US Government Approves Threat-Based Petitions

The US government’s Committee for the Implementation of Textile Agreements (CITA) has approved
three threat-based safeguard petitions providing relief form import competition from China in the
most heavily import-impacted textile product categories. Products involved are cotton knit shirts
and blouses, cotton trousers, and cotton and man-made fiber underwear. CITA determined that the US
market is being disrupted and that there is a threat of further disruption. While CITA has approved
petitions based on actual market disruption in the past, this is the firs time it has acted on the
basis of a threat of market disruption, reporting that the situation with these three products
threatens to impede the orderly development of trade.

In announcing the decision, Commerce Secretary Carlos Gutierrez said: “Today’s action by CITA
demonstrates this administrations commitment to leveling the playing field for US industry by
enforcing our trade agreements. We will consult with the Chinese to find a solution that will
permit the orderly development of trade in a quota-free environment.” CITA will now request
consultations with China by the end of May with a view toward easing or avoiding market disruption.
Consultations must be held with 30 days of receipt of the request by the Chinese government.

A bi-lateral negotiation will take place, and if agreement cannot be reached within 90 days, a
quota with a 7.5-percent annual growth rate will remain in place for the remainder of 2005. New,
one-year petitions could be filed in January and again until 2008, when the safeguard provisions

The US Association of Importers of Textiles and Apparel (USA-ITA) immediately blasted the
decision, reporting all pretense of legitimate deliberations was clearly dropped since the decision
was made just four days after the close of the public comment period. Laura E. Jones, executive
director of USA-ITA, said: “After a 30-day comment period in which a large number of companies
invested a great deal of time and effort to explain why safeguards would be wrong, why they won’t
help the US industry and why products made in China are in many cases items that are not made here,
the government takes all of four days to say that our views don’t matter.”

Predictably, textile lobbying organizations were pleased with the action, because it will likely
save thousands of textile jobs. Cass Johnson, president of the National Council of Textile
Organizations, said the government has acted faster than ever before to address these and other
textile import issues. He said a surge of imports from China more than 1,500 percent in cotton
trousers would have caused enormous job losses if the government had not made a quick decision.
Mark Lange, president of the National Cotton Council, said “this is a case of appropriate use of
the safeguard mechanism.”

Pointing out that the textile industry has additional safeguard cases pending in what the
industry considers critical categories, Auggie Tantillo, executive director of the American
Manufacturing Trade Action Coalition, urged the government to approve them as quickly as possible.

May 2005