WASHINGTON — A New York federal district court judge, in a stunning ruling on the eve of global quota elimination, ordered the Bush administration to temporarily stop reviewing several safeguard petitions seeking to curb Chinese apparel and textile imports early this year.
Senior Judge Richard W. Goldberg, of the U.S. Court of International Trade, issued a preliminary injunction late Thursday and handed a procedural victory to the U.S. Association of Importers of Textiles and Apparel, which filed a lawsuit against five government agencies on Dec.1 to strike down further review and acceptance of China safeguard petitions based on the threat of market disruption. Goldberg’s ruling temporarily bars the Bush administration from accepting new threat-based petitions or from further reviewing the pending threat-based petitions filed by a coalition of U.S. textile, apparel and fiber producers and UNITE HERE.
The coalition has asked the government to invoke the safeguard quotas on China to help save U.S. textile and apparel jobs.
Global textile and apparel quotas, which have controlled trade for over 30 years, expired on Saturday, and that monumental change in international trade rules has stirred up a firestorm of controversy over China’s potential to monopolize production and displace millions of workers around the globe.
The 148 nations of the WTO dropped their quotas on Saturday but China remains subject to an agreed upon safeguard mechanism — temporary quotas — through 2008 in categories where importing nations determine its shipments have caused or threaten to cause market disruption.
The Committee for the Implementation of Textile Agreements, comprised of the five agencies named in the lawsuit, was set to issue final rulings on 12 threat-based cases targeting $1.9 billion in Chinese imports in early February, but Goldberg’s ruling throws the timing of the safeguard cases and the government’s authority over threat-based cases into question. Goldberg did not enjoin the government from accepting and reviewing cases based on actual market disruption.
It is unclear whether the government, which was closed on Friday in observance of the New Year’s holiday, will file an appeal to the preliminary injunction but industry sources expect an appeal.
In his ruling, Goldberg said USA-ITA has raised “serious and difficult questions” about whether the government has the legal authority to make a preemptive strike against imports from China.
This story first appeared in the January 3, 2005 issue of WWD. Subscribe Today.
The judge also said the USA-ITA prevailed in its argument for a temporary injunction by showing its members have been irreparably injured, that “the balance of hardship on all the parties favors the petitioner” and that there is a likelihood the association will succeed on the merits of the broader lawsuit.
“This is a real recognition that we have presented very serious questions,” said Brenda Jacobs, counsel for USA-ITA. “Companies have been hurt and continue to be hurt by CITA’s ad-hoc decision-making process.”
She said the ruling “reinforces the strength of our case and shows we have a credible case.”
Government lawyers argued in legal briefs the court lacks jurisdiction to consider USA-ITA’s complaint because the safeguard petitions under review have not been decided by CITA. They also argued CITA is exempt from the Administrative Procedures Act and is not in violation of the act and has not moved beyond its delegated authority.
Meanwhile, the court’s action could give China an opportunity to substantially increase imports this month and in turn further hurt the U.S. textile industry, executives claimed.
Auggie Tantillo, executive director of the American Manufacturing Trade Action Coalition, said; “This is a rather dramatic turn of events that will place hundreds of thousands of U.S. textile workers’ jobs in jeopardy.”
Cass Johnson, president of the National Council of Textile Organizations, said in a statement: “In weighing whether importers and retailers may see their profits reduced because of a risky business sourcing strategy, or whether hundreds of thousands of jobs in the U.S. should be lost, NCTO believes that the Court will find that the government has acted in an appropriate manner.”