GT Alert

Safeguards Quotas and Visa Requirements on Socks from China: Trousers, Shirts and Underwear Next

November 2004
By Philippe Bruno, Robert Stang and Susan Renton, Greenberg Traurig, Washington, D.C. Office

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On October 28, 2004, the Committee for the Implementation of Textile Agreements (CITA) decided to impose quantitative limitations (i.e. quotas) on cotton, wool and man-made fiber socks produced or manufactured in China. This decision was the result of the safeguards proceeding initiated against such products from China.

"These recent safeguards petitions open the door for a trade war with China in the areas of textiles and apparel, and the Chinese government has indicated that it is prepared to challenge the legality of these petitions before the World Trade Organization."

CITA’s announcement has resulted in the following actions by U.S. Customs and Border Protection (Customs) in order to implement the quotas:

• The safeguards quota covers socks under category 332 (cotton), 432 (wool) and 632 (man-made fiber).

• The safeguards quota is set at 42,433,990 dz. pair and runs from October 29, 2004 through October 28, 2005.

• Goods subject to category 332 and exported before October 29, 2004 are subject to Group II limits (44,114,716 M2) (but not safeguards limits) and applicable visa requirements. Goods subject to category 332 and exported on or after October 29, 2004, but before January 1, 2005 are subject to both Group II limits and safeguards limits and are also subject to applicable visa requirements. Goods subject to category 332 and exported on or after January 1, 2005 through October 28, 2005 are subject to safeguards limits and applicable visa requirements. (Group II limits will expire and no longer be in effect as of January 1, 2005.)

• Goods subject to categories 432 and 632 exported before October 29, 2004 are not subject to quota or visa requirements. Goods subject to categories 432 and 632 exported on or after October 29, 2004 through October 28, 2005, however, will be subject to the safeguards limits and certain visa requirements.

Specifically, goods subject to categories 432 or 632 exported from China from October 29, 2004 through November 27, 2004 will be subject to the safeguards quota, but no visa will be required for those goods. Exports from November 28, 2004 through October 28, 2005 will be subject to the safeguards quota and must be accompanied by the appropriate visa.

Affected parties should expect that the same types of restrictions will be applied to other textile and apparel products. Significantly, on November 3, 2004 CITA published its request for public comments on safeguards restrictions with respect to cotton trousers (category 347/348) (69 Fed. Reg. 64034). All such comments must be submitted to CITA by December 3, 2004.

CITA also announced that it has accepted safeguards petitions covering U.S. imports of certain cotton and man-made fiber knit shirts (categories 338/339 and 638/639), men’s and boys’ cotton and man-made fiber woven shirts (categories 340 and 640), cotton and man-made fiber underwear (category 352/652), and man-made fiber pants (category 647/648). We expect that CITA will move quickly to request public comments on these petitions as well.

These recent safeguards petitions open the door for a trade war with China in the areas of textiles and apparel, and the Chinese government has indicated that it is prepared to challenge the legality of these petitions before the World Trade Organization. China’s position is that the textile safeguards mechanism, to which China agreed as a concession for its accession to the WTO, does not cover the threat of future market disruption.

GT’s Global Trade Practice is working with importers and affected parties to respond to these quotas on a number of different levels, including the preparation of public comments, analysis of sourcing strategies and options for challenging the quotas in the U.S. or at the international level.

© 2004 Greenberg Traurig

Additional Information:

For more information, please review our Global Trade Practice description, or feel free to contact one of our attorneys.

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