WASHINGTON — U.S. trade officials on Monday were ready to set limits on Vietnamese textiles and apparel while at the same time launching an investigation into whether the country violated U.S. trade laws by funneling Chinese apparel and textiles to the U.S., sources.said,

Funneled apparel and textiles from China, which is controlled by quotas, would inflate Vietnam’s import numbers and allow the country to negotiate from higher trade levels, sources said.

Sources said the U.S. assured them in a Monday night briefing that a clause was added to the as-yet-unsigned agreement, which will allow the U.S. to reduce the base levels in categories where U.S. Customs officials determine that numbers were inflated due to transshipments from China.

But another industry source claimed trade officials said the clause was not included in the agreement.

"There is nothing to indicate that Vietnam had anything to do with alleged transshipments involving China," the industry official said. "There is no indication the goods touched Vietnam, much less the ports or factories."

Domestic groups questioned why the U.S. did not bring the possibility of transshipments to light before negotiations began.

Meanwhile, the U.S. is seeking to impose quotas on 38 apparel and textile categories and has offered to set the limits on trade levels for the year ending Feb. 28, 2003, plus an additional 10 percent per category, sources who were briefed said.

The two sides have agreed to cap Vietnam’s textile and apparel exports at roughly $1.7 billion, according to press reports.

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