Post-Quota World Views

Nov. 20, 2004

CONFERENCEONPOST-QUOTA TEXTILE AND APPAREL TRADE SEES TROUBLE AHEAD

On November 16, 2004 the United States Importers of Textiles and Apparel (“USITA”) jointly sponsored a conference with the American Shipping Council which focused on trade in textiles and apparel after the expiration of quotas as of January 1, 2005.  The overwhelming sentiment expressed by the various speakers, whether from government or industry, was that the situation would worsen considerably before it settled down. But the greatest concern expressed by most speakers was the unpredictability of the situation.  Most of the speakers expect continued filings of safeguard petitions, as well as dumping, CVD, 201 and 301 actions.  In addition because there will be no more quota charges there is uncertainty as to how the exporting governments and vendors will react - e.g., will they try to hold on to some of that revenue.  A representative of the WTO mentioned that a petition had been received from a group of 24 countries asking the WTO to consider announcing a moratorium on dumping cases in this area for two years while the dust settles on the pricing question.

Jim Leonard the Chairman of the Committee for Implementation of Textile Agreements (“CITA”) indicated that any product exported in 2004 which is embargoed may be permanently barred from entering in 2005. He said that CITA has complete discretion to allow the goods to enter; to stage the entry of the goods over a period of time or to permanently bar their entry.

Janet Labuda, the Director, Textile enforcement & Operations Division of the Bureau of Customs and Border Protection (“CBP”)indicated that CBP plans a very aggressive enforcement effort in the textiles and apparel area beginning in January 2005.  CBP’s main concern will be the collection of revenue and Labuda expects to see renewed emphasis on classification and value issues. She also stated that they have observed a high rate of non-compliance on FTA textile/apparel claims and that this will also be a priority area. Finally Labuda indicated that CBP has continued to see high rates of non-compliance with country of origin declarations of Chinese goods.  For example in the case of bras that are subject to safeguard quotas CBP has measured non-compliance rate of over 50% on country of origin declarations.  Labuda also mentioned that they expect to see continued mischief in this area, such as other exporting countries mis-declaring their goods as Chinese goods so as to precipitate the filing of safeguard provisions.

In summary trade in textiles and apparel is expected to be the subject of extensive and intensive attention by CBP as well as the domestic industry once quotas expire on January 1, 2005.