Don't Bet On It

If anyone is still holding out hope that the U.S. government will put great energy into enacting threat-based safeguards to stem the tide of textiles imports from China, last week's decision by the U.S. Court of Appeals pretty much closes the door on the idea.

The saga began last fall when manufacturer coalitions began filing petitions with the government's Committee for the Implementation of Textile Agreements (CITA) to consider pre-emptive safeguard restrictions on certain apparel categories in advance of the Jan. 1 elimination of quotas.

Part of the World Trade Organization's agreement setting the 2005 elimination of remaining quotas included a provision that allows nations to cap imports on certain products from certain countries provided they can prove the imports have had a sudden and disruptive effect on the home country's industry.

Advocates of the threat-based measure argued that by the time the industry could finish measuring the post-quota impact of such imports, their volume would have overwhelmed the market. The pro-safeguard group points to what happened in the luggage industry, where within 14 months of the elimination of quota restrictions, China's share of the U.S. market jumped from 10 percent to 95 percent.

CITA agreed to at least review the coalition's petitions — which focused on apparel categories despite some early talk about adding sheets to the list. That's when another coalition stepped in — importers — and asked the U.S. Court of International Trade to halt CITA's review process.

Their argument: while the WTO allows for safeguard caps after the fact, no process has been agreed upon for pre-emptive safeguard action. The Court of International Trade agreed, and handed down an injunction that CITA has so far unsuccessfully appealed to have removed.

Last week, the U.S. Court of Appeals for the Federal Circuit said that instead of ruling on the injunction, it will await the judgment of a merits panel assigned to review the matter. Oral arguments aren't to begin until early May, which means that by the time the merits panel wraps up, quotas will have been off for at least half of the year, possibly longer.

It appears that if any moves are to made to curb the flow of Chinese textiles into the United States, the U.S. government would prefer they come from China. China included no home categories among the export tariffs it announced in late December. And while the January report from the U.S. Office of Textiles and Apparel showed a 546 percent surge in overall imports during the first quota-free month, imports of cotton sheets and bedspreads/quilts fell off.

At this point, there are probably just as many U.S. suppliers who favor open access to offshore goods as those who advocate capping the flow. Several of those who haven't forged alliances or joint ventures offshore are quickly doing so.

There are still folks in the industry among both the pro-safeguard and anti-safeguard contingents who believe more caps are coming. But as the first quarter gives way to the second, the prospects seem increasingly less likely.