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Justice Dept. to Appeal Safeguard Injunction

The Justice Department is appealing a preliminary injunction from the U.S. Court of International Trade halting its review of China safeguard petitions.

WASHINGTON — The U.S. Justice Department said Wednesday it will appeal a preliminary injunction issued by the U.S. Court of International Trade, as the legal battle intensified over whether the government has the authority to impose limits on Chinese textiles and apparel imports.

Ending nearly four weeks of speculation, Justice Department lawyers filed a notice of intent to appeal with the CIT in Manhattan. The appeal seeks to overturn the injunction imposed on Dec. 30 barring the government from accepting or reviewing a slew of China safeguard petitions that are based on the threat of market disruption.

“We are trying to figure out what the deadline [for the actual appeal] is once you file a notice of appeal with the CIT,” said a spokesman for the Justice Department. “We think it [the deadline] may be 30 days, but I have a feeling it will be far sooner than that. It may come quickly.”

Global textile and apparel quotas, which had controlled trade for more than   30 years, expired on Jan. 1, and that monumental change in international trade rules stirred up a firestorm of controversy over China’s potential to monopolize production and displace millions of workers around the globe.

China remains subject to an agreed-upon safeguard or temporary quotas through 2008 in categories where importing nations determine its shipments have caused or threaten to cause market disruption. A coalition of textile, fiber and some apparel producers, as well as the union UNITE HERE, seized on the safeguard mechanism in October and filed 12 petitions targeting some $1.9 billion in Chinese imports for further quota restraints.

In response, the U.S. Association of Importers of Textiles & Apparel took the dramatic step of suing five federal agencies on Dec. 1 in federal court, claiming the government violated its own published regulations and the Administrative Procedures Act, when it agreed to accept safeguard petitions based on the threat of disruption as opposed to actual harm.

The government’s appeal is expected to be filed with the Federal Circuit Court of Appeals in Washington. Separately, the government has until Feb. 7 to reply to USA-ITA’s opposition to its motion to dismiss the case with the CIT.

“There had been indications the government was going to appeal,” said Julia Hughes, vice president of international trade at the USA-ITA. “We still believe we have a very strong case and we will support that case through the appeals process.”

Auggie Tantillo, executive director of the American Manufacturing Trade Action Coalition, one of the associations filing the China safeguard petitions, said, “Clearly, the industry deserves the right…to have access to all of the alternatives available under the accession terms of the agreement. It’s ridiculous for those viable options to be denied us or even held up on a temporary basis.”

U.S. textile association executives participating in a two-day international summit in the nation’s capital, which ends today, said they were considering their options regarding the suspended China safeguard petitions. They said if the delay in the court case and appeals process dragged on, they would move quickly to file new petitions based on market disruption if they could get “real-time” import data from the Commerce Department. Commerce’s trade data lags by a month and a half.

Association executives attending the third summit of the Global Alliance for Fair Textile Trade, comprised of 96 trade groups from 54 countries, said they planned to meet with officials from Commerce, Customs, State, Treasury and the Office of the U.S. Trade Representative to discuss a variety of issues, although the pending court case was off limits for discussion.

Kiran Prakash Saakh, president of the Garment Association of Nepal, created an awkward moment at the GAFFT summit when he called for duty-free access to the U.S. and European Union for least-developed countries — a concept the U.S. textile industry vehemently opposes because it could lead to further domestic job losses.

GAFFT is calling for the governments of the U.S., EU and Canada to implement the China safeguards immediately. It wants then to ask the WTO to undertake an “urgent” review of the impact of quota elimination and an analysis of market distorting practices that places apparel trade in one or two countries such as China and India, implore the WTO to develop a permanent mechanism as part of the current round of global trade talks to prevent the textile and apparel sectors around the world from “being monopolized” and ask other governments to support a proposal by several developing countries for the WTO to monitor and address the economic impact of the quota phaseout.

In addition, the group seeks support of a proposal from Turkey calling for a permanent safeguard mechanism and asked the WTO to include a safeguard mechanism for Vietnam, which is negotiating an accession package to become a member of the global trade body.