By  on July 10, 2007

WASHINGTON — Lobbyists for importers encouraged the Commerce Department last week to recognize some Chinese producers as market-oriented enterprises, a distinction textile lobbyists are resisting because it could lead to lower duties in antidumping trade cases.

Antidumping laws and policies, which are intended to offset the impact of unfairly priced imports, are turning into a key front in the battle between U.S. textile producers and apparel importers.

Domestic textile companies cannot currently bring antidumping or countervailing duty cases against apparel imports, but they hope to gain broader access to such trade remedies by the time quotas on 34 types of Chinese-made goods, including cotton trousers and sweaters, expire at the end of 2008.

Headed by assistant secretary David Spooner, the Commerce Department's International Trade Administration asked the industry to weigh in on whether the department should consider granting market-economy treatment to some Chinese firms and what standard should be used.

"Although the limits the [Chinese] government has placed on the role of market forces are not consistent with recognition of China as a market economy under the U.S. antidumping law, the evolution in China's economy nevertheless has led the department to conclude that it is possible to determine whether the state has bestowed a benefit upon a Chinese producer," said Spooner, in his call for comments in May.

The deliberations come after Commerce's decision this spring to accept a countervailing duty case on glossy paper from China, reversing a 23-year-old policy against using such trade remedies on imports from non-market economies.

Cass Johnson, president of the National Council of Textile Organizations, warned that Chinese apparel producers received a broad array of subsidies and that opening a "loophole" for certain companies to receive market status could hurt domestic manufacturers.

"NCTO believes that such a proposal is ill-conceived and would dramatically weaken our existing trade laws, trade laws upon which the domestic textile industry will be forced to rely once the U.S.-China textile bilateral agreement expires on Jan. 1, 2009," wrote Johnson in his comments.

Importers, on the other hand, saw promise that the idea offered a multitude of suggestions that, if adopted, might allow Chinese producers not directly tied to the government there to get lower duty rates in antidumping cases."J.C. Penney firmly believes that the department should adopt an approach that enables individual companies to control their fate by concentrating on criteria that are, to a great extent, within the company's ability to control," Hunton & Williams attorney Douglas Heffner wrote in comments filed on behalf of the retailer. "Such an approach would encourage Chinese companies to fully adopt market business practices."

Limiting the chance of a dramatic spike in prices as the result of an antiduty decision could help maintain stability in the sourcing market.

"They're opening a door for multinational companies that have made investments in China and Vietnam to continue to serve their customers and not have to make their investment decisions based on antidumping policy in the U.S.," said Brenda Jacobs, counsel for the U.S. Association of Importers of Textiles & Apparel, which also filed comments to Commerce.

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