NEW YORK — The final weeks of the quota system — and the first few years of a new era in apparel and textiles trading — will present importers with logistical hurdles and legal headaches, but when the dust settles, navigating the international garment sourcing business should be simpler.
Janet Labuda, director of the textile enforcement and operations division for U.S. Customs & Border Protection, said the expiration of the quota system should make the Customs process less complicated for importers.
One of Customs’ main tasks is ensuring that exporting countries don’t exceed their quota limits, which means the agency has to determine whether goods can be admitted to the U.S. before allowing them to leave the ports. With quotas lifted, Customs’ focus will be more on ensuring that the correct duties are paid.
Given that change, she said, it will be less likely that Customs officials will need to hold up shipments at ports. Rather, she said, the service could allow goods to move into the country and then bill the importer if it discovered that full duties had not been paid.
“I predict you will see a dramatic decrease in detentions,” she said.
However, with quotas still in place — and with safeguards on some Chinese imports for at least the next year, Customs will still likely detain some goods.
Importers should expect further U.S. safeguard limits on Chinese imports, said Jim Leonard, deputy assistant secretary of commerce.
“In the past couple of weeks, we have accepted from the domestic industry six petitions based on the threat of market disruption,” said Leonard, who also is chairman of the Committee for the Implementation of Textile Agreements, the agency that decides the safeguard calls. “We will be making our decisions over the next several weeks as to whether we accept those cases. It is important to understand that our acceptance of a case does not mean we will take the safeguard action.”
CITA has already imposed safeguard quota limits on socks and has agreed to review seven of nine petitions filed that claim Chinese imports of products, including cotton trousers, knit shirts and blouses, are threatening to disrupt the U.S. market after the 148 nations of the World Trade Organization drop their textile and apparel quotas on Jan. 1.
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China agreed to the safeguard mechanism that allows temporary quotas, but has asserted that the U.S. cannot impose safeguard quotas on the threat of market disruption, rather than waiting for the actual disruption to occur. Leonard noted that the Bush administration’s position is that it can act based on threats.
Leonard was among U.S. and WTO officials at the annual meeting of the U.S. Association of Importers of Textiles & Apparel and the American Import Shippers Association last Tuesday in Manhattan. He said the safeguard quotas the U.S. imposed last year on imports of Chinese bras, robes and knit fabrics — three categories that have already been freed of quotas under the 10-year phaseout — expire on Dec. 23.
“There has been an expectation that we would receive a petition from the domestic industry to extend that,” he said. “We have not received that petition as of yet.”
As a result, Leonard said even if domestic makers petition to renew the limits, it’s likely the categories would be free of any quotas for some period. The safeguard quotas, which may be imposed for a year at a time, can be renewed through 2008.
He sought to dismiss speculation that the U.S. had reached a behind-the-scenes agreement with China to limit all its imports rather than applying safeguards on a category-by-category basis.
“There’s been a lot of rumors that we’ve cut a deal with the Chinese to limit their growth to 25 percent a year and that’s not true,” he said.
Emma Ormond, an international trade consultant based in London for PricewaterhouseCoopers, noted that the European Commission in Geneva has not yet received any China safeguard petitions from any of its member countries.
But, she predicted, “It will come under such intense pressure early next year…There is no question that they will be bombarded by safeguard petitions.”
Ormond noted that the EU is expected to lift its quotas on Vietnam on Jan. 1, as well. The U.S. plans to retain its quotas on that country, which is not a WTO member. Industry groups last week asked for additional restraints to be imposed.
The China safeguards are a temporary measure intended to smooth the way toward greater trade liberalization, but there has been a drive in the WTO to prolong the quotas. That possibility has largely been written off by trade exports, although Chiedu Osakwe, director of the WTO’s textile division, noted that developing nations have made two other proposals to ease their burden.
Executives in developing countries have begun to express concerns that they will be unable to compete with powerhouse exporters such as China and India after the quotas are limited, and that their fragile economies stand to lose millions of jobs.
That has prompted proposals in Geneva, one by a group of 10 developing nations led by Mauritius, that the WTO study the effects of the end of quotas, and a more controversial proposal by Turkey that would impose safeguards globally, with the goal of maintaining the current market shares of developing countries.