a

GAO

United States Government Accountability Office

Report to Congressional Committees

April 2005 U.S.-CHINA TRADE

Textile Safeguard 

Procedures Should Be 

Improved

GAO-05-296
www.gao.gov/cgi-bin/getrpt?GAO-05-296.

To view the full product, including the scope 

and methodology, click on the link above. 

For more information, contact Loren Yager at 

(202) 512-4347 or yagerl@gao.gov. 

Highlights of GAO-05-296, a report to 

congressional committees 

April 2005

U.S.-CHINA TRADE

Textile Safeguard Procedures Should Be 

Improved 

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. 

If the courts rule that CITA may 

process threat-based cases, GAO 

recommends that CITA clarify its 

procedures for such cases. 

GAO also recommends that the 

Commerce Department take 

actions to make production data 

more available for industry sectors 

that are at risk of experiencing 

disruptive import surges. 

Agency officials did not comment 

on the first recommendation due to 

ongoing litigation but had concerns 

about the descriptions of CITA 

procedures. Agency officials 

disagreed with the second 

recommendation, stating that such 

actions would not be productive. 

GAO made some revisions in 

response, but continues to believe 

that the recommendations would 

make the textile safeguard more 

transparent and accessible. 

The WTO China textile safeguard is a transitional mechanism that allows the 

United States and other WTO members to temporarily restrict growth in 

specific textile and apparel imports from China through the end of 2008 even 

though textile and apparel quotas in general were eliminated on January 1, 

2005. The U.S. government’s interagency Committee for the Implementation 

of Textile Agreements (CITA) has established procedures that explain to the 

public how it will consider safeguard action requests. These procedures 

stipulate that when requesting safeguard actions, producers must submit 

data on imports, market share, U.S. production, and additional information 

showing how imports from China have adversely affected U.S. industry or 

any other data deemed pertinent. 

CITA has applied safeguard quotas on specific products in response to 4 out 

of 5 U.S. industry requests that were based primarily on evidence of actual 

market disruption. Twelve threat-based requests remain unresolved. 

Procedural shortcomings have impaired effective application of the China 

textile safeguard. First, CITA’s procedures created uncertainty about when, 

how, and under what circumstances it would consider threat-based requests. 

Seventeen months elapsed before CITA issued any procedures about the 

China textile safeguard, and the procedures did not clearly indicate how 

CITA would proceed in threat-based cases. Also, a court-ordered injunction 

prevents further government consideration of threat-based cases until 

litigation is resolved. GAO does not take any position on the legal issues 

involved. Regardless of the result, this situation will affect the speed, scope, 

and duration of potential relief available to U.S. producers who made these 

requests. Second, the unavailability of production data on about 20 percent 

of textile and apparel product categories—data that is necessary to fulfill 

CITA filing requirements—inhibits equal access to the safeguard. Beyond 

these issues, uncertainty about future developments in global textile trade 

makes the future impact of the safeguard unclear. 

Share of $12 Billion in U.S. Imports from China Subject to Safeguards or Requests 
Page i GAO-05-296 U.S.-China Trade

Contents

Letter 1

Results in Brief 3

Background 5

China Textile Safeguard Permits Control over Surging Imports 10

CITA Has Applied Market-Disruption-Based Safeguards but 

Threat-Based Requests Remain Unresolved 16

Procedural Shortcomings Have Impaired Application of China 

Textile Safeguard 19

Conclusions 35

Recommendations for Executive Action 36

Agency Comments and Our Evaluation 37

Appendixes

Appendix I: Objectives, Scope, and Methodology 39

Appendix II: Paragraph 242 of the Working Party Report on China’s 

Accession to the WTO 41

Appendix III: Summary of CITA Determinations on 

Market-Disruption-Based Requests to Date 43

Appendix IV: Textile and Apparel Products Imported from China for Which 

U.S. Production Data Are Unavailable 45

Appendix V: Threat-Based Requests for Safeguard Action Filed by U.S. 

Producer Groups, 2004 48

Appendix VI: Comments from the Committee for the Implementation of 

Textile Agreements 49

GAO Comments 52

Appendix VII: GAO Contacts and Staff Acknowledgments 54

GAO Contacts 54

Staff Acknowledgments 54

Tables Table 1: Summary of Import Data for Product Categories for Which 

U.S. Production Data Are Unavailable 31

Table 2: Import Data for Product Categories for Which U.S. 

Production Data Are Unavailable 45

Figures Figure 1: U.S. Production (Shipments) in Textile and Apparel 

Sectors, 1995-2004 6
Contents

Page ii GAO-05-296 U.S.-China Trade

Figure 2: U.S. Domestic Textile and Apparel Employment, 

1995-2004 7

Figure 3: U.S. Textile and Apparel Imports from All Countries, 

1995-2004 8

Figure 4: U.S. Textile and Apparel Imports from China, 1995-2004 9

Figure 5: CITA Timeline for Taking Action on Textile Safeguard 

Requests 14

Figure 6: Share of U.S. Imports from China Subject to Safeguards 

or Requests 17

Figure 7: Monthly Brassiere Imports from China, January 1999 to 

December 2004 21

Figure 8: Comparison of Timelines for Actual Threat-Based 

Request with Possible Market-Disruption-Based 

Request 27

Figure 9: Sock Imports from China, January 1999 to December 

2004 33

Figure 10: U.S. Imports of Textile and Apparel from India, Pakistan, 

and Vietnam, 1995-2004 34

Abbreviations

CITA Committee for the Implementation of Textile Agreements

OTEXA Office of Textiles and Apparel

WTO World Trade Organization

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Page 1 GAO-05-296 U.S.-China Trade

United States Government Accountability Office

Washington, D.C. 20548

A

April 4, 2005 Letr

The Honorable Frank R. Wolf

Chairman

The Honorable Alan B. Mollohan 

Ranking Minority Member

Subcommittee on Science, State, Justice and 

 Commerce, and Related Agencies

Committee on Appropriations

House of Representatives

The Honorable Richard C. Shelby 

Chairman

The Honorable Barbara A. Mikulski

Ranking Minority Member

Subcommittee on Commerce, Justice, and Science

Committee on Appropriations

United States Senate

Concern about textile and apparel imports from China has increased over 

the last several years as the 50-year-old global quota system that regulated 

trade in this industry was phased out and finally terminated on January 1, 

2005. Since China joined the World Trade Organization1

 (WTO), U.S. 

imports of textile and apparel products from that country have grown 

rapidly in value from about $7 billion in 2001 to about $15 billion in 20042

and may increase further now that all remaining quotas have been 

removed.

In anticipation of China’s joining the WTO, the United States sought and 

obtained that country’s agreement to a textile safeguard that allows WTO 

members to impose temporary quotas on Chinese-origin textile and apparel 

imports—thus permitting the United States to limit disruptive import 

surges in ways consistent with long-standing U.S.-China bilateral 

arrangements. The United States and China originally agreed on the 

safeguard language in the negotiations that led to Congress granting China 

permanent normal trade relations status and cleared the way for that 

1

China became a member of this organization in December 2001.

2

In this report, import values for years prior to 2004 have been adjusted for inflation and are 

reported in constant 2004 U.S. dollars (see app. I). 
Page 2 GAO-05-296 U.S.-China Trade

country to become a member of the WTO. Relevant U.S. government 

agencies have received requests for relief from U.S. industry and have 

applied safeguard measures. However, domestic producers and importers 

of textile and apparel products have expressed some concerns about the 

procedures the United States has employed for China textile safeguard 

cases.

In May 2003, the House Appropriations Committee’s Subcommittee on 

Commerce, Justice, and State, the Judiciary, and Related Agencies held 

hearings regarding U.S. government efforts to support American 

businesses adversely affected by imports from China. In light of concerns 

expressed at this hearing, the House-Senate conference report on fiscal 

year 2004 appropriations legislation3

 requested that GAO monitor the 

efforts of U.S. government agencies responsible for ensuring free and fair 

trade with China. In subsequent discussions with your staff, we agreed to 

respond by providing a number of reports on relief mechanisms available 

to U.S. producers that are adversely affected by unfair or surging imports, 

and the manner in which they have been applied to China.4

 In this report, 

we 

• describe the China textile safeguard,

• describe the requests for safeguard action filed by domestic industry 

and the results of these requests, and

• evaluate agency procedures for transparency and access to safeguard 

measures and identify additional issues that may affect application of 

such measures in the future.

To address the first objective, we reviewed U.S. laws and procedures as 

well as relevant WTO agreements. We interviewed officials from the five 

member agencies of the U.S. government’s Committee for the 

Implementation of Textile Agreements (CITA), as well as WTO officials and 

other experts on trade law.

3

H.R. Rep. No. 108-401, at 574 (2003).

4

Forthcoming reports will focus on countervailing duties, other safeguard measures, and 

antidumping duties.
Page 3 GAO-05-296 U.S.-China Trade

To address the second and third objectives, we obtained and analyzed 

relevant information from both governmental and private sector sources. 

We reviewed the official record on each of the safeguard requests that CITA 

had considered as of the end of 2004. To clarify the views of those favoring 

and opposing application of safeguard measures, we spoke with officials 

from trade associations representing U.S. textile and apparel producers, as 

well as importers and retailers. We interviewed Chinese government 

officials and, to obtain a broader perspective on global textile trade in a 

postquota environment, spoke with representatives of additional textile 

and apparel exporting and importing countries. Finally, we conducted 

extensive analyses of textile and apparel trade and economic data. We 

performed our work from January 2004 to January 2005 in accordance with 

generally accepted government auditing standards. Appendix I contains a 

more detailed description of our scope and methodology.

Results in Brief The China textile safeguard allows WTO members to place defined limits 

on particular textile and apparel imports from China through the end of 

2008, despite the general elimination of most textile quotas on January 1, 

2005. When a member finds that certain Chinese-origin imports are “due to 

market disruption, threatening to impede the orderly development of 

trade” in these products, it may request consultations with China and, at 

the same time, impose specific quota limits.5

 When requesting 

consultations, the importing member provides China with a statement 

showing the existence or threat of market disruption and the role of 

Chinese imports in that disruption or threat. If the two members cannot 

agree on another solution, the quota limits remain in place. In the United 

States, the interagency Committee for the Implementation of Textile 

Agreements (CITA) has adopted procedures that explain the process it 

follows in considering safeguard action requests from the public. CITA’s 

procedures stipulate that requests must include import, market share, and 

U.S. production data, and additional information showing how imports 

from China have adversely affected the domestic industry, such as their 

effect on prices in the United States, or any other data deemed to be 

pertinent. They also establish a 15-week approximate time frame for 

deciding whether to impose safeguard measures. The duration of any 

safeguard applied can vary a great deal—from 3 months to a 

year—depending on when U.S. producers submit their requests.

5

The agreement does not define the terms “market disruption” or “orderly development of 

trade.”
Page 4 GAO-05-296 U.S.-China Trade

During 2003 and 2004, U.S. producer groups claimed market disruption and 

requested safeguard actions against five Chinese products, including 

brassieres and dressing gowns. In 4 of these cases, CITA determined, 

among other things, that the market had been disrupted and that Chinese 

imports had played a role in that disruption, and applied safeguard 

measures. During 2004, U.S. producers also filed 12 “threat-based” requests 

for safeguard action to prevent future market disruption. In 9 of these 

requests, U.S. producers sought action to control expected growth in 

products to be removed from quota restrictions on January 1, 2005. In the 

remaining 3 instances, U.S. producers requested reapplication of 

previously imposed safeguards slated to expire in December 2004 on the 

grounds that this expiration threatened a renewal of disruptive import 

surges. CITA agreed to consider these 12 requests and began investigating. 

Decisions on these cases were due beginning in February 2005, but have 

remained unresolved due to a pending lawsuit against CITA by U.S. textile 

and apparel importers.

Procedural shortcomings have impaired application of the China textile 

safeguard. First, we found that CITA was slow to issue procedures and that 

the procedures do not provide clear guidance about threat-based requests. 

