Government Appeals Textile Safeguard Injunction

The US Justice Department has appealed an injunction by a federal court that blocked the
Committee for the Implementation of Textile Agreements (CITA) from using a threat of market
disruption in considering safeguard petitions that could result in imposition of new import quotas
on Chinese textile and apparel imports.

Last December, the US Court of International Trade in New York issued a preliminary injunction
that enjoins CITA from accepting, considering or taking any further action on China textile
safeguard petitions based on a threat of market disruption filed by US textile manufacturers. CITA
had accepted a dozen petitions based on the threat of market disruption, which is a provision in
China’s accession to the Word Trade Organization agreement.

The United States Association of Importers of Textiles and Apparel challenged CITA’s right to
use threat of market disruption charging that in accepting the petitions, CITA broke its own rules
providing for interested parties to comment on such petitions. The merits of the petitions are not
being challenged at this time, only the procedures followed by CITA. The preliminary injunction
does not affect a number of petitions pending before CITA based on what the industry says is actual
market disruption.

The federal court is likely to take at least a month to rule on the Justice Department

February 2005