WTO RULES AGAINST U.S. ON COSTA RICAN QUOTA
Byline: Jim Ostroff
WASHINGTON — A World Trade Organization appellate panel has ruled the U.S. erred when it unilaterally imposed import restraints retroactively on Costa Rican underwear.
In yet another victory for Costa Rica in the world trade body, the panel held the U.S. was wrong when it announced on June 23, 1995, that it was clamping quotas on Costa Rican underwear imports retroactive to March 27 — the date the U.S. first announced its intention to restrain these imports. In effect, the panel held that countries must follow rules that call for 90-day consultation periods before quotas can be imposed. Only then, in the absence of an agreement, can a country impose quotas, but not retroactively, it held.
The panel’s ruling was made Feb. 7 in Geneva. Copies of its decision were not available here — only summaries provided by the Office of the U.S. Trade Representative. Nonetheless, its ruling was the third straight on the issue in favor of Costa Rica and against the U.S. and its Committee for the Implementation of Textile Agreements, which first issued the controversial quota, termed a call.
Previously, other WTO trade adjudication panels ruled the U.S. had failed to prove imports of Costa Rican underwear had caused serious damage to U.S. manufacturers or could have threatened serious damage. A WTO trade dispute panel last year ordered the U.S. to withdraw the call, but this was not done pending the outcome of the appellate panel ruling on the retroactivity question.
CITA has yet to meet on the issue of withdrawing this call, Troy Cribb, CITA’s chairman, said Monday.
The latest ruling likely ends a two-year controversy that divided elements of the domestic apparel industry. Numerous U.S. makers chided CITA’s decision to impose quotas on cotton and man-made fiber underwear imports from Costa Rica, as well as El Salvador, the Dominican Republic and Honduras, arguing most of these imports were made in these countries using U.S. cut-and-formed fabrics under the 807(A) program by U.S. firms that then imported the finished goods. Hence, these firms contended, they could not be hurting themselves by importing this underwear.
Several U.S. apparel makers claimed the calls were made in fact to benefit a few large, vertically integrated U.S.-based underwear makers. Rita Hayes, who then was the CITA chairman, vehemently denied such charges.
Last week, Hayes, now the U.S.’s chief textile negotiator and textile ambassador, issued a statement on the latest WTO ruling. “Although the panel found that in this particular case [CITA] did not adequately document the existence of serious damage caused by imports, this case involved a determination made almost two years ago at the beginning of the WTO regime.”
Hayes added the U.S. was “disappointed” with the panel’s finding “with respect to the effective date of temporary safeguard measures.”
“However,” she added, “we are pleased [the panel] recognized that the problem of import surges is a legitimate one and that we retain authority to impose safeguard measures against such surges in the future.”
In the decision handed down Friday, the panel noted that Article 6.11 of the WTO’s Agreement on Clothing and Textiles permits a nation to unilaterally impose quotas within days of giving notice of its intention to do so, if its industry is in immediate danger of harm. This section does not permit retroactive calls, however.
In response to the panel’s findings, Robert Hall, the National Retail Federation’s vice president and trade counsel, said the retailers’ group “applauds what the [panel] has done…and hopes that CITA will pay attention to the higher standards it must meet in making any future calls.”