The recent decision of the United States Court of International Trade (USCIT) to issue a preliminary injunction against the U.S. domestic textile industry’s threat-based safeguard petitions effectively prevents any threat-based quotas from being imposed for the near term.
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By the time the USCIT decides the merits of this case, so much time will have passed that the domestic industry will to have to prepare and file new safeguard petitions based on actual market disruption from post-quota imports, rather than based on a threat of market disruption.
To put the timing of the USCIT’s pending decision on the merits of the importers’ case into perspective, note that the USCIT issued only seven preliminary or final decisions in the 162 cases filed in 2004 — the rest are still pending.
The result is that the importer interests will have succeeded in quashing the recent threat-based safeguard petitions by obtaining a preliminary injunction against the use of the threat-based standard. The only action that could alter this outcome would be for the U.S. government to prevail on appeal and have the injunction lifted on an expedited basis. But as of January 10, the U.S. Justice Department had given no indication that it would, in fact, appeal.
It appears that the U.S. textile industry will have no choice but to file new petitions based on actual market disruption and should do so as soon as data are available, likely by mid-April when the U.S. Government’s official import statistics for January and February 2005 are released.
Because textile and apparel safeguard quotas are calculated on U.S. imports for the first 12 of the most recent 14 months, any quotas resulting from petitions filed after mid-April 2005 will include data for at the very least, January and February 2005. These two months’ data are likely to provide evidence of an import surge from China.
Consider that when a number of apparel categories were released from quota in 2002, imports from China in many of these categories surged during the first two months.
For example, brassieres from China increased from 474,000 dozen in Jan.-Feb. 2001 to 873,000 dozen in Jan.-Feb. 2002. Imports of all Chinese apparel released from quota in 2002 surged by 355 percent over the year compared to 2001.
Based on the Court’s preliminary decision, the failure of the U.S. to appeal promptly, and the slow pace of the Court, it is a near certainty that any quotas that are applied against imports from China will be significantly larger than would have been the case had threat-based petitions gone forward and the safeguard quotas calculated only on imports under quota.
These large quotas on China will add insult to injury and will make import surges from other Asian countries become even more damaging.
Therefore, the domestic textile industry must not only aggressively pursue China safeguard actions based on actual market disruption, but also use all trade remedies available to overcome the injury from disruptive imports from India, Pakistan and other countries that will be exploiting the quota-free trade environment.
Carlos Moore, AM&S Trade Services, LLC
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William C. Sjoberg, Adduci, Mastriani, Schaumberg, LLP