The procedures were not issued until about 17 months after China joined 

the WTO and after producer groups requested safeguard actions. When 

issued, the procedures focused primarily on market-disruption-based 

requests. U.S. importers and producers that we consulted in preparing this 

report experienced uncertainty about whether or how threat-based cases 

would proceed. In December 2004, U.S. importers filed a lawsuit to prevent 

CITA from considering these threat-based requests, alleging that CITA 

violated its own procedures in accepting them. The Court of International 

Trade has enjoined CITA from considering threat-based requests pending 

further judicial review. Regardless of the result, this situation will affect the 

speed, scope, and duration of potential relief available to U.S. producers.

Second, we found that uneven availability of production data hinders 

access to the safeguard. U.S. government production data are unavailable 

on about half of the total value of textile and apparel imports from China. 

In the event that producer groups want to file a safeguard request on a 

product for which production data are unavailable, they must collect their 

own data to meet the safeguard filing requirements. This can be a difficult 

and time-consuming process that limits access to the safeguard for some 

U.S. producers.

We recommend (1) CITA take actions to clarify its procedures about how it 

will proceed in threat-based cases in the event that the courts rule that 
Page 5 GAO-05-296 U.S.-China Trade

CITA may process such cases and (2) the Department of Commerce take 

actions to improve the availability of required U.S. production data for 

industry sectors that are most likely to experience difficulties due to 

Chinese import surges. The Department of Commerce, in its capacity as 

CITA chair, compiled comments from the other member agencies into one 

letter. With respect to our first recommendation, CITA noted that our 

review focused on issues involved in the ongoing litigation, and, per a 

Department of Justice request, it could not comment on certain parts of the 

report. Nevertheless, CITA expressed concern about how we described the 

timing of issuance and content of CITA procedures as they relate to 

threat-based requests. CITA also expressed concern that some of our 

conclusions in the report seemed to be premised on the arguments of 

private parties in ongoing litigation. Our report does not take any position 

on the legal issues that are the subject of the ongoing litigation between the 

U.S. Association of Importers of Textiles and Apparel and the United 

States, including whether CITA’s procedures allow for threat-based cases. 

Nevertheless, we continue to believe the procedures could be improved in 

this regard to further increase clarity and transparency. We believe the 

report’s conclusions represent a balanced summation of the facts, based on 

our own analysis of evidence obtained from both government and 

private-sector sources. CITA disagreed with our second recommendation 

believing that it would not be productive. Additionally, CITA officials 

pointed out some constraints in making more production data available. 

We modified our discussion of unavailable production data and our 

recommendation to reflect some of the limitations in the publication of U.S. 

government production statistics. However, we continue to be concerned 

that some potential requesters may be disadvantaged in the future in light 

of the potential difficulties associated with private production data 

collection. 

Background U.S. textile and apparel production and employment have both declined 

over the past decade. Textile and apparel imports have grown throughout 

this period, with China recently playing a major role in this growth. Until 

recently, CITA limited this growth by administering quota limits, including 

limits on imports from China. However, with the final removal of all quotas 

on January 1, 2005, textile and apparel trade is now governed by the same 

WTO rules as apply to trade in other sectors. 
Page 6 GAO-05-296 U.S.-China Trade

U.S. Textile Production and 

Employment Have Declined

U.S. textile and apparel production and employment have both declined 

over the last decade. Production of apparel (and textiles to a lesser extent) 

tends to be relatively labor intensive. Consequently, developing countries, 

which tend to have significantly lower labor costs, have a competitive 

advantage. As shown in figure 1, U.S. producers’ shipments of apparel 

products fell by over half between 1995 and 2004, to about $56 billion in 

2004. Similarly, shipments by textile mills (yarns, threads, and fabrics) fell 

by about a third, to about $41 billion. On the other hand, textile product 

mills (carpets, curtains, bedspreads) remained relatively stable over the 

time period, with about $38 billion in shipments in 2004.6

Figure 1: U.S. Production (Shipments) in Textile and Apparel Sectors, 1995-2004

Notes: Industry shipments may be made to either the U.S. or foreign (export) markets.

Textile mills produce inputs such as yarns, threads, and fabrics. Textile product mills produce goods 

such as carpets, curtains, bedspreads, and other textile products besides apparel (clothing).

Figure 2 shows U.S. employment losses in this industry are also largely 

attributable to declines in the apparel sector. From 1995 through 2004, 

overall employment in this industry fell by over half, from about 1,502,000 

6

Production values reported here are in 2004 U.S. dollars (see app. I).

Billions 2004 U.S. dollars

Source: GAO analysis of Census and Federal Reserve Bank data.

0

50

100

150

200

250

Apparel

Textile product mills

Textile mills

1995 1996 1997 1998 1999 2000 2001 2002 2003 2004
Page 7 GAO-05-296 U.S.-China Trade

employees in 1995 to about 701,000 in 2004. During that time, the apparel 

sector lost 65 percent of its employment, while the textile mills sector 

contracted by 49 percent and the textile product mills sector contracted by 

19 percent. 

Figure 2: U.S. Domestic Textile and Apparel Employment, 1995-2004

Note: Textile mills produce inputs such as yarns, threads, and fabrics. Textile product mills produce 

goods such as carpets, curtains, bedspreads, and other textile products besides apparel (clothing).

Textile and Apparel Imports 

Have Grown, Especially 

from China

As shown in figure 3, U.S. imports of textile and apparel products from all 

countries have grown significantly in the past decade, rising from about $44 

billion in 1995 to about $83 billion in 2004.7

 While other U.S. trade partners, 

such as Mexico, accounted for much of this growth in earlier years, imports 

from China grew rapidly following its accession to the WTO in 2001. As 

shown in figure 4, the value of U.S. textile and apparel imports from China 

grew from about $5 billion in 1995 to about $15 billion in 2004, with much 

of that growth occurring since 2001. While China’s share of the U.S. textile 

and apparel market fell during the late 1990s, that country’s share of the 

All employees (thousands)

Source: U.S. Department of Labor, Bureau of Labor Statistics.

0

200

400

600

800

1,000

1,200

1,400

1,600

Apparel

Textile product mills

Textile mills

1995 1996 1997 1998 1999 2000 2001 2002 2003 2004

7

Import values reported here are in inflation-adjusted 2004 U.S. dollars (see app. I).
Page 8 GAO-05-296 U.S.-China Trade

market increased from about 9 percent in 2000 to 18 percent in 2004. Much 

of that growth was in categories of products that were already removed 

from quota or were removed from quota in 2002. China is now the largest 

supplier of textile and apparel imports to the United States.

Figure 3: U.S. Textile and Apparel Imports from All Countries, 1995-2004

0

10

20

30

40

50

60

70

80

90

1995 1996 1997 1998 1999 2000 2001 2002 2003 2004

China accedes to 

WTO in December 

2001

Billions 2004 dollars

Source: GAO analysis of U.S. Department of Commerce, Office of Textiles and Apparel data.
Page 9 GAO-05-296 U.S.-China Trade

Figure 4: U.S. Textile and Apparel Imports from China, 1995-2004

Import Growth No Longer 

Subject to Regulation by 

Quota

Until recently, the United States governed growth in textile imports through 

a system of quotas established through approximately 45 bilateral 

agreements with individual supplier countries. In 1994, however, the United 

States (as well as Canada and the European Union, which also maintained 

broad-ranging quota arrangements) agreed in the WTO Agreement on 

Textiles and Clothing to remove these quota restrictions in a series of 

stages beginning on January 1, 1995, and ending with the removal of all 

remaining quotas on January 1, 2005. 8 Now textile and apparel trade is 

subject to the same WTO rules that apply to trade in other sectors.9

0

2

4

6

8

10

12

14

16

1995 1996 1997 1998 1999 2000 2001 2002 2003 2004

China accedes to 

WTO in December 

2001

Billions 2004 dollars

Source: GAO analysis of U.S. Department of Commerce, Office of Textiles and Apparel data.

8

The United States continues to maintain quotas on textile and apparel products from 

selected countries that are not WTO members (e.g., Vietnam).

9

The United States continues to apply tariffs on these products, ranging up to approximately 

33 percent. The trade-weighted average U.S. tariff on textile and apparel products was 10 

percent in 2004, according to an official at the U.S. International Trade Commission. 

However, U.S. free-trade agreements and preferential access programs provide certain 

countries with duty-free access to the U.S. market for certain textile and apparel products.
Page 10 GAO-05-296 U.S.-China Trade

China and the United States signed their first textile and apparel agreement 

in 1980. As China became a major exporter of textiles and apparel in the 

1990s, these agreements came to be regarded as important means for 

restraining import growth and providing U.S. producers with an 

opportunity to adjust to trade liberalization in the textile and apparel 

sector. Upon China’s accession to the WTO, the United States began 

removing quotas on Chinese textile and apparel products in accordance 

with the terms of the 1994 Agreement on Textiles and Clothing. 

Nonetheless, a majority of all imports from China remained subject to 

quota limits through January 1, 2005. The final step in quota removals 

ended quota restrictions on about 62 percent ($7 billion) of U.S. textile and 

apparel imports from China.

Interagency Committee 

Oversees Implementation of 

Textile Agreements

Congress has granted the President broad authority to regulate U.S. 

imports of textiles and apparel.10 By executive order, the President, in turn, 

established and delegated authority for implementing textile agreements to 

CITA—an interagency committee chaired by the Department of 

Commerce.11 Other CITA member agencies are the Departments of Labor, 

State, and the Treasury and the Office of the United States Trade 

Representative. Under the executive order, the committee chair takes 

action necessary to implement textile trade agreements after notifying the 

other CITA agencies, but if a majority of these agencies object within 10 

days, the action may not be taken. While the end of the quota system has 

altered CITA’s role, CITA continues to administer a number of U.S. textile 

and apparel import programs, such as quota arrangements with non-WTO 

members.

China Textile 

Safeguard Permits 

Control over Surging 

Imports

The purpose of the China textile safeguard is to limit surging imports and 

foster the orderly development of trade in textiles and apparel from China. 

Safeguards are import restrictions, normally of limited duration and extent, 

that provide an opportunity for domestic industries to adjust to increasing 

imports. The China textile safeguard permits WTO members, including the 

United States, to temporarily restrict growth in specific imports from China 

even though textile and apparel quotas in general have been eliminated. 

107 U.S.C. § 1854.

11Exec. Order No. 11651, 37 Fed. Reg. 4699 (Mar. 3, 1972), as amended.
Page 11 GAO-05-296 U.S.-China Trade

The safeguard is transitional in nature in that it may be applied only 

through the end of 2008. CITA, an interagency group chaired by Commerce, 

has published procedures that explain the process it follows in considering 

safeguard action requests from the public. 

WTO China Textile 

Safeguard Permits 

Application of Quota Limits

China’s WTO accession agreement contains a textile safeguard that allows 

WTO members, including the United States, to impose time-limited 

restrictions on the growth of specific textile and apparel imports from 

China. (See app. II for complete text). When a member finds that imports of 

specific textile and apparel products from China are “due to market 

disruption, threatening to impede the orderly development of trade” in 

such products, it may request consultations with China, and at the same 

time impose quota limits. When making such a request, the member is 

required to provide China with a detailed statement of reasons and 

justifications that demonstrates the existence or threat of market 

disruption and the role of Chinese imports in that disruption. Unless China 

and the importing country reach agreement on another satisfactory 

solution within 90 days, the quotas remain in place. 

The terms of China’s accession agreement define the scope and duration of 

relief. In the absence of a bilateral agreement on some other solution, the 

importing member can generally limit growth in relevant Chinese imports 

to 7.5 percent above the level imported during the first 12 months of the 

previous 14-month period.12 The term of any quota begins on the date of the 

request for consultations with China and ends on December 31 of the same 

year. When 3 or fewer months remain in the year at the time of the request 

for consultations, the quota ends 12 months after the request date. No 

quota may remain in effect longer than 1 year without reapplication, unless 

the member and China agree otherwise. 

