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Comments on Safeguards Heat Trade-Debate Rift

Industry firms filed hundreds of pages of public comments on six of nine safeguard petitions that seek to curb imports on a range of Chinese goods.

WASHINGTON — The debate over free trade versus controlled trade has intensified as apparel, retail and textile firms filed hundreds of pages of public comments in response to six of nine safeguard petitions under review that seek to curb imports on a range of Chinese goods.

The responses on the first petition covering cotton trousers illustrate the explosive nature of the issue. Thirty-one respondents commented, including the Chinese government, Abercrombie & Fitch, Columbia Sportswear, Kellwood Co., Avondale Mills and Mount Vernon Mills.

China agreed to the safeguard mechanism when it joined the World Trade Organization in 2001. The safeguards are temporary, one-year quotas that an importing nation may impose on certain Chinese goods if it determines they are severely injuring or threatening to injure the domestic industries.

A coalition of textile, apparel and fiber groups and the union representing the industry has filed 12 safeguard petitions overall based on the threat of market disruption, which has caused a firestorm. The petitions target about $1.9 billion in imports from China.

The federal interagency Committee for the Implementation of Textile Agreements is to make determinations on the first set of safeguard cases in February. CITA must also respond by Wednesday to a lawsuit filed by the U.S. Association of Importers of Textiles & Apparel seeking an injunction to halt consideration of threat-based petitions.

Many industry executives said the petition covering cotton trousers will set the precedent for threat-based cases and may signal how the administration will treat the other petitions. The petition was filed by the American Manufacturing Trade Action Coalition, the National Council of Textile Organizations, The National Textile Association, SEAMS and UNITE HERE.

The petitioners asserted in the cotton trouser and man-made fiber trouser petitions that the decline in imports to the U.S. is because of the misclassification of millions of pairs of trousers as being made of linen, silk and ramie, which are not under quota, as well as the transshipment of goods through Hong Kong.

Chinese exports of cotton trousers to the U.S. were down 31 percent for the year-to-date through September and by 34 percent, or 930,000 dozen, in the same period, according to the Commerce Department.

The coalition alleges the Chinese mislabeled the trousers to circumvent quotas on cotton trousers set at 2.5 million dozen pairs and man-made fiber trousers set at 2.9 million pairs. Imports from China of silk, linen and ramie trousers increased more than 2,000 percent in less than four years, from 11 million pairs in 2001 to an annual rate of 229 million pairs for 2004.

“If simply 3.5 percent of Hong Kong’s cotton trousers are Chinese in origin and only 1.5 percent of [the silk, ramie and linen trouser category] are misclassified, then the Chinese cotton trouser ‘downturn’ disappears,” the petitioners stated in their comments.

Auggie Tantillo, executive director of AMTAC, said in an interview that it is “beyond comprehension” to believe such an increase in imports of silk and ramie trousers is legitimate.

Apparel executives fired back in their public comments.

“At worst, the implications regarding misclassification of these garments borders on libel,” said Wendy Wieland Martin, vice president for international trade at Kellwood Co., in her written public comments. “Since it is the major U.S. apparel companies, including Kellwood, who are the importers of these products, the implication is that we are falsifying legal claims to U.S. Customs & Border Protection. Our excellent reputation with CBP and the extraordinary scrutiny by that agency to assure that apparel is correctly classified and valued belies the unsubstantiated and irresponsible charges made by the petitioners.”

Carl K. Davis, vice president of corporate affairs for Columbia Sportswear, claimed in his comments that the petition is “fraught with inconsistencies and nonfactual information in an ineffective attempt to persuade [CITA] of the alleged threat of Chinese imports.”

“It utilizes inflammatory language such as ‘misclassification’ to describe completely legal imports of trousers made of materials other than cotton,” Davis said.