The U.S. Court of International Trade (CIT) on December 30 entered a preliminary injunction which prevents the Committee for the Implementation of Textile Agreements (CITA) from considering or acting on any "threat based" petitions for the imposition of "Special Textile Safeguard" quotas on textile and apparel articles from the People's Republic of China.

     As part of China's accession agreement to the World Trade Organization (WTO), China agreed to certain safeguards provisions which allow the imposition of quotas or additional duties in order to protect importing countries from "market disruption" by Chinese goods. A "Special Safeguards" regime was implemented for textile products, which allows the imposition of a temporary quota to offset "market disruption" by increased imports of Chinese textiles. The temporary quotas may be set at 107.5% of actual imports for the year prior to imposition of the safeguard (106% in the case of wool products). In 2003, CITA published procedures for considering applications for the imposition of China Special Safeguards quotas on imported goods. These procedures required that applicants show actual market disruption by reason of increased imports.

     Earlier this year, a coalition of domestic textile groups announced that it would file "threat based" safeguards petitions on a wide range of Chinese textile products. These petitions covered goods which were subject to bilateral quotas in 2004. They would not assert actual "market disruption", but only a "threat" that, following the elimination of quotas, market disruption would take place. CITA indicated that it would consider such "threat-based" safeguards petitions. To date, CITA has taken 12 such petitions under consideration. This is a matter of concern since, if a quota was only, say, 60% filled, in 2004, a "safeguard" quota immediately imposed on the goods would be lower (60% + a 7.5% growth factor) than the bilateral quota whicch currently exists. A group of importers, the U.S. Association of Importers of Textiles and Apparel (USA-ITA) recently filed a lawsuit in the Court of International Trade seeking to preclude CITA from considering "threat-based" safeguard petitions. On the afternoon of December 30, 2004, , in U.S. Association of Importers of Textiles and Apparel v. United States, Slip Op. 04-162 , the Court granted the importers' request for a preliminary injunction which, for the time being, precludes CITA from considering "threat-based" safeguards petitions. In ordering the injunction, the CIT found that

• The importers had raised serious questions about whether CITA had been delegated authority to administer the "Special Safeguards" remedy;


• CITA's regulations had previously covered only safeguard petitions based on actual market disruption, not "threat" of same;

     Accordingly, for the time being, CITA has been blocked from considering, or acting on, any "threat-based" Special Safeguard petitions.

     This does not mean that the importers will ultimately prevail. However, it does indicate that, in the Court of International Trade's opinion, the importers have at least shown a likelihood that they will prevail in their claim that CITA is acting beyond its lawful authority in considering "threat-based" petitons.

     The Court's opinion is available on its website at www.cit.uscourts.gov/slip_op/slip-op.html

     Please do not hesitate to contact us at Neville Peterson LLP if you any questions regarding this subject.

Back To Hot Topics Page

     

Home I Overview I Areas of Practice Our Attorneys I Firm Highlights I NP Trade Resource Library Hot Topics I Reading Room I Links I Contact Us

---

The material on this site is protected under the copyright laws of the United States of America and international conventions, and is the exclusive property of Neville Peterson LLP or any licensee. All rights reserved. © Neville Peterson LLP 2002.

Site by Webline Designs.