The China textile safeguard can only be applied through the end of 2008. 

After that, WTO members concerned about the effects of rapidly increasing 

or unfairly traded Chinese-origin textile and apparel products will have to 

rely on other import relief mechanisms. Other WTO agreements (and U.S. 

law) provide a number of possible alternatives, including other safeguard 

mechanisms and antidumping duties. 

12In the case of wool products, the member will generally limit growth in relevant Chinese 

imports to 6 percent above the level imported during the first 12 months of the previous 

14-month period. 
Page 12 GAO-05-296 U.S.-China Trade

CITA Has Established 

Procedures for the 

Safeguard

In May 2003, CITA published procedures that explain to the public how it 

will consider safeguard action requests.13 These procedures inform 

producers of the information they must submit when requesting action, 

describe U.S. producers’ standing to submit such requests, and establish 

time frames for processing requests and putting safeguard measures, if any 

are found appropriate, into place. 

CITA determined that these procedures fall outside the rule-making 

provisions that apply to most federal agencies under the Administrative 

Procedure Act because they pertain to foreign affairs. Therefore, CITA did 

not provide the public with an opportunity to comment on the procedures 

prior to issuing them.14

Requesters Must Provide Import, 

Market Share, and U.S. 

Production Data

To obtain the information needed to determine whether a safeguard action 

is justified, CITA’s procedures stipulate that those requesting such actions 

must submit (1) import and market share data from all foreign and 

domestic sources and from China in particular, (2) U.S. production data, 

and (3) additional information that shows how imports from China have 

adversely affected the domestic industry, such as their effect on prices in 

the United States “or any other data deemed pertinent.” The import data 

“should demonstrate that imports of [the subject] Chinese origin textile and 

apparel product[s] . . . are increasing rapidly in absolute terms.”

The relevant language in China’s WTO accession agreement neither defines 

“market disruption” or “orderly development of trade” nor establishes any 

criteria for making determinations on these matters. CITA’s procedures 

also do not provide any specific criteria or benchmarks. CITA officials 

informed us that in considering whether safeguard action is warranted, 

they typically consider a wide range of factors to determine whether 

imports from China are playing a role in any actual market disruption or 

threat thereof. Those factors usually include the following: (1) all U.S. 

imports of the products in question, (2) the quantity of imports from China, 

1368 Fed. Reg. 27787 (May 21, 2003).

14The Administrative Procedure Act generally requires that agencies provide an opportunity 

for the public to comment on rules and procedures prior to their enactment. However, the 

act’s rule-making procedures do not apply to certain agency activities, including the foreign 

affairs functions of the United States. See 5 U.S.C. § 553 and Attorney General’s Manual on 

the Administrative Procedure Act, at 9 (1947), included as an appendix in American Bar 

Association, Section of Administrative Law and Practice, Federal Administrative Procedure 

Sourcebook (3d ed. 2000). 
Page 13 GAO-05-296 U.S.-China Trade

(3) the extent to which imports of the product are increasing relative to 

other imports, (4) pricing and average unit values of U.S. imports from 

China relative to imports from the rest of the world, (5) the degree to which 

U.S. production is declining, and (6) trends in the share of the market held 

by imports from China and by the world. 

CITA Proceedings Designed to 

Take about 15 Weeks

The process for determining whether to impose a safeguard has three 

phases. First, CITA procedures provide 15 business days to review 

safeguard requests and determine whether the request provides the 

information necessary for consideration. Second, if CITA determines that 

the request provides the information required, it publishes in the Federal 

Register a notice seeking public comments within 30 calendar days. For 

example, U.S. importers opposing a safeguard can submit information that 

contradicts the requester’s claims. Finally, CITA then has up to 60 calendar 

days after the close of the comment period to decide on the merits of a 

request.15 After any positive finding of market disruption or threat thereof, 

CITA requests consultations with China and, as set forth in China’s WTO 

accession agreement, provides that country with a “detailed factual 

statement of reasons and justifications” that shows “the existence or threat 

of market disruption” and the role that Chinese products have played in 

that disruption. At the same time, CITA notifies the public via a Federal 

Register notice, and announces quotas on the subject imports from China. 

The quotas remain in place unless consultations between U.S. and Chinese 

officials yield an alternate agreement. As shown in figure 5, the entire 

process is designed to take up to about 15 weeks.

15If CITA cannot decide within 60 days, it will publish a notice in the Federal Register

indicating a date by which it will make a decision.
Page 14 GAO-05-296 U.S.-China Trade

Figure 5: CITA Timeline for Taking Action on Textile Safeguard Requests 

Duration of Relief Depends on 

When Industry Files Case

Under CITA procedures, and as outlined in China’s WTO accession 

agreement, import limits are effective from the date that the U.S. requests 

bilateral consultations to December 31 of the same calendar year. However, 

if 3 or fewer months remain in the year at the time of the request for 

consultations, the limit can be applied for one year from the consultation 

request date. Therefore, the length of time that safeguard measures remain 

in effect can vary by months, depending on when industry requests 

application and when CITA requests consultations. For example, if U.S. 

producers submit their request to CITA in mid-June, and CITA subsequently 

requests consultations in late September, safeguard measures can only 

remain in effect for a little over 3 months (that is, until the end of the 

calendar year in question). However, if producers wait until mid-July to 

submit their request, such that CITA initiates consultations with China in 

October, measures imposed may remain in effect until the following 

October—or for 12 months. 

CITA procedures allow producer groups to request reapplication of 

safeguard measures. However, the procedures specify that CITA will 

reapply safeguards only in the event of a new determination that Chinese 

imports are, due to market disruption, threatening to impede the orderly 

Request 

considered:

within 

15 working days 

(19 calendar days)

Public 

comment period:

30 calendar days

Agency deliberation:

CITA decides 

within 

60 calendar days 

(or less)

Consultations

and

relief

Request 

filed

Decisions/

events

Phases

Federal Register 

notice published

Determination 

reached

If yes, consultations requested 

and quotas imposed 

simultaneously. CITA has 

discretion in deciding when to 

request 90-day consultation period

Federal register notice 

published explaining 

reasons for denial

Requester notified 

of denial and 

reasons

weeks

Yes

No

Yes

No

Source: GAO analysis of Department of Commerce information.

1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16
Page 15 GAO-05-296 U.S.-China Trade

development of trade.16 The timeline for processing reapplication requests 

is the same as for initial safeguard requests.

CITA Procedures Grant Standing 

to Producers of Finished Goods 

and Components

CITA procedures give broad standing to producers of both finished goods 

(e.g., garments) and components (e.g., fabric) to submit requests for 

safeguard actions. Requests may be filed by an entity that represents either 

(1) domestic producers of a product “like or directly competitive with” the 

Chinese textile or apparel product or (2) domestic producers of a 

component used in such a product. CITA officials explained that 

component producers have long had standing to request imposition of 

quota restrictions on textile and apparel products. CITA officials explained 

that although component producers may request safeguard actions, the 

data they submit in support of their request must address the subject 

Chinese imports. Entities eligible to file a request include trade 

associations, firms, and certified or recognized unions or groups of 

workers in relevant industries. CITA itself may also initiate a safeguard 

action.

Over the last two decades, U.S. producers of apparel have come to rely 

heavily on outward processing arrangements. In such arrangements, U.S. 

factories focus on the relatively capital-intensive operations, such as fabric 

production. These fabrics and components are then shipped to Caribbean, 

Andean, or African countries that participate in certain U.S. trade 

preference programs.17 Factories in these countries conduct the relatively 

labor-intensive business of assembling the fabric and other components 

into finished garments. 

16China has taken the position that a safeguard cannot be reapplied without its consent.

17Relevant trade preference programs include those established under the Caribbean Basin 

Economic Recovery Act, as amended, 19 U.S.C. §§ 2701 and following; the Andean Trade 

Preference Act, as amended 19 U.S.C. §§ 3201, and following; and the African Growth and 

Opportunity Act, 19 U.S.C. §§ 3701, and following. For further information, see for example 

United States International Trade Commission, The Impact of the Caribbean Basin 

Economic Recovery Act: Sixteenth Report 2001-2002, Publication 3636 (Washington, D.C., 

September 2003).
Page 16 GAO-05-296 U.S.-China Trade

CITA Has Applied 

Market-DisruptionBased Safeguards but 

Threat-Based Requests 

Remain Unresolved

During 2003 and 2004, CITA applied safeguard measures on four 

Chinese-origin products that had previously been freed from quota limits, 

based on evidence of both actual market disruption and the threat of 

continued market disruption. As shown in figure 6, these products 

accounted for about 7 percent of U.S. imports of textile and apparel 

products from China.18 More recently, producers groups have filed 

threat-based requests for safeguard action on a number of products, 

alleging that there would be disruptive import surges once quotas on those 

products expired on January 1, 2005. The main difference between the 

market-disruption-based requests and threat-based requests is that the 

market-disruption-based requests allege that market disruption has 

occurred and that Chinese imports have played a role in that disruption, 

whereas the threat-based requests allege that market disruption will occur 

in the future and that Chinese imports will play a role in that disruption. 

Figure 6 shows that these threat-based requests account for an additional 

11 percent of U.S. imports of textile and apparel products from China.19

These requests remain unresolved pending resolution of a lawsuit, filed by 

U.S. importers, that opposes CITA’s processing of threat-based requests.

18Share of imports from China based on 2003 import statistics.

19Share of imports subject to threat-based safeguard requests based on petitions filed as of 

January 15, 2005. Threat-based petitions requesting reimposition of recently expired 

safeguards are not included in the 11 percent. All products subject to these safeguard 

requests were under quota until January 1, 2005. An additional 51 percent of total U.S. 

imports of textile and apparel products from China were removed from quota limitations in 

January 1, 2005, but have not been the object of safeguard requests. Therefore, a total of 62 

percent of U.S. imports of textiles and apparel from China were removed from quota on 

January 1, 2005. These figures are based on 2003 import statistics.
Page 17 GAO-05-296 U.S.-China Trade

Figure 6: Share of U.S. Imports from China Subject to Safeguards or Requests

Note: Share of approximately $12 billion in U.S. imports of textile and apparel products from China is 

based on 2003 import statistics. Shares do not equal 100 percent due to rounding.

Safeguards Applied in Four 

of Five Market-DisruptionBased Requests

U.S. producer groups requested that CITA impose safeguards on imports of 

knit fabric, brassieres, robes and dressing gowns, and gloves from China in 

July 2003, and in June 2004 they requested safeguards on socks from China 

as well.20 Almost all of these products had been removed from quota 

protection well in advance of the requests for relief—either when China 

joined the WTO in December 2001 or shortly thereafter in January of 2002. 

In four out of these five cases, CITA imposed 7.5 percent growth limits on 

relevant imports from China, as provided in China’s WTO accession 

agreement, and these limits remained in place when U.S.-China 

consultations failed to produce agreement on any alternate solution. In 

each case, CITA determined that U.S. markets for the products in question 

7%

11%

32%

51%

Removed from quota January 1, 2005; no 

safeguard action requested

Safeguards applied 2003-2004

Removed from quota January 1, 2005; 

threat-based safeguard action requested

Removed from quota prior to 2005 or 

never subject to quota; no safeguard 

action requested

Source: GAO analysis of data from the Department of Commerce, Bureau of the Census, and the Office of Textiles and Apparel.

20Trade associations representing textile manufacturers that produced components of 

brassieres, dressing gowns and gloves requested the safeguard actions. In the case of knit 

fabric, trade associations representing producers of the final product requested the 

safeguard action. In the case of socks, the trade associations requesting the safeguard action 

represented producers of both components and the final product. 
Page 18 GAO-05-296 U.S.-China Trade

had been disrupted and that imports from China had played a significant 

role in this disruption. In each case, CITA also determined, based on a 

number of factors, that the subject Chinese imports posed a threat of 

further market disruption in the future. First, CITA found that China had a 

significant capacity to export textile and apparel products. Second, CITA 

found that the prices of textile and apparel products from China were 

lower than the average prices from other supplier countries. Third, CITA 

noted that since the U.S. removed quotas on these products, trends in 

prices, production, and imports had changed markedly. Consequently, CITA 

determined that without action, the trends would continue. CITA also 

considered the imports of the subject products to be increasing 

dramatically. Finally, CITA noted significant Chinese investment in its 

textile and apparel industry. See appendix III for more detail on each of the 

four CITA determinations.

