WASHINGTON — Following up on its promise, a coalition of textile and apparel industry groups that are pressuring the White House to curb imports from China filed four more safeguard petitions on Wednesday.

At the same time, tensions over the petitions flared as some coalition executives expressed concern over a statement made by a Commerce Department official regarding examples of some of the things the government might look for in the petitions.

The American Manufacturing Trade Action Coalition, National Council of Textile Organizations, National Cotton Council, SEAMS, American Fiber Manufacturers Association and UNITE HERE are targeting some $1.96 billion in imports from China for continued quota restraints in an expected wave of 13 petitions covering 21 categories.

On Wednesday, the coalition targeted eight apparel categories in four petitions. They are: men’s and women’s man-made fiber knit shirts, woven cotton and man-made fiber shirts, men’s and women’s cotton knit shirts and men’s and women’s man-made fiber trousers. The combined import value of the eight categories was $818.9 million in 2003.

The interagency Committee for the Implementation of Textile Agreements has 15 business days to review the petitions and determine whether they meet the merits for a full review. The due date for a determination on the four petitions in the initial stage is Nov. 3 — a day after the presidential and Congressional elections.

The filings on Wednesday bring the total number of petitions registered with the government to five. Some members of the coalition filed the first petition Friday against Chinese imports of men’s and women’s cotton trousers.

Meanwhile, industry sources said they were concerned about a Commerce official’s statements regarding what constitutes “hard evidence” in terms of the criteria the government is looking for in the petitions. In a WWD story Tuesday, a Commerce official, who requested anonymity, said the government is looking for “hard evidence” as opposed to “anecdotal” evidence in its petitions.

Among the examples cited by the official were: showing excess capacity in China that is not currently being used but is expected to go into production at the beginning of the year, stockpiling articles under quota with the intent to ship as soon as quotas come off and a significant investment in recent months or years, particularly in the types of textile and apparel production in the petitions.

This story first appeared in the October 14, 2004 issue of WWD. Subscribe Today.

The Commerce official, reached Wednesday, would not elaborate further on possible samples of criteria the government might want in the petitions, but noted the examples given Tuesday are the “kind of concrete, hard, clear evidence we will be looking for.”

“By no means are those three examples the only types of things we are looking for,” the official added. “But the evidence cannot simply be anecdotal.”

The industry coalition provided information on Chinese investment in the textile and apparel sector, as well as an enormous body of evidence to argue the threat of market disruption, industry officials said.

“Our cases do not contain anecdotal evidence,” said Auggie Tantillo, executive director of the American Manufacturing Trade Action Coalition. “They contain hard evidence and the best evidence that is available from the Chinese, the World Trade Organization, the United Nations, the U.S. government and any other entity that collects data on investment, production and export trends. We believe our petitions will stand the intense scrutiny of the U.S. government.”

The coalition is entering unchartered territory with the threat-based petitions, putting the Bush administration to a real test to make determinations on potential threat as opposed to actual market disruption. Retail and importing associations have vigorously opposed the concept of threat-based petitions and are pressuring the administration to publish its procedures or guidelines for threat-based petitions.

The National Retail Federation, Retail Industry Leaders Association, U.S. Association of Importers of Textiles & Apparel and the American Apparel & Footwear Association jointly signed and sent a letter to Jim Leonard, deputy assistant secretary at Commerce and chairman of CITA, and four other CITA members late Wednesday asking it to refrain from accepting any more China safeguard petitions or reviewing any that have been filed until new guidelines are published for threat-based petitions.

In New York on Wednesday, U.S.A.-ITA held a seminar on the potential for safeguard quotas being imposed, advising importers on how to keep their supply-chain options.

“We need to get through first-quarter and second-quarter 2005 to see how this is all playing out,” said Julia Hughes, the group’s Washington vice president. In the meantime, she said importers may want to “limit exposure by maintaining alternative sources” of the goods in question.

Hughes noted it could take several months for the safeguard petitions to be resolved. That could provide further incentives for importers looking to avoid quota issues to seek to ship goods in January, a time when significant supply-chain backups are expected. Another factor that could exacerbate the surge in trade is that the standing safeguard quotas on Chinese robes, bras and knit fabrics is set to expire on Dec. 23. The domestic coalition said it would file a renewal request in the next two days.

Brenda Jacobs, an attorney with Sidley Austin Brown & Wood, who advises the USA-ITA, added that after CITA’s decision, “the big question is will [China] bring this to the WTO?”

A Chinese official recently said the country would not stand for any new quotas being imposed.

Jacobs said the use of the safeguard mechanism to limit imports before actual “market disruption” is caused remains an unproven strategy, and one the global body could find unsound. She noted that if the dispute is taken to Geneva, it could take up to 18 months to resolve.
— With contributions from Scott Malone, New York



Potential Safeguard Limits
It could take several months before the Committee on the Implementation of Textile Agreements makes a final decision on the current round of China safeguard petitions. Only after agreeing to the safeguard requests would CITA set the one-year quota limits, which cap imports at a level 7.5 percent higher than the previous year’s volume, which China agreed upon when it entered the World Trade Organization. However, Julia Hughes, vice president of the U.S. Association of Importers of Textiles & Apparel, sketched out estimated numbers on what the new limits could be. These estimates are based on trade volumes through July, while CITA’s decision will likely incorporate imports through September. In cases where the usage to date of the existing quota is low, the projected safeguard quotas are lower than the existing quota.
Category Current limit Usage to date Projected safeguard quota
Cotton knit tops 2.5 million dozen 73.6 percent 2.7 million dozen
Cotton and man-made fiber men’s and boys’ woven shirts 2.3 million dozen 73.7 percent 2.4 million dozen
Cotton trousers 2.4 million dozen 59.1 percent 1.9 million dozen
Cotton and man-made fiber underwear 5.3 million dozen 72.1 percent 5.7 million dozen
Wool men’s trousers 76,352 dozen 61.2 percent 99,323 dozen
Man-made fiber knit tops 2.7 million dozen 77.9 percent 3.2 million dozen
Man-made fiber trousers 3.0 million dozen 69.3 percent 2.8 million dozen
Cotton yarns 2.7 million kilograms 72.3 percent 2.2 million kilograms