GAO Reports that China Textile Safeguard Procedures Should Be Improved
The Government Accountability Office (GAO) has issued a report entitled, U.S.-China Trade: Textile Safeguard Procedures Should be Improved.
Sign up for a free preview to unlock the rest of this article
Timely, relevant coverage of court proceedings and agency rulings involving tariffs, classification, valuation, origin and antidumping and countervailing duties. Each day, Trade Law Daily subscribers receive a daily headline email, in-depth PDF edition and access to all relevant documents via our trade law source document library and website.
According to GAO, this report is one of a number of reports being issued on relief mechanisms available to U.S. producers that are adversely affected by unfair and surging imports, and the manner in which they have been applied to China.
(In anticipation of China's joining the World Trade Organization (WTO), the U.S. sought and obtained China's agreement to a textile safeguard transitional mechanism which allows the U.S. and other WTO members to temporarily restrict growth in specific textile and apparel imports from China through the end of 2008. The Committee for the Implementation of Textile Agreements (CITA) has established procedures that explain to the public how it will consider safeguard action requests.
GAO reports that since China joined the WTO in December 2001, U.S. imports of textile and apparel products from China have grown rapidly in value from about $7 billion in 2001 to about $15 billion in 2004.)
CITA Was Slow to Issue Procedures Regarding China Textile Safeguard
GAO found that CITA was slow to issue procedures regarding the China textile safeguard, noting that they were not issued until about 17 months after China joined the WTO and after producer groups had already requested safeguard actions.
Safeguard Procedures Do Not Provide Clear Guidance on Threat-Based Requests
In addition, GAO found that the procedures regarding the China textile safeguard do not provide clear guidance about threat-based requests, but rather focus primarily on market-disruption-based requests.
(According to GAO, twelve threat-based requests submitted in October through December 2004 remain unresolved, as on December 30, 2004, the Court of International Trade (CIT) granted a motion by the U.S. Association of Importers of Textiles and Apparel (USA-ITA) for a preliminary injunction and enjoined CITA from taking any further action on China textile safeguard actions based on threat of market disruption during the court proceedings on the case. See ITT's Online Archives or 01/04/05 news, 05010405, for BP summary of the CIT's preliminary injunction.)
GAO recommends clarified procedures for threat-based cases. GAO recommends that CITA take actions to clarify its procedures about how it will proceed in threat-based cases in the event that the courts rule that CITA may process such cases.
(With respect to this recommendation, CITA responded that GAO's review focused on issues involved in ongoing litigation, and per a Justice Department request, it could not comment on certain parts of GAO's report. However, CITA expressed concern that some of GAO's conclusions seem to be premised on the arguments of private parties in ongoing litigation.)
Unavailability of Production Data Inhibits Access to Safeguard
GAO found that the unavailability of production data on about 20% of textile and apparel product categories (data that is necessary to fulfill CITA's filing requirements) inhibits equal access to the safeguard.
As an example, GAO states that the experience of U.S. sock producers in preparing their market-disruption-based request illustrates the difficulties that can result from production data not being available. Since the Census Bureau did not, until recently, collect production data on cotton, wool, or man-made fiber socks, the U.S. producers that filed the request needed to collect the data themselves, which delayed submission of a request for 10 months while they gathered the relevant data.
GAO recommends actions to improve availability of production data. GAO recommends that the Commerce Department take actions to improve the availability of required U.S. production data for industry sectors that are most likely to experience difficulties due to Chinese import surges.
(CITA disagreed with this recommendation and GAO therefore revised its report to make clear that there are a number of reasons why production data are not published and that it may not be proper, in some situations, to make the data available to the public.)
GAO report (GAO-05-296, dated April 2005) available at http://www.gao.gov/new.items/d05296.pdf