Textile Manufacturers To Seek Countervailing Duties Against Chinese Imports

US textile manufacturers plan to take
advantage of a new government policy to consider using countervailing duties (CVDs) against
illegally subsidized goods from nonmarket economies. At the annual meeting of the National Council
of Textile Organizations (NCTO) in Washington April 24, NCTO Chairman Smyth McKissick, Alice
Manufacturing Co., told Textile World his organization “definitely” sees the CVD policy as another
tool in the industry’s efforts to combat a flood of imports from China.

In a major reversal of policy, the US Department of Commerce on March 30 announced that it
would, for the first time, use the CVD anti-subsidy law against China. While the case involves a
manufacturer of coated paper products, David Spooner, assistant secretary of commerce for import
administration, said applications covering imports of other commodities could be considered. US
antidumping and countervailing duty laws are recognized by the World Trade Organization.

Although CVD cases generally are complicated and time-consuming, NCTO believes they are
worth pursuing because it believes Chinese textile and apparel products are heavily subsidized and
are costing the US industry thousands of jobs. While anti-dumping laws provide another avenue of
relief, the government has held that US textile manufacturers have no standing in cases involving
apparel. Since the US apparel industry has shrunk so much, there has been very little activity on
that front.

In an address to the NCTO members attending the annual meeting, McKissick put high priority
on legislation that would levy punitive tariffs on goods from countries that manipulate their
currencies to gain advantage in international trade. NCTO is pushing the Fair Currency Act of 2007
that would define “exchange rate manipulation” as a prohibited export subsidy and permit use of the
CVD law to seek relief from injury caused by imports that benefit from the subsidy offsetting any

In citing “progress” in dealing with trade issues, McKissick told NCTO members that free
trade agreements (FTAs) recently negotiated with Peru, Colombia and Panama have the “very best rule
of origin we have ever had.” He said they have a yarn-forward rule with no tariff preference level
that would allow non-participating countries to benefit from the agreements, and they call for
strong Customs enforcement. He also gave general praise to the South Korea FTA, although details
have not yet been released. One area of possible concern is that 61 percent of textile and apparel
tariffs will be eliminated immediately upon enactment of the agreement, and textile manufacturers
are uneasy about which products will by duty free and which ones will continue to have tariff

McKissick also was bullish on the FTA with Vietnam because of the government’s monitoring
program and a commitment to self-initiate anti-dumping actions if it determined that Vietnam
textiles or apparel are being dumped on the US market at unfair prices.

As the meeting concluded, the textile executives headed for Capitol Hill to shore up their
relations with members of Congress. McKissick said this is a continuation of a number of
activities, which underscore the fact that “our industry is being heard, and we are able to
influence policies that help shape our industry and the ways we do business.”

April 24, 2007