US jumps gun on textile safeguards

PUBLISHED : Wednesday, 06 April, 2005, 12:00am
UPDATED : Wednesday, 06 April, 2005, 12:00am

'Self-initiated' investigations pose threat of new quotas on mainland products

The United States has launched trade investigations into Chinese textiles that could result in the imposition of new import quotas as early as June, drawing ire from US textile importers and charges of protectionism from Beijing.

Rather than waiting for formal petitions from US garment manufacturers, the US Committee for the Implementation of Textile Agreements (Cita) has 'self-initiated' probes into mainland cotton knit shirts and blouses, cotton trousers, as well as cotton and man-made fibre underwear.

Cita, which operates under the Department of Commerce, will impose safeguard quotas - one-year limits on import growth to 7.5 per cent, permitted under WTO rules until 2008 - on the items if they are found to have disrupted the US market.

'This decision is the first step in a process to determine whether the US market for these products is being disrupted and whether China is playing a role in that disruption,' Secretary of Commerce Carlos Gutierrez said. 'Free trade must be fair trade.'

Foreign ministry spokesman Qing Gang yesterday derided the move as 'irrational', saying it constituted 'an unfair, discriminatory measure on Chinese textile products'.

In the first quarter, US imports of mainland cotton trousers jumped 1,500 per cent. Cotton knit shirt and blouse imports surged 1,250 per cent, while cotton and man-made fibre underwear imports quadrupled, according to preliminary Department of Commerce data.

Cita will solicit feedback for 30 days before deciding whether quotas are warranted.

The deliberation will normally take 60 days, but the process may be expedited, according to letters from lawyers in the US to Willy Lin Sun-mo, a vice-chairman of the Hong Kong Textile Council.

Asian manufacturers and traders criticised the decision to initiate the investigations without waiting for complaints from the market.

'[Self-initiated probes] offer a fast-track for the Department of Commerce. We believe this action is a short cut - a back door - which is not the correct way of doing things,' Mr Lin said.

'For Hong Kong trade, it spells anxiety. A lot of Hong Kong trading firms buy textile products from China and can be badly burned by quotas.'

US garment retailers and fashion chains have also lined up to oppose the move towards quotas.

'To self-initiate cases undermines the published procedures established by the US government,' said Kevin Burke, the president of the American Apparel and Footwear Association, which is dominated by retailers.

'We oppose the Bush administration's decision to self-initiate investigations,' he said.

However, the US National Council of Textile Organisations welcomed the move. Chairman Allen Gant said: 'Our government's willingness to take this aggressive step against China sends a clear message the US will not allow China to steal US jobs.'

The council might 'quickly file' petitions for safeguard quotas on other Chinese textile products, said council president Cass Johnson.

Meanwhile, the European Commission is meeting this week to lay out rules and procedures for imposing safeguard quotas on mainland textiles.