The USA and EU negotiated a belts and braces set of temporary protection measures that China was forced to accept as part of the price of joining the WTO in 2001. The China Protocol of Accession provides both a textile/clothing-specific safeguard—available until 2009—and a broader safeguard for all products including textiles and clothing that is available until 2013. In the past few days the US garment industry “has filed requests”:http://www.textileworld.com/News.htm?CD=5&ID=8095 for new ‘special’ textile safeguard quotas against China that are designed to offset the impact of the 1 January elimination of the 30-year-old Multifiber Arrangement quotas. It has further requests in the pipleline including an ‘extension’ of the quotas imposed last year (see below). Under the Protocol terms the US has only to request a consultation with China on the imports in question to trigger an automatic 7.5 per cent growth ceiling in Chinese shipments over the following 12 months. Since U.S. consumers have lifted their purchases of Chinese clothing by 60% or more in the past two years—following the opening of the garment market to China—a 7.5 per cent growth rate dramatically penalizes U.S. consumers. The US garment importers and retailers have strongly condemned the new quota applications, pointing out that the problems of the US garment industry cannot be solved by import protection; they are due to a long-term loss of competitiveness. bq. Calling the government’s action on safeguard petitions “misguided,” Laura E. Jones, executive director the US Association of Importers of Textiles and Apparel, said US manufacturers are making a “bogus attempt” to blame others for their failure to compete. She accused textile manufacturers of attacking their own customers and said a better approach would be to create partnerships between the mills and their customers. (“Textile World”:http://www.textileworld.com/News.htm?CD=5&ID=8067) The re-application of the existing quotas is also controversial. In November last year “the US invoked”:http://www.inquit.com/article/116/what-the-textile-quotas-mean the textile-specific safegard for the first time. This allowed it to implement new quantitative restrictions on imports of Chinese garments for one year only “without re-application” (according to the Protocol). Under the terms of Protocol the USA could use this safeguard without testing for actual ‘injury’ and without consulting or compensating China. Now the US textile industry “has applied”:http://www.textileworld.com/News.htm?CD=5&ID=8067 for an “extension” of those quotas, apparently contrary to the ‘without reapplication’ provisions of the Protocol. Since the Chinese Protocol of Accession is not justiciable in the WTO dispute settlement system, the US courts will presumbly be free to determine any dispute about the meaning of the phrase ‘without reapplication’. They might, for example, find that the 2003 quotas can be re-instated on the basis of a new (but identical) application.
Peter Gallagher is student of piano and photography. He was formerly a senior trade official of the Australian government. For some years after leaving government, he consulted to international organizations, governments and business groups on trade and public policy.
He teaches graduate classes at the University of Adelaide on trade research methods and the role of firms in trade and growth and tweets trade (and other) stuff from @pwgallagher