Issue 455, December 9, 2004

SAFEGUARDS:
The WTO quota agreements expire at midnight, December 31st. Some Industry coalitions have already petitioned the federal government to establish Safeguards against countries like China. They say that come January 1st, China will "threaten the U.S. with market disruption." Opposition groups claim that Safeguards are not legal and are challenging these coalitions of Industry and Union groups. Here is a quick look at how Safeguards work, who is writing the petitions, and what US Customs is saying.

What is a Safeguard?
The government group getting these petitions is CITA, the Committee for the Implementation of Textile Agreements. CITA is an inter-agency group drawn from the Departments of Commerce, Treasury, Labor, and State, plus USTR.

CITA has 30 days to decide if a petition is valid. If valid, they'll do two things: ask China for consultations on how to reach a mutually satisfactory agreement and, second, put a quota in place. If the meetings don't go well, the quotas can stay in place up to a year. This is the two-part Safeguard, consulting while limiting with a quota.

This is a sample of the textile commodities on which petitions have been filed. Many more are expected.

Quota Category		Commodity
301:		combed cotton yarn
332/432/632:		cotton, wool, and man-made fiber socks
338/339:		knit cotton shirts and blouses
340/640:		woven men's and boys' cotton and man-made fiber shirts
347/348:		cotton trousers
352/652:		cotton and man-made fiber underwear
647/648:		man-made fiber trousers

The petitioners bringing the requests for Safeguards include the American Manufacturing Trade Action Coalition, the National Council of Textiles Organizations, the National Textile Association, the Domestic Manufacturer's Committee of the Hosiery Association, SEAMS, and UNITE HERE!

Other trade groups have told CITA that Safeguards are not legal while quotas still exist.

They feel that current quotas are already safeguards and are sufficient. They want the federal government to return to pre-Safeguard days:

The U.S. Association of Importers of Textiles and Apparel (USA-ITA) has issued a Textile Development Memo stating it and three other apparel associations [ . . . ] express their objections to consideration of China textile safeguard petitions on products that remain under quota through the end of 2004, and urging the Administration to reinstate its prior (and correct) interpretation of the safeguard provision, "Products cannot be simultaneously subject to China safeguard mechanisms and to quota…." (ITT 10/04.)

Meanwhile, US Customs simply asserts that quota goods shipped in 2004, (ETD,) must abide by the current Agreements no matter when the goods reach the U.S., (ETA.) Customs is offering no extensions, no shortcuts, and no special end-of-year programs. Customs says that everyone knew this day would come when they wrote the quota agreements years ago. "We honor our commitments." If Safeguards become the new quotas next year, Customs will expect everyone to follow them, too.

Three recommended web sites for reading:

	US Customs has an extensive Question and Answer website. They just posted their third Q&A at: http://www.cbp.gov/xp/cgov/import/textiles_and_quotas/wto_quota_elimination/
	Click on this link to see a list of the 147 WTO member nations. It is only these nations whose quotas will expire on December 31st. Non-WTO member nations, like Vietnam, will still have quota agreements in 2005. http://www.wto.org/english/thewto_e/whatis_e/tif_e/org6_e.htm
	Finally, here are the quotas that the controversy is all about. This is the Customs' web site listing all the quotas from all 55 nations with quota agreements with the U.S. If the nation is a WTO member, its page will theoretically go blank on January 1st. http://www.cbp.gov/xp/cgov/import/textiles_and_quotas/textile_status_rpt/

New developments occur daily. Be wary of anyone who guarantees that a commodity will be unrestricted in 2005.

Please note that due to the complex nature of the subject matter, DHL Danzas Air & Ocean cannot be responsible for actions taken by the reader in reliance on the information contained herein without prior consultation with DHL Danzas Air & Ocean.