U.S.-China Trade: Textile Safeguard Procedures Should Be Improved

GAO-05-296 Published: Apr 04, 2005. Publicly Released: Apr 04, 2005.
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Highlights

U.S. textile and apparel imports from China have more than doubled in value since China became a World Trade Organization (WTO) member. When joining the WTO, China agreed to a special textile safeguard mechanism applicable only to that country. In this report, GAO (1) describes the mechanism, (2) describes requests for safeguard action filed by U.S. producers and the results of these requests, and (3) evaluates U.S. agency procedures for transparency and accessibility.

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Recommendations

Recommendations for Executive Action

Agency Affected Recommendation Status
Committee for the Implementation of Textile Agreements In the event that the courts rule that CITA may process threat-based requests for China textile safeguards, CITA should amend its procedures to clarify how it will proceed in threat-based cases, including the information that producers should submit in such cases.
Closed - Implemented
The Governments of the United States and the People's Republic of China negotiated a bilateral agreement concerning trade in textile and apparel products that eliminated the issues we identified in our report that were the basis for our recommendations. The memorandum of understanding between the two governments entered into force on January 1, 2006 and terminated on December 31, 2008. There have been no requests for relief from industry for safeguard action since the implementation of the bilateral agreement. As the China textile safeguard could only be applied through the end of 2008 and has expired, no future requests will be forthcoming.
Department of Commerce To enhance access to safeguard relief for all segments of the textile and apparel industry that may face import surges, the Department of Commerce, as CITA's chair, should review the products and categories for which U.S. Bureau of Census production data are unavailable and, with public input, conduct a risk assessment aimed at identifying industry sectors at high risk of experiencing import surges from China and associated market disruption. Further, on the basis of the risk assessment, Commerce's Office of Textiles and Apparel should work with the Census Bureau to explore options to make production data concerning these industry sectors available for safeguard requests. In some instances it might not be feasible to make such data publicly available due to disclosure limitations and data (or analysis of trends in that data) possibly may need to be limited to CITA.
Closed - Implemented
The Governments of the United States and the People's Republic of China negotiated a bilateral agreement concerning trade in textile and apparel products that eliminated the issues we identified in our report that were the basis for our recommendations. The memorandum of understanding between the two governments entered into force on January 1, 2006 and terminated on December 31, 2008. There have been no requests for relief from industry for safeguard action since the implementation of the bilateral agreement. As the China textile safeguard could only be applied through the end of 2008 and has expired, no future requests will be forthcoming. Department of Commerce officials indicated they would consider our recommendations in their 60-day letter. Subsequently, the United States signed a comprehensive bilateral agreement with the People's Republic of China on November 8, 2005. China agreed to limit exports of many textile and apparel product categories to the United States. The United States agreed to not apply the safeguard for those product categories subject to export limits and to use restraint when applying it to other products. No producer has requested relief under the safeguard since the implementation of the agreement. Additionally, both the safeguard and U.S.-China bilateral agreement expired at the end of 2008. As a result, the agreement eliminated the problems our recommendations sought to address in the short term, and they are no longer relevant.

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