*EPF311 09/18/2002
U.S. Continues Resisting Faster Textile Quota Expansion
(Administration report describes efforts for domestic industry) (2140)

The Bush administration has reiterated its opposition to demands from developing countries that the United States accelerate elimination of quotas on textile imports required under a World Trade Organization (WTO) agreement.

A report to members of Congress released by the U.S. Department of Commerce September 18 also restated its position that language adopted at a 2001 WTO ministers' meeting in Doha, Qatar, will not limit use of U.S. antidumping laws for textile imports.

The document describes how the administration is seeking to open foreign markets to U.S. textiles, to ensure foreign compliance with existing textile trade agreements, to fight illegal textile transshipments and to persuade developing countries to diversify their economies into non-textile sectors.

The 1994 agreement that created the WTO required the United States and other countries to phase out their decades-old textile quotas by 2005.

"We will continue to actively oppose all calls for accelerating the growth in textile quotas beyond the gradual phase-out mandated" by the WTO agreement, the report states.

The report shows how the administration rejected requests in 2001 for additional textile import quotas from Bangladesh, Indonesia, Malaysia and Sri Lanka.

The United States will defend its textile rules of origin against a challenge raised in the WTO by India, the report said. The United States will also defend its position in a WTO challenge brought by China over U.S. interpretation of quota expansion, it said.

Ministers at the Doha meeting approved language in their declaration that countries exercise "particular consideration" before initiating antidumping investigations on textiles imported from developing countries. The administration report, however, said the United States would not budge from its existing standards for initiating a case.

The full report can be accessed at http://www.commerce.gov/opa/press/2002_Sept18_Textile_report.htm. Following are excerpts from it:

(begin excerpts)

EXECUTIVE SUMMARY

The Administration has placed a high priority on measures to improve conditions in the U.S. textile industry. Some of the highlights of the Administration's efforts include:

Trade Agreements

-- We are committed to pursue the opening of foreign markets to U.S. textile/apparel products and to make reciprocal market access a priority in all future trade agreements.

-- We have successfully resisted demands in the WTO [World Trade Organization] by textile-supplying countries to accelerate the integration of our textile quotas.

Market Access and Compliance

-- We are currently working on 25 compliance issues with a variety of countries, with special attention on India, Egypt, Pakistan, China, Mexico, and Brazil.

-- In July, Pakistan reduced duties on 55 textile products requested by the United States.

Transshipment

-- U.S. Customs stopped $300 million in illegal trade involving 162 factories which were closed down as a result of U.S./Hong Kong Customs joint efforts. (5/01-5/02).

-- CITA [Committee for the Implementation of Textile Agreements] charged back $28 million of trade against China's quotas last December.

-- From October 1, 2001-May 31, 2002, U.S. Customs seized $14.2 million worth of textiles and apparel that was either transshipped or violated intellectual property rights.

Export Expansion

-- U.S.A. pavilions at the Heimtextil exhibition in Frankfurt, Germany, and the International Fashion Fair (IFF) in Tokyo, Japan, earlier this year generated $50 million in projected sales by the 39 participating U.S. companies.

-- The Commerce Department has 11 additional trade promotional events specifically for U.S. textile/apparel companies scheduled over the next year.

-- The United States has been named "Partner Country" for the January 2003 Heimtextil exhibition. This will be the showcase event for upcoming promotional program(s).

Trade Remedy Laws

-- The United States has maintained, and will continue to maintain, its strong opposition to any weakening of antidumping (A/D) and countervailing duty rules.

-- We have made clear that A/D language agreed at Doha will not limit use of our A/D laws.

Trade Adjustment Assistance

-- The Administration is committed to ensure that those adversely impacted by imports receive viable career counseling, training, and placement services that result in a new job.

-- We worked closely with Congress to gain improvements to Trade Adjustment Assistance in the new Trade Act.

Diversification

-- We are encouraging trading partners to diversify their economies into non-textile sectors.

-- We have advised Turkey that textiles could not be included in its proposed Qualified Industrial Zone. ...

TRADE AGREEMENTS

The United States is committed to opening foreign markets to U.S. textile and apparel products and to making reciprocal market access a priority in all future trade agreements. As such, the TWG [interagency Textile Working Group] subgroup on Trade Agreement Negotiating Objectives is working with industry to identify foreign barriers and trade practices in the textile and apparel sector that should be key negotiating priorities. The group is also working to forestall efforts by textile exporting countries to accelerate the scheduled implementation of the WTO Agreement on Textiles and Clothing (ATC).

In our preparation for the Doha Round of tariff negotiations, we are placing strong emphasis on obtaining commitments from developing countries to lower their tariffs and to bind their tariffs at those levels. The Administration believes U.S. tariff reductions on textile products must be linked to reciprocal cuts by our trading partners, as well as to elimination of other trade distorting practices, to level the playing field for our textile manufacturers. We also intend to maintain the strength and effectiveness of our antidumping and countervailing duty laws.

In Free Trade Area (FTA) negotiations, we have made clear that trade agreements must afford U.S. textile and apparel companies significant access to foreign markets. Our approach is to obtain full reciprocity to the comprehensive market access offer we table and to insist on tough rules of origin and anti-circumvention language. We have proposed specific language dealing with cooperation to prevent illegal transshipment in the Singapore FTA, including information sharing, enforcement measures, and penalties for violators. We have held detailed discussions with Chile on its current regulatory framework, with a view toward crafting language to address these issues. We will seek similar language in the Free Trade Area of the Americas (FTAA) negotiations.