CITA refused to consider the fifth case—a July 2003 market-disruptionbased request concerning knit and woven, cotton and man-made fiber 

gloves—because (1) woven gloves were still subject to product-specific 

quotas under the Agreement on Textiles and Clothing21 and therefore would 

already be subject to limits during the period of safeguard relief, and (2) the 

production data provided by the requester were from 2001, and 2002 data 

were to be released shortly. As of March 2005, however, U.S. producers 

have not filed an updated request.

Threat-Based Requests 

Remain Unresolved

In the last three months of 2004, U.S. producer groups filed 12 threat-based 

requests. Nine of the threat-based requests focused on products that would 

be removed from quota restrictions on January 1, 2005. These included 

cotton trousers, man-made fiber knit shirts/blouses, cotton knit 

shirts/blouses, man-made fiber trousers, man-made fiber shirts (not knit), 

and man-made fiber underwear. The remaining three requested 

reapplication of safeguard restrictions on knit fabric, brassieres, and 

dressing gowns on the grounds that disruptive imports of these products 

would resume when previously imposed restrictions ceased to apply in 

December 2004.

21CITA had indicated that it would not take action on products subject to specific quota 

limits but that this would not prevent CITA from considering a request for safeguard action 

on a product subject to a specific limit if the safeguard action were to take effect after the 

removal of that limit. 
Page 19 GAO-05-296 U.S.-China Trade

CITA agreed to consider these 12 threat-based requests, but has not yet 

completed action on them.22 CITA had been scheduled to decide upon all of 

them between February and March 2005. However, as a result of a 

December 30, 2004, court-ordered injunction (described below) granted in 

response to a motion by importers, CITA is not permitted to process 

threat-based requests until judicial review of its authority to impose 

safeguards in such cases has been completed. Therefore, these cases 

remain unresolved.

Procedural 

Shortcomings Have 

Impaired Application 

of China Textile 

Safeguard

Although CITA has completed action on several textile safeguard requests 

and U.S. producers have received relief, procedural shortcomings have 

impaired use of the safeguard. First, we found that CITA was slow in 

issuing its procedures and a lack of clarity in those procedures created 

uncertainty about when, how, and under what circumstances CITA would 

consider threat-based requests and that this uncertainty resulted, and 

continues to result, in decisions being delayed while imports from China 

increase. Second, we found that the lack of production data on some textile 

and apparel products—data that is necessary to fulfill CITA filing 

requirements—has inhibited equal access to the safeguard. Beyond these 

issues, uncertainty about future developments in global textile trade makes 

the future impact of the China textile safeguard unclear. 

Procedural Shortcomings 

Created Uncertainty 

U.S. producers considering requests for safeguard action and U.S. 

importers of textiles and apparel that might oppose such safeguards have 

faced uncertainty because CITA was slow in issuing procedures and a lack 

of clarity in those procedures. A significant period of time elapsed before 

CITA issued procedures for the China textile safeguard, substantially 

delaying action on the initial market-disruption-based requests. Once 

issued, CITA’s procedures were unclear about whether or how it would 

proceed on threat-based requests. The uncertainty surrounding 

threat-based cases has resulted in a court-ordered injunction preventing 

22Please see appendix V for a complete list of the 12 threat-based requests. In a December 1, 

2004, submission to CITA about whether to apply the textile safeguard on imports from 

China of cotton trousers, China contended that the language in its WTO commitment 

showed that the textile safeguard could only be imposed when there was actual market 

disruption and not merely a threat of market disruption. China contended that the language 

regarding threat did not refer to the kinds of textile and apparel cases that could be brought, 

but only to the material a WTO member could present to China showing why a safeguard 

should be applied.
Page 20 GAO-05-296 U.S.-China Trade

action on these requests and created additional delays—both for those 

interested in seeking safeguard actions and those seeking a clear 

determination that such actions should not be taken.

CITA Slow to Issue Procedures CITA issued procedures about the textile safeguard contained in China’s 

WTO accession agreement approximately 17 months after China joined the 

organization. Until these procedures were issued, it was not clear when, 

how, or under what circumstances CITA would consider safeguard action 

requests from the public.

China’s WTO accession agreement, which became effective December 11, 

2001, outlined some aspects of the safeguard mechanism, but did not fully 

explain what or how much information national authorities should 

consider in deciding whether to apply safeguards. Member governments 

were left to clarify such matters.23 Even though CITA had not yet provided 

any guidance, in September 2002 U.S. trade associations representing 

textile manufacturers requested application of safeguards against Chinese 

knit fabric, gloves, dressing gowns, brassieres, and luggage. CITA did not 

act on these requests.

In May 2003 CITA issued procedures describing the information that it 

would require in order to consider safeguard requests. U.S. producers of 

knit fabric, gloves, dressing gowns, and brassieres subsequently refiled 

their requests,24 and CITA applied safeguards on these products (except 

gloves) in December 2003—15 months after these industry groups had 

originally requested action. Imports of some of these products grew 

significantly during the intervening months. Figure 7, for example, shows 

that imports of Chinese-origin brassieres increased by about half between 

the first and second industry filings. 

23CITA officials noted that China’s Accession Agreement does not obligate WTO members to 

publish procedures. 

24The trade associations did not submit a revised safeguard action request for luggage, and 

no further action has been taken on this product.
Page 21 GAO-05-296 U.S.-China Trade

Figure 7: Monthly Brassiere Imports from China, January 1999 to December 2004

Commerce officials pointed out that the procedures issued for the China 

textile safeguard marked the first occasion that CITA had published 

guidance on how it would consider requests for new quota restraints. They 

noted that because CITA had not had this level of transparency in the past 

when administering the wide-ranging U.S. textile quota system, the 

procedures took longer than might be expected to prepare. Additionally, 

CITA officials indicated that the procedure of soliciting comments prior to 

requesting consultations and imposing limits was also unprecedented. 

Previously, CITA put out notices for public comment only after delivering a 

request for consultations to establish a quota.

Procedures Unclear on 

Threat-Based Requests for 

Safeguard Action

CITA’s China textile safeguard procedures are not clear on how it will 

proceed in threat-based cases. CITA officials told us that the procedures 

utilize the WTO language through which members can request 

consultations on the existence as well as threat of market disruption. 

However, the procedures focus on market-disruption-based requests. For 

0

200

400

600

800

1,000

1,200

1,400

1,600

1,800

2,000

Jul

Sept.

Nov.

y

Nov

Jan.

Mar.

May

.

Sept.

Nov

Jan.

Mar.

May

July

.

Sept.

Nov.

Jan.

Mar.

May

July

Sept.

July

Nov

Jan.

Mar.

May

.

Sept.

Jan.

Mar.

May

July

Dozens (millions) Industry files initial 

safeguard request

WTO accession

Quotas removed

Industry refiles 

safeguard request

Safeguard invoked

CITA issues procedures

Source: GAO analysis of U.S. Department of Commerce, Office of Textiles and Apparel data.

2000 2001 2002 2003 2004
Page 22 GAO-05-296 U.S.-China Trade

example, they state that a request will only be considered if it includes 

specific information set forth in support of a claim of market disruption. 

Similarly, the procedures state that reapplication will only take place if 

CITA makes a new affirmative market disruption determination. They also 

specify that the import data submitted with a request “should demonstrate 

that imports of Chinese-origin textile and apparel products that are like or 

directly competitive with the product produced by the domestic industry 

concerned are increasing rapidly in absolute terms.” 

By their nature, threat-based cases will not rely on information claiming 

that market disruption has already taken place, but rather will focus on 

prospects for future market disruption. This was demonstrated in the 

requests filed by U.S. producers in the fall of 2004. Although import data 

demonstrating that a rapid increase has already occurred have been 

important in CITA’s determinations in market-disruption-based requests, 

they would not be expected to be as important for threat-based requests. In 

fact, a majority of the threat-based requests made in late 2004 asserted that 

imports were unlikely to increase rapidly until 2005 because these products 

had, until recently, been subject to quotas that made substantial import 

increases improbable.25

In the absence of formal guidance, U.S. producers requesting threat-based 

actions submitted information on such matters as China’s productive 

capacity, performance in other apparel categories already removed from 

quota, price behavior of products removed from quota, and information 

about alleged unfair trade practices in China. CITA’s procedures do not 

specifically call for any of these types of information, but requesters are 

allowed to submit other information deemed pertinent.

CITA Officials Accepted 

Threat-Based Requests and 

Announced Indicative Factors

CITA officials emphasized that China’s accession agreement provides for 

taking safeguard actions on the basis of threat. These officials further 

explained to us that their procedures do not preclude U.S. producers from 

requesting safeguard action solely on the basis of threatened market 

disruption. Therefore, even if U.S. procedures do not focus on threat, CITA

25The threat-based requests filed by producer groups thus far involve the elimination of a 

quota in the near future. In providing technical comments on this report, CITA officials said 

a threat could be found for which imports are increasing extremely rapidly, even though 

those imports have not yet caused market disruption.
Page 23 GAO-05-296 U.S.-China Trade

may still consider requests on that basis.26 Finally, administration officials 

maintained that they were under no obligation to issue procedures and can 

independently consider safeguard measures based upon the government’s 

best information and judgment.

Although CITA’s procedures do not clearly describe the information that 

requesters should submit in support of threat-based requests, Commerce 

officials observed that the Federal Register notices requesting public 

comment on threat-based requests have indicated the types of information 

that CITA would take into consideration in determining whether safeguard 

actions should be applied. These notices requested that interested parties 

submit information as to

• whether Chinese imports are entering the market at prices substantially 

below the prices of the equivalent U.S. product and whether the Chinese 

imports will likely depress prices of the U.S. product;

• whether Chinese imports are likely to rise due to increasing production 

capacity in China;

• whether there will be an imminent diversion of Chinese-origin products 

and other third markets to the United States;

• changes in inventory levels of the Chinese-origin products in question;

• the extent to which conditions in the domestic industry demonstrate 

that market disruption is likely (e.g., factory closures or production 

declines); and

• whether U.S. managers, retailers, purchasers, importers, or other 

market participants have recognized Chinese producers as potential 

suppliers.

CITA officials noted that these factors are indicative but not necessarily 

determinative. Moreover, they have not been integrated into their official 

procedures.

26CITA stated that even if the procedures are silent as to how CITA intended to evaluate 

requests for safeguards based solely upon allegations of threatened market disruption, 

CITA’s decision to accept as sufficient such a request is in compliance with the overall 

principles of the agreement it is implementing. 
Page 24 GAO-05-296 U.S.-China Trade

Some U.S. Importers and 

Producers Experienced 

Uncertainty about Threat-Based 

Requests

In July 2004, a number of producers and producer associations observed 

that CITA had thus far refused to consider threat-based requests for 

safeguard action even though, in the associations’ view, WTO rules allowed 

consideration of such requests. One industry representative at the time 

stated: “Specifically, the U.S. textile industry has asked the administration 

to recognize that China poses a severe threat to the domestic textile 

industry and to use appropriate safeguard actions, as allowed under WTO 

rules. To date, the administration has refused to consider safeguard actions 

before the actual occurrence of damage in the marketplace.” In concert 

with other organizations, the same industry association subsequently filed 

a number of threat-based requests for safeguard action in early October 

2004. 

In opposing CITA’s decision to accept these requests and initiate 

investigations as to whether safeguards should be applied, one association 

representing importers argued that the administration had changed its 

position on threat-based requests. The importers contended that 

administration officials had informally indicated to them that the safeguard 

was intended for market-disruption-based requests as opposed to 

threat-based requests. In addition, the association observed that when 

CITA decided to consider threat-based requests, it did not modify its 

procedures or make a formal announcement to reflect the change in its 

position. 

