Importers Respond to Safeguard Appeal

USA-ITA filed a response with the U.S. Court of Appeals, defending its lawsuit that challenges federal authority to impose China safeguard quotas.

WASHINGTON — The U.S. Association of Importers of Textiles & Apparel, defending a lawsuit that challenges the government’s authority to impose certain quotas on China, argued in court papers that the statements of three top Bush administration officials were “irrelevant and improper.”

In a response filed with the U.S. Court of Appeals for the Federal Circuit, USA-ITA lawyers said the written remarks by Grant Aldonas, undersecretary for international trade at the Commerce Department; Josette Sheeran Shiner, deputy U.S. trade representative, and John B. Taylor, undersecretary for international affairs of the Treasury Department, should be stricken from the record on grounds they are an “irrelevant and improper presentation of new evidence on appeal.”

USA-ITA lawyers said the Court of International Trade in Manhattan, which is considering the suit, did not “abuse its discretion” in issuing a preliminary injunction barring the government from considering or accepting the threat-based China safeguard petitions.

Justice Department lawyers argued in the appeal that the trade court erred on several key issues in determining to impose an injunction. The government also has argued that USA-ITA does not have the right to challenge the government’s deliberations and the trade court does not have jurisdiction to consider the lawsuit. The government also said the federal interagency Committee for the Implementation of Textile Agreements is exempt from the procedural requirements of the federal Administrative Procedures Act because its decisions involve foreign policy.

The legal tug-of-war being played out in courtrooms in New York and Washington stems from an action brought by the USA-ITA, which sued five federal agencies in the Court of International Trade in Manhattan on Dec. 1. The group alleged that the government violated its own published regulations, as well as the Administrative Procedures Act, when it agreed to accept safeguard petitions based on the threat of market disruption because of expected surges of Chinese apparel and textile imports.

There are two pending decisions: the government’s motion to dismiss the entire lawsuit before the trade court, and  the government’s motion at the Court of Appeals to stay the injunction. At the center of the debate is a safeguard mechanism to which China agreed when it joined the World Trade Organization, which allows an importing nation to impose one-year quotas when it determines Chinese textiles and apparel exports are threatening to cause or are causing market disruption.

This story first appeared in the March 9, 2005 issue of WWD.  Subscribe Today.

A coalition of domestic textile, fiber, apparel and labor groups filed 12 safeguard petitions targeting $1.9 billion in Chinese imports for further quota restraints. The timing of the petitions and the lawsuit are linked to the elimination of global textile and apparel quotas on Jan. 1, which has stirred worldwide concern over China’s potential to monopolize production and displace millions of workers.

The preliminary injunction has suspended the government’s review process for two months and created uncertainty about the timing of safeguard quotas. The domestic coalition behind the safeguard petitions is concerned it may be forced to refile its threat-based petitions as actual market disruption cases if the court cases drag on too long. Imports from China have now been streaming in quota-free, but the trade data for January from the U.S. Commerce Department won’t be released until Friday.

USA-ITA lawyers, in the response filed Monday night, said: “The underlying action in this appeal involves a challenge to [CITA] invalid, unpublished and contradictory interpretation of its regulations. In the current appeal, the government challenges the trial court’s exercise of its discretion in granting a preliminary injunction that temporarily prevents CITA from applying its challenged interpretations, the application of which would irreparably harm USA-ITA and its members.”

The lawyers argued that the government is trying “to divert the attention of this Court from CITA’s responsibility to comply with its regulations and the Administrative Procedures Act.” They said the case is not about the “President’s ability to conduct foreign affairs or the interpretation of an international agreement; rather it is about CITA’s responsibility, triggered by the APA, to apply its regulations in a fair and nonarbitrary manner.”

In its response, USA-ITA lawyers said the trade court “properly fashioned the injunction,” by barring the government to self-initiate cases, “did not abuse its discretion in analyzing the irreparable harm factor,” “correctly” considered USA-ITA’s likelihood of success on the merits and did not wrongly analyze the balance of hardships factor or the public interest factor.