscious economic decision to move to China,” said Kevin Burke, president of the American Apparel and Footwear Association. “If a safeguard petition on these particular garments is agreed to by our government, these companies will leave China and find other sources, most likely in Southeast Asia, to produce the same products.”

But Cass Johnson, interim president of the American Textile Manufacturers Institute, said, “We are arguing that China is clearly causing market disruption, and if you look over the last year with U.S. production falling, the overwhelming majority of the increase in imports and market share has been from China. When a country goes from a 3 percent market share in [man-made fiber bras] in 2001 to a 38 percent market share [in July], that’s disruptive and that disrupts the normal development of trade.

“Mexico and the Caribbean Basin had a combined share of 50 percent [of bra production] a couple of years ago,” Johnson said. “Now they are down to 27 percent and that is almost entirely at the hands of China. If China is restrained, the logical assumption is that production will come back, but we have to wait and see.”

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