Court Suspends CITA 

Consideration of Threat-Based 

Requests

Uncertainty over threat-based cases and the disagreement that ensued 

between U.S. textile importers and the administration led to a court order 

that CITA may not consider threat-based requests, pending further judicial 

review. At this point, it is not clear when the court will render a final 

decision. 

The case began on December 1, 2004, when the U.S. Association of 

Importers of Textiles and Apparel filed a complaint and motion for a 

preliminary injunction before the U.S. Court of International Trade 

requesting that the court enjoin CITA from considering threat-based 

requests.27 In support, the Association argued, among other things, that 

CITA had (1) violated its own procedures and the Administrative Procedure

27U.S. Ass’n. of Importers of Textiles and Apparel v. United States, Ct. No. 04-00598 (C.I.T. 

Dec. 1, 2004). GAO is not taking any position in this report on the legal issues involved in the 

lawsuit.
Page 25 GAO-05-296 U.S.-China Trade

Act28 by deciding to consider threat-based petitions and (2) exceeded its 

authority in taking any action under the China Textile safeguard because 

Congress had not authorized CITA to do so.29

In its response, the administration argued that CITA was not obligated to 

promulgate regulations implementing the textile safeguard and that, in any 

event, CITA acted within its authority in considering threat-based 

requests.30 In this regard, the administration maintained that CITA had 

clarified its procedures regarding threat-based requests through individual 

case proceedings.31 Furthermore, CITA officials asserted that they never 

had a policy of categorically denying threat-based requests.

On December 30, 2004, the court granted the association’s motion for a 

preliminary injunction and enjoined CITA from taking any further action on 

China textile safeguard actions based on threat of market disruption during 

the court proceedings on the case.32 In enjoining CITA from further 

considering threat-based requests, the court found that CITA officials made 

statements to various trade publications between July and August 2004 

indicating that the safeguard was intended for cases of actual market 

disruption—rather than threat of market disruption. On Feb. 14, 2005, the 

administration appealed the Court of International Trade’s granting of a 

preliminary injunction to the United States Court of Appeals for the Federal

285 U.S.C. §§ 551, and following

29The association also argued that CITA did not follow the notice and comment 

requirements of 5 U.S.C. § 553 in promulgating its procedures.

30For a more detailed presentation of the administration’s legal arguments, see Defendant’s 

Memorandum in Support of its Motion to Dismiss and Opposition to Plaintiff’s Motion for a 

Preliminary Injunction, Ass’n of Importers of Textiles and Apparel, Ct. No. 04-00598 (C.I.T. 

Dec. 15, 2004), and Brief of Defendant-Appellant, United States, Ass’n of Importers of 

Textile and Apparel, Ct. No. 05-1209 (Fed. Cir. Feb. 14, 2005). 

31As a supporting example, the United States cited CITA’s solicitation of public comments 

regarding whether there was a threat of market disruption to the U.S. market for cotton 

trousers. In the solicitation, CITA listed 6 factors (cited above) as examples of information it 

sought to help it determine whether there was a threat of market disruption. 69 Fed. Reg. 

64,034 (Nov. 3, 2004).

32U.S. Assn. of Importers of Textiles and Apparel v. United States, Ct. No. 04-00598 (C.I.T. 

Dec. 30, 2004). In support of its order granting a preliminary injunction, the court noted that 

the plaintiff’s complaint had raised an important question about whether CITA’s delegated 

authority to administer textile agreements includes the authority to issue regulations 

pursuant to China’s accession agreement.
Page 26 GAO-05-296 U.S.-China Trade

Circuit.33 Thus, at this point, it is unclear when there will be a final 

determination on whether CITA can properly hear threat-based requests.

Delays Impact Timing and Level 

of Relief

Lengthy legal action against CITA or a court decision that CITA may only 

process cases that present evidence of actual market disruption will 

postpone determinations on whether to apply safeguard measures and may 

result in imposition of quota limits that remain in place for shorter periods 

of time and are less restrictive of Chinese imports. 

Because of the wording in China’s WTO accession agreement, 

decision-making delays on the pending requests for application of 

threat-based safeguards may shorten the duration of any measures 

imposed. Prior to the court issuing its preliminary injunction, CITA had 

been scheduled to decide whether to take action on the threat based 

requests submitted in October 2004 by early February 2005. As shown in 

figure 8, had CITA decided in favor of safeguard actions in accord with its 

original timetable, quota limitations on cotton trousers, for example, would 

have been in place for 11 months (from February 1 through the end of 

2005). In the event of a court ruling in its favor, CITA may yet impose 

threat-based safeguards. However, as provided in China’s WTO accession 

agreement, any safeguard measure imposed prior to October 1 of a given 

year will expire at the end of that year. Through September, therefore, each 

month of delay means that any safeguard measures imposed will remain in 

place for a correspondingly shorter period of time. For example, measures 

imposed at the end of April would remain in effect for 8 months.

33U.S. Ass’n of Importers of Textiles and Apparel v. United States, Ct. No. 05-1209 

(Fed. Cir. Feb. 14, 2005).
Page 27 GAO-05-296 U.S.-China Trade

Figure 8: Comparison of Timelines for Actual Threat-Based Request with Possible Market-Disruption-Based Request

Source: GAO analysis of Department of Commerce information.

Threat-based request on cotton trousers

Oct.

Nov.

Dec.

Jan.

Feb.

Mar.

Apr.

May

June

July

Aug.

Sept.

Oct.

Nov.

Dec.

Jan.

Feb.

Mar.

Apr.

May

June

July

Aug.

Sept.

Oct.

2004 2005 2006

Oct.

Nov.

Dec.

Jan.

Feb.

Mar.

Apr.

May

June

July

Aug.

Sept.

Oct.

Nov.

Dec.

Jan.

Feb.

Mar.

Apr.

May

June

July

Aug.

Sept.

Oct.

2004 2005 2006

Unrestricted import growth possible

6 months’ unrestricted import 

growth possible

9 months’ unrestricted import growth possible

?

Dec. 31, 2005: 

Relief termination date 

(prior to injunction)

Feb. 1, 2005: 

CITA determination date 

(prior to injunction)

Jan. 1, 2005: elimination of WTO quotas.

Jan. 1, 2005: elimination of WTO quotas.

Safeguard quotas could have been in place for 

11 months, but now imports continue with no 

quota and safeguard duration uncertain

Market-disruption-based request: Different strategies offer different potential relief

CITA

process

(when imposed in the last 3 months of the year)

CITA

process

CITA

process

Safeguard quotas potentially in place for

12 months

Safeguard quotas 

potentially in place for 

approximately

6 months

Actual 

request 

stopped by 

injunction on 

Dec. 30, 2004

Scenario 1:

Initiate in 

March, based 

on 1 month’s 

import data, 

produces 

shorter 

safeguard 

Scenario 2:

Initiate later, 

based on 

4 months’ 

import data, 

results in 

longer 

safeguard 
Page 28 GAO-05-296 U.S.-China Trade

Lengthy delays or a court ruling against CITA may result in U.S. producers 

choosing (or being required) to file new requests based only on actual 

market disruption. As shown in figure 8, any relief they receive would come 

at a significantly later date than would have resulted from their original 

threat-based requests. Since supporting import data in a 

market-disruption-based case should demonstrate a rapid increase in 

imports from China, any petitioner requesting relief based on actual market 

disruption on a product removed from quota on January 1, 2005 would 

likely have to wait until at least mid-March to file a request.34 The reason is 

that they will probably need at least one month’s import data after the 

quota expires to demonstrate an increase in imports that is leading to 

actual disruption in the U.S. market. In addition, it takes about 6 weeks for 

the federal government to make import data publicly available so that 

domestic producers may include it in their requests.35 Given CITA’s 3-month 

decision-making timeline, U.S. producers could not expect a decision on a 

case filed in mid-March until around July 2005. In this scenario, U.S. 

producers would receive about 6 months of relief.

Alternatively, domestic producers could wait until midyear to file a 

market-disruption-based request. As shown in figure 8, an affirmative 

determination would then result in a year of relief. However, a decision to 

postpone filing is likely to result in less effective relief for the domestic 

producer. As already noted, China’s WTO accession agreement provides 

that quota restrictions will be calculated based on the import levels 

recorded during the first 12 months of the 14-month period leading up to 

the quota action being taken. In an environment of rapidly rising imports, 

the longer an organization waits to file a request, the higher import levels 

grow and the higher subsequently imposed quota limits become.

Unavailability of Production 

Data Hinders Access to the 

Safeguard

Equal access to the China Textile Safeguard is impaired by the lack of 

publicly available U.S. production data on some textile and apparel 

products. As mentioned earlier, CITA requires that safeguard action 

34CITA’s procedures state that supporting import data should demonstrate a rapid increase 

in imports from China, but do not specifically require the data to make that demonstration. 

The administration has argued in court proceedings that “rather than a prerequisite for CITA 

to consider requests, the ‘rapid increase’ language reflects an admonition that CITA will 

normally look for a rapid increase in imports as it considers whether to invoke paragraph 

242 [the China Textile Safeguard].”

35The Census Bureau publishes official U.S. import statistics. 
Page 29 GAO-05-296 U.S.-China Trade

requests include import, market share and U.S. production data. CITA 

officials review production data (for example, the amount of knit fabric 

produced in the United States) to determine the nature and extent of 

disruption in the U.S. market. According to CITA procedures, if production 

data are not available from government sources, those requesting 

safeguard actions must provide the data themselves, along with a complete 

list of all sources from which the data were obtained. The submission must 

include an affirmation that, to the best of the requester’s knowledge, the 

data represent substantially all of the domestic production of like or 

directly competitive products. 

The Bureau of the Census collects and publishes production data for many 

textile and apparel products. The Census Bureau surveys U.S. industry to 

obtain production information as part of the bureau’s Current Industrial 

Reports program. Census officials send questionnaires to manufacturers on 

a monthly, quarterly, or annual basis, depending on the product. The 

purpose of the bureau’s program is to provide data on production and 

shipments of certain products for use by both government and the private 

sector. 

Commerce’s Office of Textiles and Apparel (OTEXA) takes the production 

data, converts it, and publishes it in category form in order to compare it 

with trade data.36 The purpose of the category system is to allow the United 

States to implement quotas under international textile agreements by 

grouping products in directly competitive Harmonized Tariff Schedule 

headings together into single categories. For example, bow ties and other 

types of ties enter the United States under different tariff headings, but for 

quota management purposes, data on all types of ties are added together to 

form one “neckwear” category.

Since the two classification systems were developed for different purposes, 

Census production categories and CITA import categories differ to varying 

degrees. Because OTEXA is not able to match Census production data to 

all of CITA’s categories, the availability of production data for safeguard 

investigations can be affected. In addition, because of the small number of 

producers in some industries, data are collected but not released publicly 

36In determining the product detail collected in its manufacturing statistics programs, the 

Census Bureau has specifically worked over time to improve the consistency with the 

classifications in the Harmonized System, the international classification system for exports 

and imports developed by the Customs Cooperation Council. 
Page 30 GAO-05-296 U.S.-China Trade

because they would disclose private business information.37 In total, U.S. 

production data are not available for 32 of 167 textile and apparel 

categories.38 OTEXA and Census officials provided the following 

accounting of why data are not available in these categories:

• For 9 categories, Census does not collect production data. OTEXA 

believes many of these the categories are composed of products for 

which there is little or no domestic production. For 3 sock categories, 

Census did not start surveying the industry until the end of 2004. Also, in 

1 category (nonwoven fabric), OTEXA believes the industry is large, but 

not import sensitive. 

• For 11 categories, Census may collect some data, but Census production 

descriptions do not match CITA categories. For example, CITA 

maintains a category called “other man-made fiber apparel,” which 

includes a range of products from swimwear to shawls. Census collects 

data for some, but not all, of the products in this category.