The WTO Council on Trade in Goods (CTG) was asked, at last year's Doha Ministerial, to consider proposals by textile exporting nations to require the United States and other developed countries to expedite the phase-out of textile quotas. The United States successfully opposed attempts in the CTG to ratify these proposals. The CTG, therefore, made no recommendation to the WTO General Council to this effect by the July 31 deadline mandated at the Doha WTO Ministerial. We will continue to actively oppose all calls for accelerating the growth in textile quotas beyond the gradual phase-out mandated by the ATC.

We continue to resist attempts by exporting nations to obtain unilateral concessions from the United States in other contexts. Numerous countries have approached the United States seeking additional quota. With the exception of Pakistan, because of its unique role in the war on terrorism, we have denied virtually all such requests. (For example, we denied such requests from Bangladesh, Indonesia, Malaysia, and Sri Lanka last year.) We urge exporting nations to plan accordingly so that they do not use all of their quota allowance too quickly, and we resist attempts by these nations to obtain additional quota.

India has claimed that certain amendments of U.S. rules of origin for textile fabrics and made-up articles are in violation of the WTO Agreement on Rules of Origin. We maintain that our rules comply with our international obligations. At India's request, a WTO Dispute Panel challenging our rules of origin for textiles and apparel was established on June 24, 2002. The composition of the panel has yet to be decided, and there is no firm date as yet for the initial hearing. We will maintain our position and fight India's claim in the WTO dispute settlement process.

When China joined the WTO in December 2001, it became eligible for phased quota elimination by 2005. China considers the growth formulas applied to China's quotas by the United States to be too restrictive under the rules established in China's WTO accession agreement. However, we have been aggressive in maintaining China's quota growth rate for the remaining years of the ATC at the level that we consider appropriate under WTO rules. China has lodged a complaint with the WTO over our interpretation. We will defend the U.S. position and continue to carefully monitor imports of textile and apparel products from China. Under the terms of China's accession to the WTO, the United States retains the right to take textile/apparel safeguard actions against imports from China until December 31, 2008, and we will exercise that right where circumstances warrant.

The Committee for the Implementation of Textile Agreements (CITA) carefully monitors imports, domestic production, and other industry trends on an ongoing basis. In response to a substantial increase in imports, negotiations have begun with Belarus to limit entry into the United States of certain categories of women's wool apparel. Fiberglass fabric limits also are being negotiated. U.S. industry has expressed concerns to CITA over imports of fiberglass fabric, particularly from Taiwan. Commerce Under Secretary (U/S) [Grant] Aldonas has personally raised these concerns with the Taiwanese Government. CITA will continue to monitor imports closely and explore available options to deal with this issue.

On December 10, 2001, the United States granted Normal Trade Relations (NTR) status to Vietnam. CITA is closely monitoring imports of textile and apparel products from Vietnam. We are aware that Vietnam has considerable potential as a supplier of textile and apparel to the United States and of recent increases in imports in certain textile and apparel categories. We have made it clear to Vietnam that we intend to negotiate a bilateral textile agreement, and we expect to commence such negotiations shortly. ...

TRADE REMEDY LAWS

Rules Negotiating Group

The United States is committed to maintaining the strength and effectiveness of the antidumping and countervailing duty laws. The starting point for our consideration of the contributions to the Rules Group is the Ministerial Declaration. The directive of this group is to "clarify and improve" disciplines under the Agreements, "while preserving the basic concepts, principles and effectiveness of these Agreements and their instruments and objectives, taking into account the needs of developing and least-developed participants." Furthermore, the mandate here goes beyond maintaining the basic concepts and principles by stressing the possibility for improvements in disciplines on trade distorting practices. The United States has an affirmative agenda based primarily on extending and strengthening the trade discipline rules and bringing others up to the same high standards of due process and transparency that are respected under U.S. law.

To date three formal meetings have been held, with two more scheduled before December. Several countries have tabled papers for the Rules Negotiating Group. These papers have been helpful in beginning the process of identifying Members' interests in the initial phase of the negotiating process.

Textiles -- "Particular Consideration"

The United States has made clear that the U.S. agreement at Doha to exercise "particular consideration" before initiating antidumping investigations on textile products from less developed countries will not limit the use of our trade remedy laws. This text does not change the standard for initiating a dumping case on textiles. The United States successfully deflected the use of more restrictive language in earlier drafts. Also, at U.S. insistence, this provision is limited to a period of two years after expiry of our quota agreements.

Representatives of the Import Administration have briefed U.S. industry in detail on the Administration's efforts in this respect, explaining that we believe that our current stringent and transparent initiation process for antidumping cases already constitutes "particular consideration." The Industry Sector Advisory Committee for Textiles and Apparel (ISAC 15) was recently provided an in-depth briefing on these issues.

Trade Remedies

We have met separately with U.S. textile industry representatives to explain antidumping and countervailing duty procedures and analyze options available to the industry under U.S. trade remedy laws. In response to industry's request for assistance in gathering information and evaluating possible remedies, the Import Administration has been working closely with the Office of Textiles and Apparel (OTEXA) to gather information on and analyze foreign textile subsidy practices. U.S. industry has expressed concerns related to possible subsidies in several major textile exporting countries. Our research is focused on potentially countervailable subsidies that may be provided to textile manufacturers and exporters in these countries. As noted above, for India, specifically, we are aware of several export subsidy programs that are providing benefits to its textile and apparel industry and we are considering options to address these programs.

Although developing countries are currently exempt from the prohibition on export subsidies, and many will remain so for the foreseeable future, the WTO Agreement on Subsidies and Countervailing Measures provides for possible ways to address the trade distortions caused by export subsidies for countries not currently subject to the prohibition. We are continuing to explore several possible WTO strategies to address the problem of such textile subsidies.

(end excerpts)

(Distributed by the Office of International Information Programs, U.S. Department of State. Web site: http://usinfo.state.gov)

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