WASHINGTON — Flexing its muscles in the World Trade Organization, China is challenging U.S. programs that offer duty-free treatment to imports from certain African, Caribbean and Andean countries.

The preference programs restrict the use of fabrics from countries that aren’t part of the agreements.

Last year, the U.S. submitted requests for WTO waivers for the African Growth & Opportunity Act, the Caribbean Basin Economic Recovery Act and the Andean Trade Preference Act. Without waivers, the programs could be challenged before a WTO dispute panel and likely found to be in breach of global trade rules, according to trade experts.

“A few members, including China, have raised questions regarding the detailed operations of these arrangements and are not yet prepared to join a consensus to approve the waiver requests, so consultations will continue,” said a spokeswoman for the U.S. Trade Representative’s office.

“China raised questions to some of the preferential origin requirements,” she said. “These requirements are meant to ensure that the benefits of these preferential programs go to the beneficiary countries and not to other countries. No WTO member has take any action or suggested that it is contemplating any action that would endanger the benefits provided under AGOA or other programs.”

China raised its objections at a closed-door meeting in Geneva this month and said the U.S. preference programs should be changed so the countries that take part in them can use fabrics from around the world, said a WTO trade diplomat.

Sun Zhenyu, China’s WTO ambassador, told delegates the programs favor U.S. producers and suggested that Beijing would like any WTO waiver decision to include an assurance that the U.S. will modify the rules of the programs to allow more foreign fabrics and yarns.

This story first appeared in the March 21, 2006 issue of WWD. Subscribe Today.

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