CHINA SAFEGUARD UPDATE

Effective November 5, 2005 

Serious reports are filtering out from the latest round of textile negotiations taking place in Washington, D.C. this weekend between the U.S. and China. It appears a deal is near. Certainly significant progress has been made. On November 2, 2005, the U.S. and China announced a resolution of pending safeguard actions regarding socks to allow a new quota of “slightly more than 10 million dozen pairs... of Chinese cotton, wool and man-made fiber socks” to be imported.  

The socks announcement came on the heels of CITA announcing it was extending until November 8, 2005 the period in which to decide whether to request consultations with China regarding imports of women’s and girls’ cotton and man-made fiber shirts and blouses (341/641), cotton and man-made fiber skirts (342/642), cotton and man-made fiber nightwear and pajamas (351/651) and cotton and man-made fiber swimwear (359-S/659-S). 

The latest word from the current negotiations is a final agreement could be reached and signed as early as Tuesday, November 8th. Depending on the source, the quota is reported to increase in 2006 by 8% or 10%, by 13% or 16% in 2007 and by 17% in 2008. The Chinese had hoped to shorten the safeguard period to 2007, but that was not accepted by the U.S. One of the most significant facts not yet known is the baseline on which these percentage increases will be figured. Some suggest that the USA-ITA lawsuit, which barred the Government from enforcing safeguards based on threat of market disruption until overturned on appeal, had a perhaps unintended benefit in that the quantity of textile products imported in the first few months of 2005 was significantly higher than it would have been had the case not succeeded before the lower court. If those import figures form the baseline on which the increases are calculated, that means more goods will be allowed entry than if the original 7.5% safeguard limitation applied.