• For 12 categories, Census does collect domestic production data, but 

the data cannot be published to avoid disclosure of individual company 

information. Suppression across these 12 categories affects 

approximately 100 establishments, or about 1 percent of the total 

number of textile and apparel establishments from which Census 

collects data.39

The unavailability of production data might disadvantage an unknown 

number of U.S. producers facing market disruption. We found that most (25 

of 32) Chinese-origin imports in categories for which there are no publicly 

available production data have increased both in absolute terms and in 

relation to imports from other countries. This suggests that U.S. producers 

37Individual firms reporting to the Census Bureau in the Current Industrial Reports program 

may waive their right to confidentiality. If all companies in the suppressed sector submitted 

waivers, Census could then publish the data. 

38Census recently finished a comprehensive review of the Current Industrial Reports 

program. As a result of that review, Census restructured survey coverage of the textile 

sector. Beginning in 2005, Census will cancel several textile surveys and consolidate others. 

We have not evaluated the impact that this restructuring may have on Commerce’s ability to 

provide textile and apparel production data by category.

39An establishment is an individual business location (e.g., a factory). A company may have 

multiple establishments that produce textile and apparel products, and each one would be 

counted individually.
Page 31 GAO-05-296 U.S.-China Trade

of these products face increased competition from Chinese imports, and 

thus may be more likely to seek safeguard action. In its past decisions to 

impose safeguards, CITA has cited relative and absolute Chinese import 

increases as factors in its market disruption determinations. Additionally, 

in some categories recently removed from quota, such as “other man-made 

fiber apparel,” the Chinese producers largely filled their quota in the past 

several years. In its recent threat-based requests, the domestic industry 

cited import increases and high quota fill rates as evidence that Chinese 

imports will increase significantly upon removal of the quotas. 

Table 1 provides a summary of import trends in categories for which 

production data are unavailable. (See app. IV for detailed information on 

each product category.) About half of the total value of textile and apparel 

imports from China (48 percent) fell into product categories for which data 

on U.S. production are unavailable.40 Furthermore, for imports from China 

removed from quota on January 1, 2005, about half also fell into product 

categories in which data on U.S. production are unavailable. 

Table 1: Summary of Import Data for Product Categories for Which U.S. Production Data Are Unavailable

Source: GAO analysis of Department of Commerce data.

Note: Imports in thousands constant 2004 dollars.

40Analysis of import shares are based on 2003 U.S. imports from China.

Textile and apparel

Number of

categories

Imports from

China, 1995

Imports from

China, 2004

China’s share of

total U.S. imports,

2004 (percent)

Average annual

 change, imports from

China, 2001-2004

(percent)

Products removed from quota prior to 

January 1, 2005, or never under quota 15 $556,780 $2,761,488 42 50

Products removed from quota January 1, 

2005 14 790,702 4,479,622 41 60

Products currently subject to safeguards 

measures (socks) 3 1,737 228,298 21 197

Total (all products without production 

data) 32 $1,349,219 $7,469,408 40 57
Page 32 GAO-05-296 U.S.-China Trade

Sock Case Illustrates Data 

Collection Difficulties

The experience of U.S. sock producers in preparing their 

market-disruption-based request illustrates the difficulties that can result 

from production data not being available. Since the Census Bureau did not, 

until recently, collect production data on cotton, wool, or man-made fiber 

socks, the U.S. producers that filed this request needed to collect the data 

themselves. The requesters proceeded to survey the domestic industry to 

obtain the required data. However, according to a textile industry 

representative, some members of the industry did not cooperate with the 

survey because they did not support the request. This made it difficult for 

the requesters to collect the information needed to meet CITA’s 

requirement for data covering “substantially all” domestic production. One 

industry representative said that collecting the production data was “a very 

difficult and time-consuming exercise.” One of the producer associations 

requesting the safeguard said it had to delay submission of a request for 10 

months while they gathered the relevant data. As shown in figure 9, sock 

imports from China rose substantially during this delay.41

41After the request had been filed and accepted the Bureau of the Census indicated that, due 

to interest among policymakers, it would conduct a one-time survey of U.S. sock 

production. This survey was conducted at the end of 2004. Availability of this data should 

make it easier for domestic sock producers to use the safeguard in the future.
Page 33 GAO-05-296 U.S.-China Trade

Figure 9: Sock Imports from China, January 1999 to December 2004

Safeguard’s Future Impact 

Unclear

Uncertainty about future patterns in the global textile and apparel trade 

and the applicability of other U.S. import relief mechanisms make the 

future impact of the China textile safeguard unclear. It is unclear to what 

extent safeguards imposed on China will provide relief to the U.S. 

industry—or will instead increase the market share obtained by other 

foreign producers. As shown in figure 10, U.S. textile and apparel imports 

from producers such as India, Pakistan, and especially Vietnam have also 

increased over the past decade, and the China textile safeguard cannot be 

applied to non-Chinese imports. While China is widely expected to become 

a more dominant force in global textile and apparel markets, it is too early 

to predict how other major producing countries will fare in the postquota

0

1

2

3

4

5

6

7

Jul

Sept.

Nov.

y

Nov.

Jan.

Mar.

May

Sept.

Nov.

Jan.

Mar.

May

July

Sept.

Nov.

Jan.

Mar.

May

July

Sept.

July

Nov

Jan.

Mar.

May

.

Sept.

Jan.

Mar.

May

July

Dozen pairs (millions) WTO accession

Safeguard 

invoked

Industry begins 

collecting production 

data

Request filed

Source: GAO analysis of U.S. Department of Commerce, Office of Textiles and Apparel data.

2000 2001 2002 2003 2004

Time CITA took to issue procedures
Page 34 GAO-05-296 U.S.-China Trade

environment.42 Other WTO members have expressed concern about 

changing trade patterns resulting from the termination of the quota limits. 

These members note that, while some studies suggest overall benefits from 

the liberalization of textile and apparel trade, certain developing countries 

will face difficult adjustment costs.

Figure 10: U.S. Imports of Textile and Apparel from India, Pakistan, and Vietnam, 

1995-2004

The Chinese government’s recent announcement that it will impose export 

taxes on a range of textile and apparel products to ensure a smooth 

transition from the end of the quota system further clouds future 

42For example, studies from both World Trade Organization and the U.S. International Trade 

Commission suggest that China will become the largest supplier to the U.S. market. 

However, both also suggest possible market share gains for other supplier countries. See 

United States International Trade Commission, Textiles and Apparel: Assessment of the 

Competitiveness of Certain Foreign Suppliers to the U.S. Market (Washington, D.C., 2004); 

and World Trade Organization Secretariat Staff, The Global Textile and Clothing Industry 

Post the Agreement on Textiles and Clothing (Geneva, Switzerland, 2004).

0

1

2

3

4

1995 1996 1997 1998 1999 2000 2001 2002 2003 2004

Billions 2004 dollars

Source: U.S. Department of Commerce, Office of Textiles and Apparel.

India

Pakistan

Vietnam
Page 35 GAO-05-296 U.S.-China Trade

developments in U.S. textile trade. The Chinese government has indicated 

that these taxes are intended to encourage the export of higher-value-added 

products while discouraging export surges. The impact of these taxes 

remains to be seen.

Other import relief mechanisms available under the terms of China’s WTO 

accession agreement and U.S. law may or may not prove useful for U.S. 

textile and apparel producers. The “product-specific” safeguard established 

under the accession agreement may in theory be applied to textile and 

apparel imports from China through the end of 2013.43 However, no one has 

yet made such a request. Other import relief mechanisms available under 

U.S. law—such as noncountry and nonsector-specific safeguard measures 

and antidumping duties—might be used to deal with imports from China 

and other WTO members. However, to our knowledge these remedies have 

not been applied in the textile and apparel industry recently, and thus it is 

difficult to predict how effective they might prove. 

It is also possible that a portion of the textile industry will not have 

recourse to any U.S. trade remedies after the China textile safeguard 

expires on December 31, 2008. Two industry representatives told us they 

had concerns about their eligibility to use other trade remedies. CITA 

procedures explicitly give standing to U.S. component producers to request 

application of the China textile safeguard against imports of finished 

products. However, the industry representatives observed that the laws and 

regulations governing antidumping and other import relief mechanisms 

have standing requirements that may preclude component producers from 

requesting relief through these other mechanisms. Thus, U.S. government 

agencies may determine that component manufacturers do not have 

standing because their component is not “like or directly competitive to” 

the subject Chinese import. 

Conclusions The China textile safeguard provides a mechanism for limiting growth in 

imports from that country in certain circumstances—thus helping to avoid 

market disruption and facilitate orderly adjustment to China’s growth as a 

source of textile and apparel products. The four requests that the United 

States has decided upon thus far have demonstrated that once removed 

from quota restrictions, imports from China can rise rapidly and 

43This commitment has been implemented by section 421 of the Trade Act of 1974, 19 U.S.C. 

§ 2451. 
Page 36 GAO-05-296 U.S.-China Trade

significantly disrupt U.S. markets. The termination of all remaining quotas 

on Chinese imports at the beginning of this year may bring additional 

import surges and associated disruption in U.S. markets.

Procedural shortcomings have impaired effective application of the China 

safeguard, leading to, among other things, uncertainty and delay that may 

weaken safeguard actions on some products that were recently released 

from quota restrictions. Similarly, lack of production data impaired access 

to safeguard measures for U.S. sock producers, and may pose similar 

problems should other producers in similar circumstances seek application 

of this mechanism.

The extent to which vigorous application of the China-specific textile 

safeguard will assist U.S. producers—or create opportunities for other 

exporting nations—is unknown, and in any case, the safeguard is only 

available through the end of 2008. Nonetheless, China is expected to 

continue to be a major source of U.S. textile and apparel imports, and the 

usefulness of alternative U.S. import relief mechanisms remains untested 

by textile and apparel producers. Since the safeguard was an integral part 

of the framework that led to Congress approving permanent normal trade 

relations with China and cleared the way for that country to join the WTO, 

it is important that CITA and the Department of Commerce take action to 

enhance the procedures employed in applying this mechanism while it 

remains available.

Recommendations for 

Executive Action

In the event that the courts rule that CITA may process threat-based 

requests for China textile safeguards, we recommend that CITA amend its 

procedures to clarify how it will proceed in threat-based cases, including 

the information that producers should submit in such cases.

To enhance access to safeguard relief for all segments of the textile and 

apparel industry that may face import surges, we recommend that the 

Department of Commerce, as CITA’s chair, review the products and 

categories for which U.S. Bureau of the 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. We further recommend that on the 

basis of the risk assessment, Commerce’s Office of Textiles and Apparel 

work with the Census Bureau to explore options to make production data 

concerning these industry sectors available for safeguard requests. We 

realize that in some instances it might not be feasible to make such data 
Page 37 GAO-05-296 U.S.-China Trade

publicly available due to disclosure limitations and that data (or analysis of 

trends in that data) possibly may need to be limited to CITA. 

Agency Comments and 

Our Evaluation

We provided draft copies of this report to the Department of Commerce, in 

its capacity as chair of the interagency Committee for the Implementation 

of Textile Agreements. The Department of Commerce collected and 

compiled comments from the CITA member agencies into one letter, which, 

with our responses, are reproduced in appendix VI. CITA also provided 

technical comments that we incorporated, as appropriate. We also 

incorporated technical comments from the Bureau of the Census and the 

United States International Trade Commission. 

With respect to our first recommendation, CITA noted that our review 

focused on issues involved in the ongoing litigation and, per a Department 

of Justice request, CITA could not comment on certain parts of the report. 

