WASHINGTON — The U.S. Justice Department, seeking dismissal of a lawsuit filed by importers challenging the government’s authority over China safeguard petitions based on the threat of market disruption, said in court papers “there is no constitutional right to import.”
The justice department, representing five federal agencies, responded in a 69-page motion filed late Wednesday to importers who want an injunction thwarting action by the Bush administration to limit the anticipated onslaught of Chinese imports once global apparel and textile quotas are lifted on Jan. 1.
The U.S. Association of Importers of Textiles & Apparel filed the suit Dec. 1 in the U.S. Court of International Trade in Manhattan seeking to stop further review and acceptance of China safeguard petitions intended to continue quotas. It also questioned the right of the interagency Committee for the Implementation of Textile Agreements, known as CITA, to control imports in that way.
The justice department’s strongly worded brief said the court lacks jurisdiction to consider USA-ITA’s complaint because the safeguard petitions under review have not been decided by the CITA. It said USA-ITA does not have the right to challenge CITA’s deliberations and has not exhausted the administrative remedies provided by CITA to challenge the safeguard petitions.
Government lawyers told the court the importer group failed to “state a claim for which relief may be granted,” and said CITA is exempt from the procedural requirements of the Administrative Procedures Act and is therefore not in violation of the act, as charged by the import group, and that CITA has not moved beyond its delegated authority.
In response to USA-ITA’s motion for a preliminary injunction, the government argued:
USA-ITA cannot establish importers have “undue hardship sufficient to justify interference with a continuing interagency process.”
The public — in particular textile and apparel manufacturers — would be harmed by an injunction halting CITA’s reviews.
USA-ITA is unlikely to prevail upon the merits of the case.
The government argued that China’s World Trade Organization (for related story, see page 14) accession agreement contains provisions that allow for member countries, including the U.S., to take safeguard actions against imports of Chinese apparel and textile products based upon the “existence or threat of’’ disruption of the market.“Accordingly, CITA clearly possesses authority to entertain threat-based requests regarding the importation of textiles and textile products, as contemplated in the Accession Agreement,” the government said.
Oral arguments in the case are to begin Monday. How quickly the court renders a decision is critical for importers and retailers who oppose the safeguard quotas, and textile, apparel and fiber producers who claim the safeguards are necessary because China will decimate their industry in a short period of time without them.
The 30-year system of quotas governing global apparel and textile commerce will be lifted on Jan. 1 based on an agreement among the 148 WTO member nations. At the center of the debate is the safeguard mechanism China agreed to when it joined the WTO in 2001. The safeguards are essentially temporary quotas that an importing nation can impose on certain Chinese goods if it determines they are severely injuring domestic industries. They can be imposed for one year at a time through 2008, when the provision expires.
CITA triggered protests from retailers and importers in September when it announced it would begin accepting threat-based petitions. The decision was a victory for a coalition of textile, apparel and fiber trade associations and the industry’s main labor union, which proceeded to file 12 China safeguard petitions with CITA over the next three months, targeting some $1.9 billion in imports from China for further quota restraints.
CITA has accepted for full review 11 petitions and is set to rule on them in February. Coincidentally, CITA accepted a petition Thursday requesting that quotas on dressing gowns and robes from China be reapplied for a second year.
“Even assuming for the sake of argument that there is any discrepancy between the [government’s] procedures and the Accession Agreement, the procedures cannot trump the rights and obligations of the member countries under the Accession Agreement,” the government argued.
“Indeed, USA-ITA’s complaint might be entirely moot if CITA ultimately decides not to impose the safeguards requested. The potential harm to USA-ITA does not outweigh the disruption to the government’s legitimate interest in enforcing a negotiated provision of an international agreement.”
Five textile companies — Mount Vernon Mills, Avondale Mills, Glen Raven Mills, Inman Mills and Hamrick & Musgrove Mills — filed a brief Thursday in opposition to the USA-ITA’s motion for a preliminary injunction.“The investigation by CITA will not alter the current status quo, but rather will provide a fair and appropriate process for CITA to ensure that the [five textile companies represented in the legal brief] and similarly situated textile and apparel producers in the United States are not unduly injured by the vast, impending change in the international textile and apparel trade,” the brief said.
They noted that U.S. textile and apparel companies would “suffer irreparable harm, including job losses and plant closings, if the proposed injunctions are granted and CITA is not allowed to continue its investigation.”
Auggie Tantillo, executive director of the American Manufacturing Trade Action Coalition and former deputy assistant secretary of Commerce and chair of CITA, said for the court to rule in favor of the importers would be a “monumental decision” and is unlikely.
“It would undermine the way the government administers a lot of its international trade agreements,” he said. “It’s really a stretch to challenge the government’s authority to do that, unless the government’s views are so diametrically opposed to what the language [of the international agreement] literally says.”
Jonathan Fee, a customs and international trade lawyer in Washington, claimed he supports the USA-ITA case, but said it has an uphill battle.
“I’d say the issue is ripe because of that first step taken by CITA in accepting the petitions for review,” Fee said. “That set the wheels in motion and if the court doesn’t stop it, importers will be harmed.”
He supported USA-ITA’s contention that the government has acted inconsistently with its own rules, “which makes everybody suspicious.” But he conceded the government has a law that supports its defense, adding, “My heart is with the importers in this case, but my head tells me they are going to have a tough time.”
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