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Importer Association Sues U.S. Government

USA-ITA filed suit against five government agencies seeking an injunction against further review of threat-based China safeguard petitions.

WASHINGTON — The battle over curbing Chinese imports reached a new level Wednesday when the U.S. Association of Importers of Textiles & Apparel sued five government agencies to stop further review of China safeguard petitions based on the threat of market disruption.

The USA-ITA suit, filed in the U.S. Court of International Trade in Manhattan, seeks an injunction to block the Committee for the Implementation of Textile Agreements from considering seven safeguard petitions it accepted for review and put the brakes on new petitions. The group is seeking to halt CITA from accepting threat-based petitions or those involving products under quota without publishing new rules, interpretations and/or policies. CITA wants to invalidate the government’s current rules allowing threat-based petitions.

CITA, a federal interagency group, is accepting requests based on “anecdotal bits and pieces of information,” in violation of importers’ due process rights under the Administrative Procedures Act, USA-ITA said in a statement.

“Unless the court stops this unfair process, USA-ITA members will be forced to make irreversible decisions and take irreversible actions, at incalculable cost, to reduce their exposure to the risk of an embargo created by the imposition of highly restrictive, illegal safeguard measures and to ensure that they have merchandise to sell,” Laura Jones, executive director of the USA-ITA, said in the statement.

The government has 10 days to respond to the complaint.

“The language negotiated in China’s WTO Accession Agreement is clear that a petitioner may file a request for safeguard action based on market disruption or threat of market disruption,’’ a Commerce Department spokeswoman said in a statement. “The procedures CITA uses in deciding whether to consider a safeguard request do not preclude threat petitions. The government has ample authority under U.S. law to take the safeguard actions requested by the petitioners.”

CITA, chaired by the Commerce Department and also consisting of senior officials from the State, Labor and Treasury Departments, and the Office of the U.S. Trade Representative, is responsible for considering the China textile safeguard petitions and implementing U.S. textile trade policy.

At the center of the debate is the safeguard mechanism China agreed to when it joined the World Trade Organization in 2001. The safeguards are essentially temporary quotas that an importing nation may 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.

This story first appeared in the December 2, 2004 issue of WWD.  Subscribe Today.

Nations have the option of negotiating with China to determine a mutually acceptable limit on imports of certain items, or, if China fails to agree, the importing nation can cap China’s shipments at a level of 6 percent for wool and 7.5 percent for other products higher than they had been the previous year.

A coalition of textile, apparel and fiber trade associations and the industry’s main labor union have filed a total of 12 China safeguard petitions — including one reapplication on Wednesday for bras — with CITA in the last three months, targeting some $1.9 billion in imports from China for further quota restraints. CITA coincidentally accepted for review an eighth threat-based petition covering certain synthetic filament fabric imports from China on Wednesday and is set to make a final determination on whether to impose quotas on the products, ranging from cotton trousers to cotton and man-made fiber shirts, in early February.

The heart of the matter is whether CITA’s existing safeguard procedures allow for the filing of threat-based petitions. Importers and retailers argue they don’t, but the government has said they do.

Cass Johnson, president of the National Council of Textile Organizations, a member of the coalition supporting the petitions, said, “Those guidelines were vetted through the Congress and through the interagency process two years ago. For them now to suddenly say these procedures aren’t valid, as we’re dealing with the China safeguard petitions, smacks of a desperate attempt to derail the process. I think what USA-ITA is worried about is these are strong cases and the facts are on our side.”

Auggie Tantillo, executive director of the American Manufacturing Trade Action Coalition, another coalition member, noted in a statement that China’s import market share in the U.S. in the apparel categories released from quota in 2002 has jumped to 72 percent from 9 percent.

“The policy question facing us is not whether China will cripple the U.S. textile and clothing industry through the use of unfair trade practices, but whether the U.S. government is willing to prevent that crippling damage from happening,” Tantillo said.

Mark Levinson, chief economist at coalition member UNITE HERE, said CITA didn’t make the rule, but is implementing it based on China’s accession agreement. Levinson said USA-ITA is “trying to find a backhand way to undermine the agreement and stop the petitions.”