Nevertheless, CITA expressed concern about how we described the timing 

of issuance and content of CITA procedures as they relate to threat-based 

requests. CITA also expressed concern that some of our conclusions in the 

report seemed to be premised on the arguments of private parties in 

ongoing litigation. Our report does not take any position on the legal issues 

that are the subject of the ongoing litigation between the U.S. Association 

of Importers of Textiles and Apparel and the United States, including 

whether CITA’s procedures allow for threat-based cases. However, we 

continue to believe the procedures could be improved in this regard to 

further increase clarity and transparency. With respect to the timing issue, 

we acknowledge the significant steps CITA has taken to increase the 

transparency of its investigations. Nevertheless, a significant amount of 

time elapsed prior to CITA’s issuing procedures, and concerned groups had 

to refile several safeguard action requests. We reviewed the submissions of 

the parties and described some of their main points. However, we drew our 

conclusions from our analysis and evidence that we collected. We maintain 

that our findings about the public’s uncertainty at the time represent a 

balanced summation of the facts. 

In responding to our second recommendation, Commerce made three 

points. First, the agency observed that there are several reasons why 

production data might not be available, including the need to protect the 

confidentiality of individual producers. Second, it stated that there are few, 

if any, domestic entities from industries for which Census data were not 

published that would likely request safeguard action. Third, it noted that 

any domestic entity that did request a safeguard would be able to collect its 
Page 38 GAO-05-296 U.S.-China Trade

own data and that Commerce and CITA stand ready to provide advice as to 

how the data requirements could be met. 

We revised our report to make clear that there are a number of reasons why 

production data are not published and that it may not be proper, in some 

situations, to make the data available to the public. We agree that the 

universe of producers that may be adversely affected by a lack of 

production data may be small. However, we found that collecting the 

information needed to meet CITA’s production data requirement can be a 

time-consuming process that impedes safeguard access relative to industry 

sectors where the data is readily available from government sources. Given 

that the textile and apparel industry is undergoing rapid change, new 

industry sectors not previously viewed as vulnerable to Chinese 

competition may seek relief and would need data.

We are sending copies of this report to the heads of CITA member agencies 

(the Departments of Commerce, Labor, State, and the Treasury and the 

Office of the United States Trade Representative), appropriate 

congressional committees, and other interested parties. In addition, the 

report will be available at no charge on GAO’s Web site at 

http://www.gao.gov.

If you or your staff have any questions about this report, please contact me 

at (202) 512-4347 or yagerl@gao.gov. Other GAO contacts and staff 

acknowledgments are listed in appendix VII.

Loren Yager

Director, International Affairs and Trade 
Page 39 GAO-05-296 U.S.-China Trade

Appendix I

Objectives, Scope, and Methodology ApApenednxidexiIs

In May 2003, the House Appropriations Committee’s Subcommittee on 

Commerce, Justice, and State, the Judiciary, and Related Agencies held 

hearings regarding U.S. government efforts to support American 

businesses adversely affected by imports from China. In light of concerns 

expressed at this hearing, the House-Senate conference report on fiscal 

year 2004 appropriations legislation requested that GAO monitor the efforts 

of U.S. government agencies responsible for ensuring free and fair trade 

with China. In subsequent discussions with your staff, we agreed to 

respond by providing a number of reports on relief mechanisms available 

to U.S. producers that are adversely affected by unfair or surging imports, 

and the manner in which the mechanisms have been applied to China.1

 In 

this report, we (1) describe the China textile safeguard, (2) describe the 

requests for safeguard action filed by domestic industry and the results of 

these requests, and (3) evaluate agency procedures for transparency and 

accessibility and identify additional issues that may affect application of 

safeguard measures in the future.

To address our first objective, we reviewed U.S. laws and procedures as 

well as relevant World Trade Organization (WTO) agreements and China’s 

WTO accession agreement. To ensure our understanding of relevant laws, 

procedures, and agreements, we spoke with officials from the five member 

agencies of the U.S. government’s Committee for the Implementation of 

Textile Agreements (CITA). The members of CITA are the Departments of 

Commerce, Labor, State, and the Treasury, and the United States Trade 

Representative. In addition, we interviewed officials with the World Trade 

Organization and private sector experts on trade law.

To address our second and third objectives, we reviewed and analyzed 

each of the Statements of Reasons and Justifications that CITA has issued 

to explain its determinations on safeguard actions completed as of 

December 2004. We also reviewed the information that CITA received in 

response to its request for public comment on each of these requests. To 

clarify the views of parties in favor of applying safeguard measures, we 

spoke with representatives of the three domestic industry trade 

associations that have participated in filing every safeguard action request 

to date. To clarify views of parties opposed to such measures, we spoke 

with a trade association representing over 200 importers of textiles and 

apparel and a trade association representing 50 state retail associations and 

1

Forthcoming reports will focus on countervailing duties, the China product-specific 

safeguard, and antidumping duties.
Appendix I

Objectives, Scope, and Methodology

Page 40 GAO-05-296 U.S.-China Trade

20 national retail organizations as well as national and independent 

retailers, and also attended an international conference of textile and 

apparel importers. We also spoke with Chinese government officials. To 

obtain a broader perspective on global textile trade and the application of 

the safeguard in a postquota environment, we spoke with representatives 

of additional textile and apparel exporting and importing countries. Finally, 

we reviewed the order of the U.S. Court of International Trade granting a 

preliminary injunction to the U.S. Association of Importers of Textiles and 

Apparel precluding CITA from acting on threat-based requests for 

safeguard action,2

 as well as other relevant documents filed by the parties 

involved in this case. 

In support of these objectives, we also conducted analyses of textile and 

apparel import data, as well as U.S. domestic production and employment 

data for textile and apparel sectors. U.S. import data are official statistics 

from the Bureau of the Census, Department of Commerce. We adjusted the 

import data for inflation by using the textile and apparel products import 

price deflators from the Bureau of Labor Statistics. Inflation-adjusted 

values are in constant 2004 dollars and are identified throughout the report. 

U.S. production (shipment) values are from the Census Bureau’s 

Manufacturing, Mining, and Construction Statistics. In order to present 

values in 2004 dollars, we used the 2004 value of shipments from Census 

for each industry and extrapolated prior year shipments using the Federal 

Reserve Board’s Industrial Production Index for the particular industries. 

U.S. employment data are official statistics from the Bureau of Labor 

Statistics, Department of Labor. We assessed these data and found them to 

be sufficiently reliable for the purposes of this report.

We performed our work from January 2004 to January 2005 in accordance 

with generally accepted government auditing standards.

2

U.S. Ass’n. of Importers of Textiles and Apparel v. United States, Ct. No. 04-00598 

(C.I.T. Dec. 30, 2004).
Page 41 GAO-05-296 U.S.-China Trade

Appendix II

Paragraph 242 of the Working Party Report on 

China’s Accession to the WTO ApendxiI

The representative of China agreed that the following provisions would 

apply to trade in textiles and clothing products until 31 December 2008 and 

be part of the terms and conditions for China’s accession:

(a) In the event that a WTO Member believed that imports of Chinese 

origin textiles and apparel products covered by the ATC as of the 

date the WTO Agreement entered into force, were, due to market

disruption, threatening to impede the orderly development of trade 

in these products, such Member could request consultations with 

China with a view to easing or avoiding such market disruption. The 

Member requesting consultations would provide China, at the time 

of the request, with a detailed factual statement of reasons and 

justifications for its request for consultations with current data 

which, in the view of the requesting Member, showed: (1) the 

existence or threat of market disruption; and (2) the role of products 

of Chinese origin in that disruption;

(b) Consultations would be held within 30 days of receipt of the request. 

Every effort would be made to reach agreement on a mutually 

satisfactory solution within 90 days of the receipt of such request, 

unless extended by mutual agreement;

(c) Upon receipt of the request for consultations, China agreed to hold 

its shipments to the requesting Member of textile or textile products 

in the category or categories subject to these consultations to a level 

no greater than 7.5 per cent (6 per cent for wool product categories) 

above the amount entered during the first 12 months of the most 

recent 14 months preceding the month in which the request for 

consultations was made;

(d) If no mutually satisfactory solution were reached during the 90-day 

consultation period, consultations would continue and the Member 

requesting consultations could continue the limits under 

subparagraph (c) for textiles or textile products in the category or 

categories subject to these consultations;

(e) The term of any restraint limit established under subparagraph (d) 

would be effective for the period beginning on the date of the 

request for consultations and ending on 31 December of the year in 

which consultations were requested, or where three or fewer 

months remained in the year at the time of the request for 
Appendix II

Paragraph 242 of the Working Party Report 

on China’s Accession to the WTO

Page 42 GAO-05-296 U.S.-China Trade

consultations, for the period ending 12 months after the request for 

consultations;

 (f) No action taken under this provision would remain in effect beyond 

one year, without reapplication, unless otherwise agreed between 

the Member concerned and China; and

(g) Measures could not be applied to the same product at the same time 

under this provision and the provisions of Section 16 of the Draft 

Protocol.
Page 43 GAO-05-296 U.S.-China Trade

Appendix III

Summary of CITA Determinations on MarketDisruption-Based Requests to Date ApendxiI

Product Key dates

Key elements of CITA 

finding that market was 

disrupted

Role of imports from China in 

present disruption

Role of imports from 

China in threat to disrupt 

the U.S. market in the 

near future

Brassieres and 

other body 

supporting 

garments

Request filed: July 24, 

2003.

CITA determination: Nov. 

17, 2003. 

Consultation 

requested/quotas 

imposed: December 24, 

2003. 

U.S. production, including 

outward processing, 

dropped from 28,375,000 

dozens in 2000 to 

27,781,000 dozens in the 

year ending June 2003. 

U.S. producers’ share of 

the market fell from 52.8 

percent in 2000 to 43.8 

percent in the year ending 

June 2003.

Total imports grew 17 percent from 

2000 to year-end October 2003. 

Imports from China grew 291 

percent in the same period. China 

went from the sixth largest supplier 

of such garments to the United 

States in 2001 to the largest 

source in 2002 and 2003. China 

gained U.S. market share (15.5 

percentage points gained between 

2000 and year-end June 2003), 

and gains came at the expense of 

domestically produced garments, 

including U.S. outward processing. 

Enormous capacity of 

China to produce textile 

and apparel products for 

export. 

Lower average prices than 

other suppliers. 

Rapid change since 

integration suggests that 

without action, current 

trends in imports from 

China will likely continue. 

China has made significant 

investment in plants, 

equipment, and research 

and development in its 

textile and apparel 

industry.

Cotton and 

man-made 

fiber dressing 

gowns

Request filed: July 24, 

2003.

CITA determination: Nov. 

17, 2003.

Consultation 

requested/quotas 

imposed: Dec 24, 2003.

U.S. production plus 

outward processing fell by 

about 40 percent from 

2000 to year-end June 

2003.

Share of the market held 

by U.S. producers fell 17.9 

percentage points 

between 2000 and yearend June 2003. 

Total U.S. imports grew by 77 

percent from 2000 to yearend 

October 2003. U.S. imports from 

China increased 1,483 percent 

during the same period.

Market share of imports from 

China increased from 3.9 percent 

in 2000 to 30.7 percent for the year 

ending June 2003. 

Imports from the rest of the world 

minus outward processing and 

U.S. producers plus outward 

processing both lost market share. 

(See above explanation 

under “Brassieres.”)
Appendix III

Summary of CITA Determinations on MarketDisruption-Based Requests to Date

Page 44 GAO-05-296 U.S.-China Trade

Source: CITA Statements of Reasons and Justifications.

Product Key dates

Key elements of CITA 

finding that market was 

disrupted

Role of imports from China in 

present disruption

Role of imports from 

China in threat to disrupt 

the U.S. market in the 

near future

Knit fabric Request filed: July 24, 

2003.

CITA determination: Nov. 

17, 2003.

Consultation 

requested/quotas 

imposed: Dec 24, 2003.

U.S. production declined 

from about 657 million 

kilograms in 2000 to about 

480 million kilograms in 

2002. 

U.S. producers’ market 

share had declined 9.6 

percent between 2000 and 

2002. 

Financial difficulties of two 

publicly traded firms 

engaged primarily in the 

manufacture of knit fabric.

Total imports increased 42 percent 

from 2001 to year-end October 

2003, while knit fabric imports from 

China increased 21, 307 percent 

from 2000 to year-end October 

2003. 

