Textile Manufacturers Seek New Import Controls

A coalition of US textile manufacturers is planning to petition the government to impose quotas on
Chinese textile and clothing imports, and importers aren’t at all happy about it. Trade association
representatives are preparing petitions that for the first time will ask the government to set
quotas for scores of product categories based on the threat of market disruption rather than actual
market disruption, which has been the practice in the past.

Cass Johnson, president, National Council of Textile Organizations, said the action is based
on new trade data that show China now controls 72 percent of the US market for 29 apparel products
that were released from quota controls in 2002. “History has proven that China can capture as much
as 30 to 40 percent market share in a single year,” Johnson said. “We cannot and will not allow
China to do the same thing in the categories still under quota.” He said it is clear that the World
Trade Organizations safeguard mechanism permits the filing of threat-based safeguard petitions. The
petitions are expected to include men’s and boy’s cotton trousers, women’s and girls’ trousers,
men’s and women’s shirts, women’s blouses and dresses, and home furnishings such as towels and
sheets. All of these products are scheduled to be removed from quota control by Jan. 1, 2005.

The National Retail Federation (NRF) reacted sharply to the announcement that petitions would
be filed, charging they are a scheme to recreate the old system of imposing quotas against imports
based on backroom political deals. NRF’s vice president and international trade counsel, Erik
Autor, said: “The US government so far has limited its decisions in textile safeguard cases to
those involving actual market disruption. The textile industry is asking the government to go
beyond that standard and take protectionist action against alleged threatened disruption that might
or might not occur in the future.”

The safeguard mechanism is a fairly drawn out process that could take months before any final
decision is reached by the inter-agency Committee for the Implementation of Textile Agreements
(CITA). CITA has 15 days to accept or reject petitions, and if they are accepted, there is a 30-day
period for interested parties to comment, followed by 60 days for CITA to evaluate the comments. If
market disruption or a threat is determined, the US government would enter into consultations with
China, and if agreement cannot be reached unilateral quotas would be imposed.

September 2004