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China Warns U.S. Over Safeguards

WASHINGTON — The Chinese government has sternly warned the Bush administration about the possibility of imposing safeguard limits on imports of cotton trousers and other products from China, calling such moves an effort “to extend the...

WASHINGTON — The Chinese government has sternly warned the Bush administration about the possibility of imposing safeguard limits on imports of cotton trousers and other products from China, calling such moves an effort “to extend the quota system under disguise.”

That claim came in the form of a sharply worded 55-page statement by the Chinese Ministry of Commerce, filed in response to the first of nine China safeguard petitions the U.S. has accepted for full review.

On Monday, interagency Committee for the Implementation of Textile Agreements agreed to review a petition concerning the import of Chinese wool trousers, bringing the number of total petitions it’s considering to nine. Final determinations on the controversial cases are due in February.

China agreed to a safeguard mechanism when it joined the World Trade Organization 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 — or threatening to injure — domestic industries.

A coalition of textile, apparel and fiber-producing groups and the union representing the industry has filed a total of 12 safeguard petitions, all based on the threat of market disruption, targeting about $1.9 billion in imports from China. The coalition said it is acting preemptively to prevent what it claims will be a monopoly by China once global apparel and textile quotas are eliminated on Jan.1.

The U.S. did not immediately respond to a request for comment on the Chinese statement.

China argued the requests by the U.S. coalition for safeguard action against textiles and apparel products “are based on speculation and conjecture.”

“The nature of such requests is to sabotage the integration of textiles and apparel products and to extend the quota system under disguise,” the Chinese government said. The author of the statement was not identified.

China also asserted that the U.S., by accepting threat-based petitions, which it claims have “patently violated the provisions of China’s accession agreement to the WTO,” has “encouraged and connived a small group of people to abuse the Safeguard Actions.”

“If the U.S. continues to ignore the facts and the WTO rules, the China-U.S. economic and trade relationship will be adversely affected,” the statement said.

This story first appeared in the December 7, 2004 issue of WWD.  Subscribe Today.

The Chinese also warned that it will take “necessary actions to protect the rights and interests that China shall be entitled to as a member of the WTO.”

Finally, the Chinese argued that legal requirements must be met to prove market disruption, including: Imports of textile and apparel products increasing rapidly and prices of the products in question must be substantially below prevailing prices for similar goods of comparable quality.