Imports from China gained market 

share at the expense of U.S. 

producers: Of the 9.6 percent of 

U.S. market share lost from 2000 

to 2002 1.1 percent is attributable 

to Chinese imports.

(See above explanation 

under “Brassieres.”)

CITA also stated that the 

significant increase in knit 

fabric import volume since 

2001 suggested that 

imports would continue to 

increase in the near future. 

Cotton, manmade fiber, and 

wool socks

Request filed : June 28, 

2004.

CITA determination: Oct. 

22, 2004.

Consultation 

requested/quotas 

imposed: Oct. 29, 2004.

Excluding outward 

processing, U.S. imports 

increased from 51,014,517 

to 98,976,106 dozen pairs 

between 2001 and 2003. 

U.S. production, including 

outward processing, 

dropped from 246 million 

dozen pairs to 214 million 

dozen pairs from 2001 to 

2003. 

U.S. production plus 

outward processing 

market share fell from 82.9 

in 2001 percent to 68.4 

percent in 2003. 

Employment and number 

of sock-producing 

establishments both 

declined.

Between 2001 and August 2004, 

Chinese imports grew 4, 211 

percent. Between 2001 and yearend August 2004 total world 

imports increased 100 percent.

China went from the 12th largest 

foreign supplier to the United 

States in 2001 to the largest 

supplier by year-end August 2004. 

China’s market share grew from 

0.3 percent in 2001 to 7 percent in 

2003, and the market share gain 

came at the expense of U.S. 

producers. 

(See above explanation 

under “Brassieres.”)

(Continued From Previous Page)
Page 45 GAO-05-296 U.S.-China Trade

Appendix IV

Textile and Apparel Products Imported from 

China for Which U.S. Production Data Are 

Unavailable ApendxiIV

U.S. production data on 32 of 167 textile and apparel categories are 

unavailable. Table 2 lists these 32 product categories and provides 

information on the size of U.S. imports from China in 1995 and 2004, 

imports from China as a percentage of total U.S. imports, the average 

annual percentage change in imports since China became a WTO member 

in 2001, and the quota fill rates for these product categories. Quota fill rates 

(as of December 1, 2004) show what share of the quota allocation for each 

product category was already allocated near the end of the quota period 

(December 31, 2004). Quotas on these products were removed completely 

on January 1, 2005, but the quota fill rates provide some information about 

how constraining the quotas were prior to their removal. In addition, notes 

at the end of the table identify qualitative information from OTEXA and 

Census on why the data for each category are unavailable.

Table 2: Import Data for Product Categories for Which U.S. Production Data Are Unavailable

Category name

Category

number

Imports from

China, 1995

Imports

from China,

2004

Share of

China in U.S.

imports from

all countries,

2004

(percent)

Average

annual

change,

imports

from China

2001-2004

(percent)

Quota fill rate

as of

December 1,

2004

Products removed from quota prior to 

January 1, 2005, or never under quotaa

Flat goods, handbags, and luggageb 670 $196,648 $1,735,685 78% 68% N/A

Wool floor coveringsd 465 181,679 164,981 18 -2 N/A

Womens’ and girls’ man-made fiber downfilled coatsc 654 32,522 203,076 85 42 N/A

Other man-made fiber manufacturesd 669 13,804 264,822 39 148 N/A

Men’s and boys’ man-made fiber downfilled coatsc 653 66,801 108,207 85 6 N/A

Man-made fiber floor coveringsd 665 8,933 96,762 16 48 N/A

Special purpose fabricc 229 4,175 122,266 14 134 N/A

Wool gloves and mittensc 431 5,182 15,857 76 6 N/A

Cotton handkerchiefsb 330 6,143 18,832 91 15 N/A

Women’s and girls’ cotton down-filled 

coatsc 354 7,114 3,941 78 130 N/A

Nonwoven fabricb 223 830 14,264 2 505 N/A

Wool blanketsc 464 414 4,055 24 30 N/A

Men’s and boys’ cotton down-filled coatsc 353 30,248 4,293 68 -7 N/A
Appendix IV

Textile and Apparel Products Imported from 

China for Which U.S. Production Data Are 

Unavailable

Page 46 GAO-05-296 U.S.-China Trade

N/A = Not applicable.

Source: GAO analysis of U.S. Department of Commerce data.

Nontextured filament yarnb 606 0 3,138 3 17,654 N/A

Man-made fiber handkerchiefsb 630 2,286 1,309 49 -7 N/A

Subtotal N/A $556,780 $2,761,488 42% 50% N/A

Products removed from quota 

January 1, 2005

Other cotton manufacturesd 369 $280,155 $1,070,693 46% 42% 32.5

Babies' garments and clothing accessoriesd 239 76,606 1,103,435 55 135 No information

Other man-made fiber furnishingsd 666 40,702 1,211,228 61 194 83.1

Other cotton appareld 359 134,105 413,203 42 38 49.8 and 66.4a

Other man-made fiber appareld 659 110,658 330,931 16 32 84.2 and 77.9

and 76.8a

Bedspreads and quiltsc 362 120,525 183,713 34 6 80.1

Other wool appareld 459 12,595 138,199 55 28 No info

Wool knit shirts and blousesc 438 5,102 9,560 3 5 93

Yarns put up for retail sale, and sewing 

threadb 200 3,032 9,434 5 43 89.4

Other wool manufacturesd 469 3,699 5,257 29 8 64.8a

Woven fabric containing 85 percent or more 

by weight artificial staplec 611 3,081 2,756 13 6 32.1

Specialty yarnsc 201 346 855 0 -5 64.8a

Other wool fabricd 414 95 142 0 -25 64.8a

Man-made fiber fabric, woven, containing 

more than 15 percent but less than 36 

percent woolc 624 1 215 1 -20 64.8a

Subtotal N/A $790,702 $4,479,622 41% 60% N/A

Products currently subject to 

safeguards measures (socks)

Hosiery (socks)e 632(part) $515 $221,348 57% 295% N/A

Hosiery (socks)e 332 1,222 4,848 1 32 N/A

Hosiery (socks)e 432 0 2,103 10 21 N/A

Subtotal $1,737 $228,298 21% 197%

Total (all products for which production 

data is unavailable) N/A $1,349,219 $7,469,408 40% 57% N/A

(Continued From Previous Page)

Category name

Category

number

Imports from

China, 1995

Imports

from China,

2004

Share of

China in U.S.

imports from

all countries,

2004

(percent)

Average

annual

change,

imports

from China

2001-2004

(percent)

Quota fill rate

as of

December 1,

2004
Appendix IV

Textile and Apparel Products Imported from 

China for Which U.S. Production Data Are 

Unavailable

Page 47 GAO-05-296 U.S.-China Trade

Notes: Safeguard on hosiery (socks) is a single safeguard measure covering products from all three 

categories.

a

Quota restraints are applied against a group of categories or subcategories in these cases. The fill 

rates either apply to the combined categories or several fill rates apply to one category.

b

Census does not collect production data.

c

Census does collect domestic production data, but the data cannot be published to avoid disclosure of 

individual company information. 

d

Census may collect some data, but Census production descriptions do not match CITA categories. 

e

Census began collecting data in December 2004
Page 48 GAO-05-296 U.S.-China Trade

Appendix V

Threat-Based Requests for Safeguard Action 

Filed by U.S. Producer Groups, 2004 ApendxiV

Source: Defendant’s Memorandum in Support of its Motion to Dismiss and Opposition to Plaintiff’s Motion for a Preliminary Injection, 

Sch. A, Ass’n of Importers of Textiles and Apparel, Ct. No. 04-00598 (C.I.T. Dec. 15, 2004).

Description Category

Date request received by

CITA chair (2004)

Date CITA accepted request

for consideration (2004)

Cotton trousers 347/348 Oct. 8 Oct. 29

Knit cotton shirts and blouses 338/339 Oct. 13 Nov. 3

Men’s and boys’ cotton and manmade fiber shirts, not knit 340/640Oct. 13 Nov. 3

Knit man-made fiber shirts and 

blouses 638/639

Oct. 13 Nov. 3

Man-made fiber trousers 647/648 Oct. 13 Nov. 3

Cotton and man-made fiber 

underwear 352/652

Oct. 15 Nov. 3

Combed cotton yarn 301 Oct. 27 Nov. 18

Other synthetic filament fabric 620 Nov. 8 Dec. 1

Men’s and boys’ wool trousers 447 Nov. 12 Dec. 6

Knit fabric 222 Nov. 19 Dec. 13

Dressing gowns and robes 350/650 Nov. 24 Dec. 16

Brassieres and other body supporting 

garments 349/649

Dec. 1 Dec. 22
Page 49 GAO-05-296 U.S.-China Trade

Appendix VI

Comments from the Committee for the 

Implementation of Textile Agreements ApendxiVI

Note: GAO comments 

supplementing those in 

the report text appear 

at the end of this 

appendix.
Appendix VI

Comments from the Committee for the 

Implementation of Textile Agreements 

Page 50 GAO-05-296 U.S.-China Trade

See comment 1.
Appendix VI

Comments from the Committee for the 

Implementation of Textile Agreements 

Page 51 GAO-05-296 U.S.-China Trade

See comment 2.
Appendix VI

Comments from the Committee for the 

Implementation of Textile Agreements 

Page 52 GAO-05-296 U.S.-China Trade

The following are GAO’s comments on the Committee for the 

Implementation of Textile Agreements’ letter dated March 11, 2005.

GAO Comments 1. Our report does not take any position on the legal issues that are the 

subject of the ongoing litigation between the U.S. Association of 

Importers of Textiles and Apparel and the United States, including 

whether CITA’s procedures allow for threat-based cases. We 

acknowledge CITA’s extensive consultations and that the procedures 

represent a significant increase in the transparency of its investigations 

compared with those conducted under other agreements such as the 

Agreement on Textiles and Clothing. Nevertheless, 17 months is a 

significant amount of time to issue procedures to inform the public 

about CITA’s process. The timing of issuance of the procedures 

necessitated industry groups refiling several safeguard action requests 

made months before the procedures were published. As noted in 

appendix I, we independently reviewed China’s WTO accession 

agreement and CITA’s procedures, and other information, as well as 

submissions from all parties involved in the ongoing litigation. We 

maintain that our description of CITA’s procedures and findings about 

the public’s uncertainty at the time represents a balanced summation of 

the facts. We continue to believe the procedures could be improved in 

this regard to further increase transparency and clarity.

2. According to a Bureau of the Census official, the Current Industrial 

Report program’s coverage of U.S. textile and apparel production 

remained unchanged from 1993 until the completion of a programwide 

review in 2004 to reassign resources to manufacturing areas of 

increasing economic importance. We consider a risk assessment to be a 

useful and timely exercise due to the recent change in long-standing 

trade rules for textiles and apparel and resulting increased global 

competition. We agree that there are a variety of reasons why 

production data might be unavailable, including suppressing data to 

protect respondent confidentiality, and we amplified our discussion on 

textile and apparel production data accordingly. Additionally, we 

modified our recommendation to acknowledge that in certain 

instances, making the production data available might not be feasible. 

However, we found that requesting a safeguard action is substantially 

more difficult when production data are unavailable than when they are 

available; for example, it could add months onto the time to prepare a 

request. Accordingly, we believe that lack of production data may 

constitute a substantial impediment to a safeguard action request and 
Appendix VI

Comments from the Committee for the 

Implementation of Textile Agreements 

Page 53 GAO-05-296 U.S.-China Trade

steps should be taken to mitigate this condition. Furthermore, some 

industries that were not deemed import sensitive in the past may 

become so in the future. 
Page 54 GAO-05-296 U.S.-China Trade

Appendix VII

GAO Contacts and Staff Acknowledgments ApendxiVI

GAO Contacts Adam Cowles, (202) 512-9637

Michael McAtee, (202) 512-8978

Staff 

Acknowledgments

In addition to those named above, R. Gifford Howland, Richard Seldin, and 

Timothy Wedding made significant contributions to this report.

(320228)
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