Government Initiates Steps To Limit Chinese Imports

As textile and apparel imports from China continue to rise sharply, the Bush administration has
initiated a procedure that could result in the imposition of new import quotas later this year. The
inter-agency Committee for the Implementation of Textile Agreements (CITA) announced it has
self-initiated safeguard proceedings in three critical product categories to determine whether
imports are causing market disruption. Under the agreement that brought China into the Word Trade
Organization, countries that can show Chinese imports cause or threaten to cause market disruption
can use a safeguard mechanism to negotiate or unilaterally impose temporary quotas limiting growth
to 7.5 percent.

Commerce Secretary Carlos Gutierrez said the “government’s action was taken to demonstrate that
the administration is committed to enforcing our trade agreements and to provide assistance to our
domestic textile and apparel industry consistent with our international rights and

Products subject to the review will be cotton knit shirts and blouses (Category 338/339), cotton
trousers (Category 347/348) and cotton and man-made fiber underwear (Category 352/652). Import data
for the first quarter of this year show Chinese imports in these three categories grew at 1.250
percent, 1,500 percent and 300 percent, respectively. While US textile manufacturers and labor have
filed more than a dozen safeguard petitions on their own, the self-initiated petitions by the
government could result in much quicker results.

CITA will publish notices in the Federal Register seeking public comments regarding each product
categories within the next 30 days. After that, CITA has 60 days to render a final determination.
If the committee determines that Chinese imports are contributing to disruption of the US market,
it will seek consultations with China with a view toward easing or avoiding market disruption. As
of the date such consultations are requested, a quota will be put in place to limit US imports of
the products. The Commerce Department said every effort will be made to reach agreement on a
mutually satisfactory solution within 90 days of the request for consultations.

US textile manufacturers hailed the government’s action, but it was sharply denounced by textile
and apparel importers as an unjustified act. Laura E. Jones, executive director of the United
States Association of Importers of Textiles and Apparel, said, “There is no reason to believe that
imports of these products from China are causing market disruption,” adding that she sees no
pattern, and no consistent and substantial increases to justify what she called the the drastic
action of self initiation. Kevin Burke, CEO of the American Apparel & Footwear Association,
said that while there have been substantial increases in the products involved, the Bush
administration provides no evidence that this surge has caused market disruption. Claiming that
past safeguard actions have shown no evidence of preserving US jobs, Burke said the
administration’s time and energy would be better spent promoting quick congressional passage of the
Central American Free Trade Agreement, which he says is specifically designed to promote US textile

Textile manufacturers, on the other hand, see the action is a significant step forward and
expressed gratitude that the US government has recognized the Chinese threat. Allen Gant, chairman
of the National Council of Textile Organizations, said the industry anticipates that a final
decision on these petitions could be reached in as little as five weeks. Auggie Tantillo, executive
director of the American Manufacturing Trade Action Coalition, urged CITA to act as quickly as
possible, noting that while the US government can wait up to 60 days after the comment period to
render a decision, it does have the power to make that decision the day comments are closed. He
said the US industry cannot afford to wait an additional 60 days for a decision.

As these efforts move forward in the United States, Europes major textile and apparel trade
association, Euratex, urged the European Commission to act on its 12 petitions for relief using the
safeguard mechanism. Bill Lakin, Euratex’s executive director, said the time has come to limit the
seemingly voracious appetite of Chinese exporters for the European market.

April 2005